Photo by Justin Sullivan/Getty ImagesA large 'rent' banner is posted on the side of an apartment building on June 15

San Francisco vacancy remains low despite building boom

The sometimes fierce and expensive rental market in San Francisco has some of the lowest vacancy rates in the country, even if those rates are higher now than they were before the Great Recession, according to data released by the U.S. Census Bureau.

The trend is national — 86 out of the 100 largest metro areas have vacancy rates higher than before the recession — and it's driven in part by owners keeping their properties off the market, said Jed Kolko, chief economist at real estate website Trulia.

But in San Francisco, rental vacancy rates are still some of the nation's lowest, despite being slightly higher than a decade ago.

The City's current rate, 4.5 percent, is the sixth-lowest in the country, while San Jose has the lowest with 3 percent, followed by Orange and Ventura counties.

In 2000, The City's rate stood 0.6 percent lower than it does today, said Kolko. San Francisco has roughly 220,000 rental units currently, said Timothy Cornwell of the Concord Group at a recent event sponsored by SPUR, a San Francisco planning and urban research nonprofit.

The reasons for San Francisco's low vacancy numbers are no mystery, said Kolko: high demand, an influx of tech industry workers and limited space to build new housing.

Like some other cities with low vacancy rates, San Francisco is seeing a building boom. New developers are more likely to build in areas with low vacancy rates because they know there is a ready market of buyers and renters, he said. Still, San Francisco's boom is only a relative affair and does not match in sheer volume the construction occurring in other prosperous areas.

Despite the forest of construction cranes crowding The City's skyline, rental rates and vacancies are expected to only slightly drop, Kolko added.

“We might see modest relief, but demand in San Francisco is so strong that the amount of construction still doesn't keep up enough to prevent prices and rents from rising.”

But rental rights advocates say the vacancy rates will not change until City Hall addresses the affordable-housing crisis.

Ted Gullicksen, director of the San Francisco Tenants Union, said The City and Mayor Ed Lee have it within their power to increase the housing stock — and possibly raise vacancy rates. To do that, they need to build more affordable-housing, make builders include more affordable units in their new buildings or make them pay more to forgo that requirement, he said.

As it stands, Gullicksen doesn't expect vacancy rates to budge even with all the construction.

“What we need is more affordable housing for the people that are living here now. The stuff that's being built is too expensive for the people who live here now,” he said.

The Mayor's Office disagrees with how it has been painted by the tenant's union.

“The mayor has made housing his highest priority and one of his first significant efforts was to put a $1.5 billion Housing Trust Fund on the ballot, which passed overwhelmingly at the ballot box,” said Christine Falvey, a spokeswoman for the mayor.

The housing that will be built with that money will be mostly affordable rental units, she said, adding that the majority of the housing hitting the market will contain moderately priced units.

Both will increase the rental stock and vacancy rates.

She did not say how many affordable units will go on the market in soon to open developments or include or how many affordable projects are in the pipeline for construction.

jlamb@sfexaminer.com

Bay Area NewsdevelopmentGreat RecessionPlanningTruliavacancy rates

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