Fidelity Business Partners invests where the fundamentals are strongest: supply-constrained San Diego County and the high-growth Texas markets of Houston and San Antonio. Heading through 2026, those two kinds of markets are telling very different stories, and the contrast is exactly why we like owning both.
This is a market read to sit alongside the bigger question of how much of your portfolio belongs in private real estate, and why multifamily has held up as a safe-haven asset.
1. San Diego: hard to build, easy to fill
San Diego is the classic supply-constrained coastal market. Land is scarce, entitlement is slow, and that keeps a lid on new construction even when demand is strong. The result shows up in occupancy: as of late 2025 the metro was running around 96.1% occupied, comfortably ahead of the roughly 94.6% national average, with average rents near $2,718. After a big multi-year run-up, rent growth has cooled to roughly flat in the near term, which is a healthy pause rather than a reversal.
Occupancy: San Diego vs. the U.S.
Late 2025, share of units occupied
Source: Yardi Matrix San Diego report (occupancy ~96.1% vs ~94.6% national; average rent ~$2,718). Figures approximate and as of the reporting period. For education only.
2. The Sun Belt: digesting a record wave of supply
Texas is the opposite setup. Metros like Houston and San Antonio are far easier to build in, and developers responded to years of strong in-migration with a record wave of new apartments delivered across 2024 and 2025. That much new supply arriving at once has pressured rents and pushed concessions higher in the near term. Here is the important part: that construction wave is now tapering. As deliveries slow into 2026 and 2027 while jobs and population keep growing, the supply-and-demand balance is set to tighten again, which historically sets up the next leg of rent recovery.
3. Why owning both is the point
A supply-constrained coastal market and a high-growth Sun Belt market do not move in lockstep, and that is a feature. San Diego offers durability and pricing power through cycles; Houston and San Antonio offer growth and the chance to buy well while the market digests supply. Holding both is diversification within real estate, the same logic that makes private real estate a good complement to your stock and bond portfolio.
4. What it means for investors in 2026
Supply digestion can be an entry point. Buying into a market while it absorbs new deliveries, at a reset basis, is often better than chasing one at its peak.
Underwriting matters more than ever. Conservative assumptions and the right debt structure are what carry a deal through a soft patch, which is why we focus on the operator, as covered in The “Skin in the Game” Rule.
Value-add creates returns you do not have to wait for. Improving properties to lift income is how you build equity in any market, the idea behind forced appreciation.
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Through 2026, San Diego keeps doing what supply-constrained coastal markets do: staying full and holding value. The Sun Belt is working through a record supply wave that is now tapering, which historically precedes the next recovery. Owning both, and underwriting each conservatively, is how a portfolio captures durability and growth at the same time.
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Fidelity Business Partners invests its own capital alongside accredited investors in San Diego County, Houston, and San Antonio multifamily, with a focus on consistent quarterly cash distributions.
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