Part Three: exploring the San Francisco apartment-building market
Throughout the last two posts, we’ve been giving an in-depth look to Paragon’s recently released report on the San Francisco Bay Area apartment-building market. Today we conclude that discussion with a look at construction, rental rates and more.
Here in the Bay Area, particularly in the city of San Francisco, you’ll find plenty of older apartment buildings – many in some of San Francisco’s most hotly desired neighborhoods, commanding rents as high as just about any of their newly built compatriots. Nearly all of the city’s buildings fall under rent control, but newer buildings often do not. Instead, they are typically being built to high-tech, ultra-luxury-amenity standards with huge rental rates to match.
Something that’s under debate is exactly how much of this high-high end apartment inventory can be absorbed by the market. At the moment, demand exceeds supply, but it certainly be speculated that we might reach a saturation point as new projects continue to come online. Only time will tell how many young professionals are willing and able to pay $38,000 yearly to rent a 500-square-foot studio or $55,000 yearly to rent a 900-square-foot one-bedroom apartment.
In San Francisco and Alameda counties, we’re seeing appreciation of dollar-per-square-foot values to the tune of more than 60 percent since the bottom of the market. Keep in mind, though, that Bay Area residential investment sales consist of a changing group of unique properties that vary widely when it comes to size, era, location and quality. This makes median and average statistics merely gross generalities and without specific analysis the impact is fairly unknown.
Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email firstname.lastname@example.org. www.ceceblase.com