San Mateo County tenants have reason to smile
June 4, 2009
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| Time to negotiate: Renters at Lake Pines Apartments in San Mateo might find that now is a good time to renegotiate their rents, which have dropped since last year. (Juan Carlos Pometta Betancourt/Special to The Examiner) |
San Mateo County — Last year, one-bedroom units at the Lake Pines Apartments in San Mateo were renting for $1,499 a month. Today, those same apartments go for $1,199.
Similar deals are available throughout San Mateo County, as tenants are negotiating rents and property owners are trying to keep their units occupied.
Commercial renters are also paying less than they did one year ago, with office-space prices dropping more than 30 percent per square foot, according to an analysis by Grubb & Ellis Research of San Francisco. Meanwhile, commercial vacancy rates have risen for a year straight. At the end of March they stood at 16.7 percent.
The decline in office rents was greater than that experienced in San Francisco, where prices have fallen about 22 percent in the same period, said Jesse Gundersheim, a market analyst for Grubb & Ellis.
Apartment rentals are declining as well — though occupancy has remained high, according to data collected by Novato firm RealFacts. At the end of March, rental rates for San Mateo County apartment complexes had fallen by 1.9 percent, which is a larger dip than San Francisco, Alameda, Contra Costa and Marin counties. According to the report, occupancy was at 96 percent.
Joshua Howard, executive director of the Tri-County Division of the California Apartment Association attributed the rent stumble to the economy. He said job loss could be a motivating factor for people needing more affordable places, while others are taking advantage of low interest rates and the depressed real estate market to purchase homes.
Some high end apartment complexes are also hurting as people are being more financially conservative and as a result, choosing less expensive apartments, said Howard. And because the large tech firms that typically draw people to San Mateo County aren’t currently hiring, people who are moving away from the relatively expensive rental market are not being replaced as quickly.
In commercial real estate, many businesses are taking advantage of the weak market and negotiating lower prices with landlords, and some are participating in “blend and extend” deals in which landlords agree to lower rents and tenants agree to longer leases — one of the few “win-win scenarios being played out” because of the nation’s economic downturn, Gundersheim said.
Dave Hess, assistant community director at Lake Pines Apartments said the company is lowering rental rates when people renew their leases in an attempt to keep their occupancy high. It seems to be working.
“Right now we’re 96 percent occupied,” he said.
Office rentals
Commercial rents have dropped more than 30 percent since last year.
| City | Asking rent Class A office space, 2009* | Asking rent Class A office space, 2008* | Vacancy rate, 2009 | Vacancy rate, 2008 |
| Burlingame | $2.75 | $4.00 | 20.1% | 15.6% |
| Daly City | $2.86 | $2.79 | 5.7% | 8.4% |
| Redwood City | $2.97 | $4.39 | 11.8% | 15.5% |
| San Mateo | $2.95 | $4.50 | 16.8% | 15.3% |
| Countywide | $2.97 | $4.45 | 16.7% | 12.7% |
* Per square foot
Source: Grubb & Ellis Company
