Daily Business Report — Dec. 7, 2009
County Vacancy Rate at Equilibrium
The San Diego County Apartment Association’s fall 2009 Vacancy & Rental Rate Survey results show a 5.0 percent vacancy rate and weighted average rent of $1,189 across all unit types countywide. At 5.0 percent, the vacancy rate is at what is considered in the industry to be equilibrium.
“The apartment sector is performing better than its commercial and industrial counterparts, thanks to a large population of renters and limited new apartment development,” said Robert Pinnegar, executive director of the SDCAA. “Apartment transactions have also begun to increase in the last few months, but we’re not out of the woods yet.”
Broken down by region, North County is experiencing the highest vacancy rate at 5.5 percent, followed by the city of San Diego at 5.1 percent, East County at 4.9 percent and the South Bay at 4.4 percent.
Conventional wisdom is that the job market is the biggest factor to affect vacancy rates because employment levels have a direct impact on the need for housing. The University of San Diego’s Index of Leading Economic Indicators for September 2009 (the same month that the SDCAA survey was conducted) showed that claims for unemployment insurance reached an all-time high and that help wanted advertising continued to be negative, despite the report’s overall rise. The report also referenced an unemployment rate of 10.2 percent.
Job growth isn’t expected soon. At the SDCAA’s 2010 Apartment Perspective, also held in September, each of the three event panelists agreed that employment will lag recovery in other sectors. All of this means that rental property owners should not expect an immediate return to the 2-4 percent vacancy levels that were reported in the 10 years leading up to the current recession.
Vacancy and rental rates are being impacted less than they were in recent years by the unprecedented condo conversion and foreclosure activities, although “some of the Class A properties are still experiencing competition from single-family home rentals or from monthly mortgage payments that rival rents,” added Pinnegar.
Profit margins continue to be squeezed, as operating costs — particularly water rates — continue to rise while rent growth remains stifled by the lack of job growth. As a result, landlords are likely hesitant to adjust rental rates. The weighted average rent for all unit types countywide is $1,189; the weighted average rent reported for studio units is $996, $1,127 for one-bedroom units, $1,422 for two-bedroom units, and $1,754 for units with three or more bedrooms.
The SDCAA’s Apartment Availability Index Survey, which is supplemental to the Vacancy and Rental Rate Survey, asks 25 apartment owners and managers with the largest unit holdings in the county for the number of units currently vacant as well as units on notice to vacate in order to approximate the true availability of apartments. The fall 2009 Apartment Availability Index rate is 7.43 percent. For now, the results of the surveys indicate that there may be opportunities for renters to benefit from a wider selection of vacant units during a time of limited rent growth.
Soldiers Get a Peak at New Unmanned Aerial Vehicles
U.S. Army soldiers who will operate General Atomics Aeronautical Systems’ newest unmanned aircraft vehicles when the aircraft are deployed next year received a sneak preview of the vehicles last week during a visit to GA’s Poway plant. The new Extended Range/Multi-purpose unmanned vehicles are being manufactured at the plant. The soldier also got the opportunity to meet the men and women who are building the UAS vehicles. “All combat tools have human faces behind them — from the designers to the builders to the users — and it is important for our soldiers to thank the great people who provide the tools they need to fight the unfortunate conflicts we face,” said Col. Gregory Gonzalez, project manager of nmanned aircraft systems for the Army. Gonzalez’ office is responsible for the acquisition and fielding of all Army unmanned aircraft systems.
This class of UAS operators has extensive experience operating UAS in theater, including Warrior-class systems also built by General Atomics, and the Shadow and Hunter tactical UAS. They are deploying two years ahead of schedule to quickly bring this newest technology to areas of conflict. The rapid deployment is in response to the April 2008 challenge by Defense Secretary Robert Gates to field tools to soldiers faster.
Director Chosen for Nonprofit Research Center
Laura Deitrick, senior researcher at USD’s Caster Family Center for Nonprofit Research in the School of Leadership and Education Sciences, has been promoted to center director. Deitrick spearheaded several studies while she was senior researcher, including research on the scope of local philanthropy, the ecomic impact of San Diego’s nonprofits. She is currently completing a report on how San Diego nonprofits are faring in the economic downturn. Pat Libby, director of the Institute for Nonprofit Education and Research, said Deitrick played a major role in the development of the center and is the logical choice to run it. Previously, Deitrick worked for seven years in development and served as the executive director of the Coronado Schools Foundation. She also acted as an independent management consultant to a variety of local nonprofits and served on several nonprofit boards. Deitrick holds a bachelor’s degree in economics from SDSU, a master’s degree in nonprofit leadership and management and a doctorate in leadership studies.
The Caster Family Center for Nonprofit Research was launched in 2004 with grants provided by The Westreich Foundation and the Bruce T. Halle Family Foundation. In 2007, the center received a naming contribution from the Caster Family.
Two Medical Office Condos in San Diego are Sold
USSA LLC has purchased two medical office condominiums totaling 3,722 square feet in Cabrillo Medical Center at 7695 Cardinal Court, Units 1-1 and 1-2, in Kearny Mesa. Financial terms were not disclosed. The buyer plans to use the property for a medical office focusing on ophthalmology. The seller was represented by Matthew Carlson and J.P. Huntington of Cushman & Wakefield. The buyer was represented by Jon Boland of Voit Commercial. Fenway Properties acquired the building in 2005 and rebuilt the current 31,222-square-foot, three-story, Class A facility, which was completed in 2007.
NASSCO Delivers Third State-Class Ship
NASSCO has delivered the third ship of its State-class of product carriers to American Petroleum Tankers LLC, a joint venture of the Blackstone Group. The ship is named Sunshine State, the state nickname of Florida. NASSCO began constructing the ship in August 2007. At a length of 600.4 feet (183 meters), the double-hulled ship has a cargo capacity of 331,000 barrels and will be used to carry petroleum and chemical products in Jones Act service between U.S. ports. The ship was completed 11 months ahead of schedule and under budget, said Fred Harris, president of NASSCO.
Three Members Added to Salk Institute Board
The Board of Trustees of the Salk Institute for Biological Studies has unanimously voted to elect three new members:
Fred Dotzler is co-founder and managing director of De Novo Ventures in Palo Alto. De Novo is investing $650 million from three funds in early stage medical device and biotechnology companies. Dotzler founded Medicus Venture Partners in 1989. He has invested in four companies that achieved market values greater than $1 billion: San Diego-based Biosite (acquired by IMC), Inhale Therapeutic Systems, Omnicell and Tularik Inc. (acquired by Amgen). Prior to venture capital, Dotzler served in positions in marketing, finance, and operations for Searle, Millipore, Merrimack Laboratories and IBM.
The Salk board also elected literary agent Linda Chester. She begins her three-year term after having served as liaison to the board for the Institute’s International Council. Chester is founding president of the Linda Chester Literary Agency, which has offices in New York City and La Jolla and has represented many bestselling authors.
Mary Jane Salk, who also comes from the publishing world, is replacing Chester as International Council liaison. She has served as editor of Magazine Management and editorial director of Transworld Feature Syndicate, an international magazine consortium. The widow of Dr. Lee Salk, brother to Dr. Jonas Salk, Salk is the author of five young adult books for Chelsea House Publishers, and was associate producer of the feature films “Goodbye, New York” and “Forever Lulu.”
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