San Francisco Multifamily Report – Spring 2019
- May 27, 2019
With rent growth steadily accelerating and development picking up, San Francisco’s multifamily market finished 2018 on a strong note. The average rent was up 4.0 percent year-over-year through February, reaching $2,660.
Employment growth was consistent, with the metro adding 59,200 jobs in 2018 for a 1.8 percent uptick. Professional and business services led growth with 20,500 positions, followed by education and health services (12,400). Both sectors are poised for further expansion, mirrored by strong office leasing activity and a large development pipeline, including the newly opened $2.1 billion California Pacific Medical Center Van Ness Campus and the 824,000-square-foot Stanford hospital slated to open this fall in Palo Alto. Moreover, several large Bay Area tech players—including Uber, Lyft, Airbnb, Pinterest, Slack and Palantir—either have gone or are planning to go public in 2019, injecting a significant amount of wealth into the regional economy. This could, in turn, further boost the housing market.
More than 4,300 units were delivered last year, with an additional 19,683 units underway as of February. Meanwhile, rebounding rent growth boosted investor appetite, with $2.2 billion in multifamily assets trading in 2018. With development slated to hit a new cycle peak this year and absorption keeping up, Yardi Matrix expects rents to rise 2.7 percent in 2019.