ACI recently attended the San Diego Apartment Association / Certified Commercial Investment Member Apartment Perspective Forecast event held in Mission Valley. The one day panel presentation brings together leading experts local to San Diego and abroad to discuss changes happening within the commercial real estate industry to an audience of nearly 300 people.
Topics discussed during the panel included the impact of tax reform for rental owners, rent control, and the changes coming to local construction. There were also a number of interesting points made by each panelist, including:
- Event moderator Robert Vallera, CCIM of Voit, who used historic data to demonstrate a lack of construction for San Diego in the last 10 years. His data indicated that whereas in the 1950’s 1-in-100 housing units could be identified as available for San Diego residents, current estimates suggest that that ratio has risen to 1-in-400. He concluded that the region has failed to make much progress in housing construction over the last 30 years, and only a focus on change by regional leaders would keep this trend from continuing.
- The first panel speaker of the morning was Bob Pinnegar the Executive Director of National Apartment Association, who Mr. Vallera wittily commented has had a number of high profile positions for SDCAA and other expert real estate organizations. The main focus of Mr. Pinnegar’s presentation involved anticipation for pending efforts by the Trump administration on national tax reform. He urged professionals and owners in attendance to make their voices heard as the new legislation takes shape, noting that real estate professionals needed to show the human side of the industry and the impact changes to 1031 tax policy could have on owners and agents.
- The next speaker, Rick Graf of Pinnacle properties, suggested that at the national level owners have seen an unprecedented huge run-off in rents. He cautioned owners that continued construction in luxury property could be lack profitability in the next few years, as the need is truly in workforce housing. In addition, he acknowledged that many people are entering the secondary market because there is the potential for growth and not much construction underway.
- Following Mr. Graf, local housing advocate Howard Blackson engaged the audience by looking at exciting changes coming to the San Diego construction market. He acknowledged early on the need for more housing ubranism, noting that affordability is coming and that area leaders will soon be developing with walk-ability and commerce at the forefront of design. He predicted small lot ordinances with reductions to parking and unit size in the not too distant future. He showed strong faith in San Diego’s multifamily market, suggesting that more units are likely on the way if local policies streamline.
- Finally, Foundation for Form Architect Mike Burnett demonstrated how he and his team are revolutionizing mixed-use projects through the redevelopment of old retail spaces. He provided examples of a number of South Park and Golden Hill projects either completed or under construction that he cited as examples of where housing may go to attract a younger generation of renters. His focus on designer, low impact spaces showed a modern focus to achieve density with less space.
At the end of the event, audience members were polled regarding their perception on whether the San Diego multifamily market would trend up or down in the coming year. While only one person suspected the market would go down, audience members were split nearly evenly on the market either increasing or staying flat over the next 12 months.