San Francisco Multifamily Report – Spring 2020
While rents contracted through spring, the metro's employment composition could provide a valuable silver lining in the long term.
The multifamily market in the Bay Area has gone through a series of challenges in recent years. While the impacts of rent and eviction control have yet to be determined, the COVID-19 outbreak has thrown a new complication into the mix. Already on a moderating trend throughout 2019, rents took a downward turn in the first third of 2020. The average rent in the metro contracted 0.2 percent on a trailing three-month basis through April—20 basis points below the national rate. Even so, at $2,694, the metro’s average is nearly double the $1,465 U.S. figure.
The market’s largest employment sectors—education and health services and professional and business services—are better prepared to withstand the impact of the ongoing crisis, especially as the possibility of working from home is higher. Four sectors had already seen contraction on a year-over-year basis through March, with most job losses registered in the leisure and hospitality and trade, transportation and utilities sectors. Meanwhile, tech giants Facebook, Google and Salesforce announced new job openings.
After 2019’s $3.7 billion cycle peak in multifamily deals, sales in 2020’s first third totaled $702 million, with a per-unit price of $436,142—almost triple the U.S. average. Meanwhile, developers delivered 629 units and had another 21,985 underway.