The Small Space Marketplace

List Your Space

Find Space

Home About Us Executive Subscriber Membership RENTV Conferences Newsletter Contact Us Advertise
December 3, 2023
 Search RENTV
 The REview
News Home Page
Southern California
Northern California
Pacific Northwest
Prop. Management
Press Releases
 R. E. Marketplace
Service Providers
Property Spotlight
 RENTV  Conferences
Subscriber Login:
Forgot Password?

Printer-friendly Version   Email an Associate
Bay Area Multifamily Rent Growth Tapering Off


This report was provided by Kidder Mathews

Due to the Coronavirus pandemic, six of the Bay Area’s nine counties cautiously put Shelter in Place orders into effect in early March 2020, effectively putting a halt to all non-essential business and travel. During these uncertain times, the effects of the Coronavirus can be felt across all industries throughout the San Francisco Bay Area, but the full extent of the pandemic is yet to be seen. Across all nine counties, average rent growth has tapered off, sitting at $2,801/mo, a 2.3% increase YOY, and average vacancy has increased 10 basis points YOY to 4.2%.

Rental Rates

Average rental rates across the Bay Area have leveled off, slightly increasing from the previous quarter to $2,801/mo, a 2.3% from Q1 2019. Rates in San Francisco, the most expensive Bay Area County to reside in, have remained flat at $3,636/mo, a 0.2% increase year over year (YOY). On the Peninsula, San Mateo County rates sit at an average of $3,179/mo, a 3.8% increase YOY. Across the San Francisco Bay, the average Alameda county rent climbed 2.8% YOY to $2,532/mo. Santa Clara County rents increased by just under 3% YOY to $2,947/mo. Consistent with the previous quarter, Napa County experienced the highest rent growth, increasing 5.6% YOY to $2,131/mo. Looking ahead, rent growth will vary by county depending on employment situations, demographics, and the effects of the Coronavirus.

Projected Future Supply

Q1 2020 saw 855 units delivered across the Bay Area, a 35.3% decrease from Q1 2019. Alameda County had the most deliveries, with Gerding Edlen Development delivering its 206-unit high-rise apartment complex ZO to downtown Oakland. In Santa Clara County, SCOTIA delivered an additional 55 units to San Jose. It is difficult to estimate future supply currently not under construction because the credit market is in flux. Many projects in the delivery pipeline have been delayed or even cancelled due to market-rate multifamily construction not being deemed essential work. These projects will likely be pushed back at least by one quarter, but likely two quarters.

By the end of Q1 2020, around 1,735 units were absorbed throughout the San Francisco Bay Area. This is nearly twice the number of units absorbed in 4Q 2019 and a 9% increase YOY. Market-wide vacancy slightly increased to 4.2%, a 10-basis point change from the previous quarter.

Employment and Estimate of Future Demand

Q1 2020 initially saw steady unemployment rates across the Bay Area, holding at an average of 2.8%, a 40-basis point drop from the previous quarter. However, with the wide-spread Covid-19 panic and Shelter in Place orders put into effect in March, companies in non-essential industries faced critical decisions regarding their workforces. Certain companies, such as those in the technology sector, could remain fully functional with their employees working from home. Some technology companies in the tourism sector or that service restaurants will have impacts to their workforce. Other industries, such as restaurant/bars and hotels, which have essentially been shut down, are being forced into layoffs or furloughs of their workforce. There will be more demand for healthcare, food delivery, and other delivery good services workers.

In the final three weeks of Q1, 2.17 million Californians filed for unemployment, contributing to the nearly 17 million total people who have filed for unemployment benefits across the United States since the beginning of the Coronavirus panic and Shelter in Place orders. Almost 70,000 people in the Bay Area work in the hospitality and travel industries, and nearly half a million work in the food and retail industries. Despite the mass layoffs in these industries, technology companies are still hiring due to an uptick in usage and demand. Facebook, Apple, and Adobe are some major companies are still hiring in the Bay Area. Technology companies like Apple, Salesforce, and Adobe are still actively hiring.


Sales volume in the Bay Area reached just over $1.8 billion in the first quarter, down nearly 28% from the previous quarter. Acacia Capital completed the largest transaction of the quarter with their acquisition of Park Hacienda Apartments, a 540-unit apartment complex in Pleasanton, for $248 mil, or $459.3k/unit. Also noteworthy is Northwestern Mutual Life Insurance’s purchase of 808 West in San Jose for $184 mil, or $584.1k/unit. The 315-unit complex was built in 2019 and is located next to San Jose’s Diridon Station. In Solano County, FPA Multifamily completed a two-property portfolio sale from JCM Partners for $45.4 mil. The properties, ReNew Park Viva and ReNew Park Blu, are in Fairfield and have 110 and 95 units, respectively.

Looking ahead, more transactions are anticipated to close in Q2 2020; however, Q3 sales will likely be limited due to the marketing challenges presented by shelter-in-place. As Covoid-19 evolved we heard from clients that price reductions we’re being asked for in transactions. These amounts varied, and we’ve yet to receive clarity on the reduced amounts. In terms of pricing going forward this is still fluid and we’re taking in data from our clients.


Going into Q1, capital for multifamily projects was plentiful and very competitively priced for all products, and was available from essentially all capital sources (Agencies, banks, life insurance companies, pension funds, conduits, CMBS, debt funds and the like). Sub-3% borrowing rates were available at certain leverage points, with most long-term, fixed-rate debt priced in the low-to-mid 3% range. As we moved into March, these rates and terms were still available, but as the impacts of Covid-19 became more apparent and the region took actions to address the virus, capital markets quickly became highly unstable, and, thus, rates and terms changed essentially overnight. Those capital sources that did not immediately head to the sideline for a 30-or-60-day pause tightened their strike zones for projects that they were willing to finance, the result being reduced leverage and/or increased borrowing rates. Borrowing rates initially increased on the order of 100 basis points or more as lenders turned their focus away from new business and increased their attention to how their existing loan portfolios might weather the impacts of this pandemic. While still evolving, efforts to curtail the virus and the effects of the Stimulus Bill(s) are analyzed, interest rates for multifamily have decreased slightly from their mid-March high point, and are forecast to continue to subside further so long as a semblance of stability returns to regional, national and global economies.

Q1 2020 Notable Sale Transactions

• Park Hacienda – Pleasanton – $248 mil – 540 units – Acacia Capital Corporation
• 808 West – San Jose – $184 mil – 315 units – Northwestern Mutual Life Insurance
• Northridge – Pleasant Hill – $91.5 mil – 221 units – Vista Investment Group
• Ellinwood Apartments – Pleasant Hill – $47.75 mil – 154 units – Tilden Properties
• ReNew Park Viva – Fairfield – $24.6 mil – 110 units – FPA Multifamily, LLC

Q1 2020 Notable Deliveries

• ZO – 330 17th St, Oakland – 206 units – Gerding Edlen Development
• Modera Jack London Square – 378 Embarcadero West, Oakland – 134 units – Mill Creek Residential Trust
• SCOTIA – 1785 Almaden Rd, San Jose – 55 units – Cypress Group Investment Real Estate

Sources: Yardi Matrix, Costar, Federal Reserve Bank of St. Louis, SF Chronicle, Business Insider, Washington Post, NBC Bay Area, Wall Street Journal. For more information contact: John Cha, Director of Research

Return to the Archive page



Home | About Us | Newsletter | Contact Us | Executive Subscriber Membership | Executive Subscriber Home | Advertise
Southern California | Northern California | Pacific Northwest | Southwest | Retail | Multifamily | Financing | Property Management
Archives | Press Releases | Service Providers | JobWorks | Property Listings

Copyright © 2023 by RENTV, All Rights Reserved
Website designed by Regency Web Services, Inc. and powered by Lightning Media