Our new Commercial Brokerage Apartment-Building Market report was recently featured in a lead article on the San Francisco Chronicle’s website, on the heels of being featured last week on KGO radio.
So what have we found? First off, the underlying dynamics that make up the Bay Area apartment building markets have not changed in the first half of this year. These dynamics include significant population growth, employment and historically high affluence in addition to inadequate housing supply and low interest rates. These combined have continued to put upward pressure on real estate values and apartment rents.
We’ve quoted the Reis analytics firm: “The 147,300-unit Oakland-East Bay apartment market may have finally reached the point where it can’t get any tighter. The 2.7% vacancy rate for both first quarter and April is the same as the third quarter of 2013 [and] new supply will provide little relief. Rent gains were strong in 2012 and 2013 at around 5.0% , but have slowed in early 2014. Reis predicts rent gains will accelerate later in the year but still rise by a somewhat slower 4.0% for 2014 as a whole.”
Additionally, according to Reis: “Moody’s Economy.com predicts employment growth will continue to grow [in the SF-Marin-San Mateo metro area] as the labor force is maxed out. Rent gains, over 5.0% annual for the past couple of years, have started to surge even more [and is] up 6.0% from a year earlier. Reis predicts rent gains will slow [to] just above 5.0% for all of 2014.”
Speaking in terms of commercial leasing, we’ve seen San Francisco office rents go up a startling 80 percent since 2010.
The chart that acompanies this story takes a look specifically at San Francisco County, illustrating the city’s high-demand/low-supply resale market. In the first half of 2014, nearly all (92 percent) of sales went without price reductions, averaging 104 percent above asking price.
More on this tomorrow.
Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email email@example.com. www.ceceblase.com