Alan Nevin: The Rents Need to Justify Apartment Construction Costs

Colleague, friend, and leading economist, Alan Nevin, wrote a fascinating article for the San Diego Daily Transcript on the relationship between apartment construction costs and rental rates.

The analysis shows the difference in the costs of developing three different types of apartment projects in San Diego County. The three types are a three-story garden walk-up, a five-story with two decks of above-surface concrete parking (known as podium parking) and a 22-story high-rise.
Each assumes current land costs, construction costs, the price of money and each assumes a 200-unit project with apartment units averaging 850 square feet.

I won’t spoil the results of the analysis, but will say that it certainly shows the long-term investment potential of apartments.

Source: San Diego Daily Transcript

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