San Diego Apartment Rents Post Strongest Month in Two Years — But Concessions Still Bite

San Diego apartment rents are gaining real momentum. Asking rents rose 0.4% month-over-month in May — the strongest single-month gain in two years — and that pushed annual rent growth back into positive territory after a long stretch in the red. Over the trailing twelve months, asking rents are up 0.3%, to an average of roughly $2,572 per month.

For owners weighing whether to sell, hold, or reposition, the more important story isn't the headline rent number. It's what's happening underneath it: rents are rising at the same time concessions remain widespread, which means the rent a buyer actually underwrites can look very different from the rent on your rent roll.

Here's what the May data shows, and what it means if you own a 2–50 unit building in San Diego.

San Diego apartment rents: Rent growth is broad-based across property classes

May's gains weren't concentrated in one tier. Every property class posted positive month-over-month rent growth:

· Three-star (mid-tier) inventory led with a 0.5% gain

· Luxury (four- and five-star) rents grew 0.3%

· Workforce housing (one- and two-star) rose 0.2%

That breadth matters. When only luxury rents move, it usually reflects a narrow slice of new, high-amenity supply rather than genuine market-wide demand. When mid-tier and workforce product move too — which is most of the 2–50 unit world — it's a stronger signal that renter demand is real across the board.

The catch: San Diego is in its biggest supply wave this century

Rent growth is happening despite, not because of, the supply picture. San Diego is working through its largest apartment development wave in over a hundred years. More than 11,000 units were completed between 2024 and 2025, with another 5,700 scheduled for 2026. Over the past year, new deliveries outpaced absorption by about 35%, and the overall vacancy rate has climbed to roughly 6%.

That's the tension defining this market: genuine demand is pushing rents up, while a heavy supply pipeline is capping how fast they can rise and keeping vacancy elevated. The result is a market that's improving, but unevenly — and very much by neighborhood.

Why are San Diego rents rising in some neighborhoods but falling in others?

Where you own continues to matter as much as what you own. Supply-constrained submarkets are outperforming; heavy-supply submarkets are still digesting new product.

Outperforming (light supply):

· University Town Center: rents surged 1.5% month-over-month in May and are up 2.4% year-over-year, to an average near $3,300

· North County beach towns (Del Mar to Encinitas): up 1% in May and 1.9% year-over-year, to over $3,600 — with only about 260 new units delivered in the past year

Still under pressure (heavy supply):

· Mission Valley: up 0.6% in May, but still down 0.4% year-over-year after more than 2,100 units delivered in twelve months

· Downtown: down 0.3% in May and off 0.8% over the year, to about $3,130, with vacancy near 10%

The pattern is consistent and worth internalizing: neighborhoods absorbing significant new construction are seeing rents reset, while supply-constrained areas are seeing the strongest growth.

Concessions are the number that actually moves your valuation

Here's the data point most owners overlook. In May, 35% of properties tracked by CoStar were offering free rent — down from 40% in April, but still roughly three times the level typical for this time of year just a few years ago.

Concessions are what separate asking rent from effective rent. A building advertising $2,600 with one month free is producing closer to $2,383 in effective monthly income. Buyers — and their lenders — underwrite the second number, not the first.

This is why the rent recovery, while real, doesn't automatically translate into a higher sale price. If your operating statements still reflect peak rent assumptions without accounting for current concession reality, the gap between your expected price and a buyer's offer will be wider than you think.

What does this mean for San Diego apartment owners?

Three takeaways:

One — the recovery is real but gradual. Improving rents support hold strategies and modestly strengthen the case for well-positioned buildings, but this isn't a return to 2021–2022 pricing. Value should still be based on current effective income and current debt costs.

Two — submarket selection drives outcomes. A building in UTC, North County coastal, or another supply-constrained pocket is in a materially different pricing environment than an identical building in Mission Valley or Downtown right now. Knowing which side of that divide your property sits on is essential to pricing it correctly.

Three — present effective rent, not asking rent. The cleanest path to a full-value sale is a rent roll a buyer can verify and that already accounts for concessions. Buyers are scrutinizing this harder than any other line item.

If you own a San Diego apartment building and want to understand what it's actually worth in today's market — based on effective income, current cap rates, and real buyer demand rather than last year's assumptions — that's exactly what I do.

Get a confidential property valuation →

Data source: CoStar Analytics, San Diego rent report (June 2026). Analysis and broker perspective by Arby Eivazian, San Diego Apartment Broker, South Coast Commercial. DRE #01948830.