It has been a while since I’ve been able to say that the San Francisco rental market is finally on the upswing! The city is reopening and coming back to life. Roughly 75% of people I talk to report needing to be back in the office soon, whether full or part time, while the other 25% believe they’ll continue to work full time work from home. This seems to reflect the hybrid nature of the post-pandemic employment landscape.
In a normal rental market, the busy leasing season is May to September when rents can sometimes increase up to 10% from the winter season and units lease quickly. It’s encouraging to see things in June starting to look like a normal market. In some neighborhoods, certain units are seeing a flurry of inquiries for in person tours, and in some cases, we’re seeing multiple
applications on a single unit. One shift I noticed while leasing during the pandemic was the increase in the number of renters looking to move away from the city center to the avenues, closer to Golden Gate Park and Ocean Beach. It’s likely that this trend will continue with a partial work-from-home crowd looking to get a little more bang for its buck in those areas and relocating to a quieter, sometimes safer area to live.
What Renters Are Looking for Now
What are renters looking for in this early post-pandemic
rental market? A lot of the same things as before, but now with a stronger emphasis on:
- more square footage, especially larger bedrooms with enough space for a bed and a desk. While most workers will be slowly returning to the office, the work-at-home trend has become far more prevalent, with renters with roommates and/or spouses/partners wanting more room to work in the same space but without running into each other;
- outdoor space, roof decks or yard, private or shared;
- remodeled spaces (new kitchens and bathrooms) and
- hardwood floors;
- in-unit laundry, a highly sought-after amenity;
- natural light;
- parking: depends on price, the higher the price the more it’s required, on smaller units or lower-priced Rental market desirability by area
Areas of the city where the vacancy rate is dropping and rents are increasing the most include Pacific Heights, Cow Hollow, the Marina, Russian Hill, Nob Hill, and North Beach.
Areas that still have high vacancy with rents still depressed, and leasing incentives still being offered include SOMA, Mid-Market, the Tenderloin, Lower Nob Hill, and Mission Bay. However, in all these neighborhoods, with the exception of the Tenderloin, a unit with lots of living space and some or all of the amenities listed above and priced correctly (under market) will still garner many inquiries and probably multiple applications. San Francisco is and always will be a robust rental market.
Prospects for the Future
When will the areas that still have a lot of vacancy and aren’t seeing prices increase quickly like the other areas I mentioned start to increase? I saw a similar situation during the 2009-2010 downturn. I call it the “trickle-out effect.” When the more popular areas see vacancy rates
go down and rents go up, renters start trickling out to other areas where they can find better deals. During the pre-Covid days, 2018-19, when studios in the Marina/Cow Hollow/Russian Hill/Nob Hill neighborhoods started hitting upwards of $2,500 per month, rents in Lower Nob Hill/Downtown and even the Tenderloin started to rise as well.
So how quickly until this starts happening? I see the market picking up steam quickly, with rents rising slowly. San Francisco has traditionally had a shortage of rental supply and high demand. Despite the negative impact of the pandemic, I think it will happen more quickly than we thought.
Average Monthly Rental Rates
Unit Type Pre-COVID: Today
Studio $2,500 $1,950
1 BR $3,500 $2,850
2 BR $4,650 $3,850
3 BR $5,300 $4,750
The figures presented here are approximate average rents. Actual rates vary widely depending on location, amenities, and other hard-to-quantify factors. They are provided simply as a guide.
For a free evaluation of your rental property and phone consultation, e-mail David Chesnosky at [email protected].com. Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News. For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.