Renters rejoice: Prices falling citywide
By: John Upton
March 30, 2009
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| Golden Gateway Commons may start offering one month's free rent with a year lease. (Cindy Chew/The Examiner) |
SAN FRANCISCO — The weak economy is proving to be a blessing for still-employed renters who were forced to beg, line up and pay skyrocketing prices for apartments just six months ago.
Rents are tumbling as units are vacated by laid-off workers.
“We’re running a vacancy rate which is unheard of in San Francisco,” said Janan New, executive director of the San Francisco Apartment Association. “I don’t know if rents have gone into a total free fall, but clearly they’re coming down.”
Property owners are having a difficult time renting higher-end apartments, according to New. At the lower end of the market, apartment owners are being worn down by longtime San Franciscans taking advantage of the weak market to move into better homes or new neighborhoods.
“There are clearly people moving within The City — hard bargainers who have been here for a while and know the drill,” New said. “But we’re not seeing people from outside coming into The City.”
To fill empty units, owners of large apartment complexes are offering prospective tenants significant incentives, such as a month of free rent or free parking, according to Colliers International San Francisco broker Stephen Jackson. “Mom and pop” property owners will be forced to follow suit, he said.
“If you want to start negotiating your rent with your landlord, they’re going to have to lower it,” Jackson said. “Rents are dropping by $200 citywide.”
The spike in vacancies is a likely harbinger of further declines in rent, according to Caroline Latham, owner of RealFacts, a San Francisco-based real estate research firm that’s finalizing first-quarter data.
“People who were surveying said they hardly found any [units] with rents up, that a lot were unchanged and some were down. But overall, occupancy was down significantly,” Latham said. “Occupancy is the predictor of what’s going to happen to future [rent prices].”
Units are being vacated as laid-off workers move out of The City or into existing households with family members or friends, according to Latham and others.
“You can bet that household size is growing,” Latham said.
An increasing number of tenants have been approaching the San Francisco Tenants Union for advice on breaking leases they can no longer afford, according to co-founder Ted Gullickson.
“In this economy, people may want to avoid locking themselves into a long-term lease,” he said. “Rent control gives the same protections as any long-term lease.”
Gullickson believes many of the tenants he meets plan to leave The City.
But San Francisco’s chief economist, Ted Egan, said he’s “somewhat skeptical” of the idea that laid-off residents are leaving The City in significant numbers.
“Where are people going to go that’s any better?” Egan said in an e-mail. “We still have the strongest economy in California, and, while it’s expensive to live here, unemployed people tend to want to be where the jobs are most likely to appear.”
We’re not going to pay
Tumbling San Francisco rental prices have created deals for those looking to move.
- A 1,000-square-foot unit at Polk and Francisco streets, which last year would have fetched $2,500 per month, was recently rented for $2,000.
- The owner of a multiunit building with a pool at Laguna and Bush streets is offering free parking, previously worth $250 a month, with 1-bedroom apartments in an effort to fill seven vacancies.
- For the first time in a decade, Golden Gateway Commons, an upscale apartment building near the northeastern waterfront, may offer a free month’s rent with one-year leases.
Source: Colliers International San Francisco
jupton@sfexaminer.com
