San Francisco Multifamily Report – Summer 2021
After a sharp correction, Bay Area rents are regaining ground at an accelerating pace.
San Francisco rent evolution, click to enlarge
San Francisco and other gateway markets were last to enter the recovery phase and have a lot of catching up to do. May marked the second consecutive month of positive rent growth in San Francisco, with the average rent rising 0.4 percent on a trailing three-month basis, to $2,475. Meanwhile, the national rate registered a 0.6 percent increase, to $1,428. The steady flow of apartment deliveries and resident relocations spurred by the health crisis left a mark on the occupancy rate in stabilized properties, down 220 basis points year-over-year as of April, to 92.4 percent.
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San Francisco sales volume and number of properties sold, click to enlarge
The unemployment rate dropped to 5.8 percent in April, 30 basis points below the 6.1 percent national average, according to preliminary data from the Bureau of Labor Statistics. The job market on the other hand posted a 10.7 percent decline in the 12 months ending in March, trailing the -6.9 percent U.S. rate. Still, a rebound is underway, led by major employers from the tech sector that are reopening offices. With some companies requiring their employees to work from the office a few days a week, demand for apartments should increase.
Despite rising construction costs, development activity remained elevated, with 25,455 units underway and 1,913 units delivered through May. Meanwhile, $911 million in multifamily units traded through May, with investors focused on value-add plays, which further decreased the price per unit by 5.8 percent to $399,389.
