San Jose’s multifamily market made good progress in 2021, sustained by unexpectedly strong demand. While Silicon Valley did not rebound as fast as less expensive inland markets, rent growth, occupancy and supply are following a steady recovery. Rents in the Lifestyle segment led growth on a trailing three-month basis through October, up 1.4 percent to $3,080. The upscale segment also recorded a 200-basis-point jump in occupancy in the 12 months ending in September, to 94.3 percent. Considering the trough brought by last year’s swift downturn, the metro’s overall 7.6 percent year-over-year rent growth is highly notable.
The unemployment rate clocked in at 4.0 percent in September, according to the Bureau of Labor Statistics, outperforming the state (7.5 percent) and U.S. (4.8 percent) rates. The job market posted the second-consecutive month of annual growth, even though three sectors lost jobs—construction, government and financial activities. The metro added 11,000 office-using positions, but major tech employers have announced delays in return-to-office timelines due in good part to pandemic pains brought by the COVID-19 delta variant.
Development activity intensified, with 3,717 units delivered in 2021 through October, already surpassing last year’s total. Another 9,520 units were under construction. Meanwhile, transaction activity nearly came to a halt, totaling just $181 million.