San Francisco-Oakland
MULTIFAMILY
REPORT
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2024 | MID-YEAR
Annual Rent Change
Annual Inventory CHANGE
Deliveries & Absorption
Employment
Rent & Occupancy
Sales
Jobs Added / Lost*
LAST 12 MONTHS
18,700
0.8% YOY
Unemployment*
June 2024
4.2%
60 BPS YOY
Nonfarm employment grew by 0.8% since the second quarter of 2023 in the Bay Area, with the private education and healthcare sector posting more net new jobs than any other sector at 19,100 hires. The private education sector has exploded during the past year in San Francisco, with at least nine schools having recently completed an expansion, are in the process of undergoing an expansion, or have plans to expand in the near future. According to the California Department of Education, there were approximately 100 private schools in the Bay Area with an estimated 23,900 students in attendance during 2023. Many of the projects surrounding private education in the area are focused on making improvements to existing facilities, additional hiring, adding extra space, and increasing student enrollment. La Scuola International School, which is in the Mission District of the city, is in the process of increasing the number of teachers and staff to support a 150% increase in student enrollment, as well as redeveloping three existing buildings on campus. IVX Health, a provider of outpatient care centers, announced in June that it would continue to add to its growing footprint in the Bay Area. As of the middle of 2024, the healthcare group has eight centers regionwide, and recently opened its newest center in Mill Valley last month. Other future announcements include a $4.3 billion investment for University of California San Francisco Health’s new hospital, which won’t open until 2030.
EMPLOYMENT
Nine San Francisco private schools are in expansion process
READ MORE
Sutter Health to begin construction on $442 million expansion
READ MORE
UCSF Health launches $4.3 billion hospital of the future
READ MORE
EMPLOYMENT TRENDS
IN THE NEWS
The rate of net move-ins surpassed the level of apartment deliveries in Greater San Francisco during the first half of 2024 as San Francisco reverses the strong out-migration trends from during the pandemic. Positive trends including population growth are influencing factors of the growth in apartment demand in the Bay Area after it experienced below average rental activity in 2022 and 2023 when many residents migrated to other metros. As of the first half of 2024, 2,754 units were delivered across the market, with net absorption of 3,965 units. Class A and B apartments appealed most to renters in the first and second quarters. Luxury apartments are a focal point for new development, as more than half of the existing inventory is comprised of Class C properties. Historically, building activity has concentrated on areas close to downtown, but recent trends show a significant shift, with the majority of new developments now occurring in San Mateo County submarkets as well as the Oakland/Berkeley submarket. The Bay Area’s enhanced transit nodes, providing Caltrain services to residents in expanding markets south of the city center, as well as Bay Area Rapid Transit trains connecting Oakland to Downtown San Francisco, have significantly influenced builders’ focus on further developing other parts of the metro. The Oakland/Berkeley submarket had 1,093 net units come online during the first half of 2024, and accounts for approximately 35% of the supply pipeline.
Deliveries & Absorption
On par with the national trend, the average effective rent in Greater San Francisco increased 0.9% annually to $2,953 in the second quarter of 2024. The Bay Area commands one of the highest rents in the nation on average and shows no signs of receding. Persistent high mortgage rates have kept many prospective buyers renting for longer. As the median home price in San Francisco remained above $1.4 million in June 2024 according to Redfin, many renters are priced out of purchasing homes, which in turn has enabled operators to gradually increase rents. Rent increases were most prevalent in San Mateo County submarkets south of the city, an area which has grown in popularity for its concentration of high-paying wages and cluster of notable biotech employers. The county averaged a 3.4% rent gain since the middle of last year across its three submarkets.
The occupancy rate finished the second quarter of 2024 at 95.1% on average, which is 10 basis points above their level during the same time last year. Bay Area occupancy rates were 90 basis points above the national average, a metric which San Francisco has typically been below since the start of the pandemic. The trend of positive net absorption across San Francisco is indicative of the market’s gradual recovery following the pandemic.
RENT & OCCUPANCY
2024 Year to Date*
VOLUME
$389.3M
CAP RATE (AVG)
N/A
Price Per Unit (AVG)
$409,501
TRANSACTIONS
4
WHAT’S TRADING?*
BUILDINGS (AVG)
9
ACRES (AVG)
3.30
YEAR BUILT (AVG)
2000s
UNITS (AVG)
273
Sources: MSCI Real Capital Analytics; CoStar Group; Berkadia Research
SALES
2024 YEAR TO DATE
DELIVERIES
2,754 UNITS
2024 TOTAL*
ABSORPTION
3,965 UNITS
DELIVERIES
4,876 UNITS
ABSORPTION
8,177 UNITS
Effective rent
Q2 2024
$2,953
0.9% YOY
OCCUPANCY
Q2 2024
95.1%
10 BPS YOY
*$50m+
SELLER
Fore Property Lennar Corp. Align Real Estate Encore
Andrews AFB, MD Miami, FL San Francisco, CA Boca Raton, FL
LOCATION
Buyer
Acacia Capital Corp KKR Bridge Investment Grp Hines
San Mateo, CA New York, NY Sandy, UT Houston, TX
Location
Top Buyers*
Top Sellers*
BACK TO TOP
*Projected
Source: RealPage
Y- o-Y Effective Rent Change
( 4. 1 %) - ( 1 . 8%)
( 1 . 7%) - 0 . 0 %
0 . 1 % - 0 . 7%
0 . 8% - 4. 0 %
4. 1 % - 5. 7%
1. Central San Mateo County
2. Concord / Martinez
3. Downtown San Francisco
4. Fremont
5. Hayward / San Leandro / Union City 6. Livermore / Pleasanton
7. Marin County
8. North San Mateo County
9. Northeast Contra Costa County
10. Northwest Contra Costa County
11. Oakland / Berkeley
12. San Ramon / Dublin
13. SoMa
14. South San Mateo County
15. Walnut Creek / Lafayette
16. West San Francisco
SUBMARKET BOUNDARIES
Apartment rents have increased at rapid rates in areas south of Downtown San Francisco, primarily concentrated in San Mateo County. Of the county’s three submarkets, North San Mateo County increased at the highest rate among the Bay Area’s 16 submarkets. Rents rose 5.7% annually in the second quarter to $2,857, as landlords could be more bullish since the submarket has the highest average occupancy in the Bay Area. South San Mateo County posted the market’s second highest annual increase at 4.0% and achieved the highest rent in the market at $3,731. Effective rent in the submarket is roughly 26% above San Francisco’s average rent. Landlords capitalized on the influx of renters south of the city’s center thanks to the increased number of remote and hybrid workers post pandemic and access to transit that makes commuting, if necessary, easy.
SUBMARKET MID-YEAR 2024 ANNUAL RENT Change
Annual Inventory Change
0 . 0 % - 1 . 2%
1 . 3% - 2. 4%
2. 5% - 3. 6%
3. 7% - 4. 8%
1. Central San Mateo County
2. Concord / Martinez
3. Downtown San Francisco
4. Fremont
5. Hayward / San Leandro / Union City 6. Livermore / Pleasanton
7. Marin County
8. North San Mateo County
9. Northeast Contra Costa County
10. Northwest Contra Costa County
11. Oakland / Berkeley
12. San Ramon / Dublin
13. SoMa
14. South San Mateo County
15. Walnut Creek / Lafayette
16. West San Francisco
SUBMARKET BOUNDARIES
Inventory growth through the second quarter took place primarily in San Mateo County and the Oakland/Berkeley submarket, which are located south and east of the downtown area. San Mateo County submarkets posted a combined 1,195 new deliveries across its three submarkets thus far in its north, south, and central submarkets, with approximately 2,000 units remaining in the delivery pipeline. Renters are attracted to San Mateo County because it offers suburban living with an easy commute into the city enabled by nearby Caltrain stations. San Mateo County also has emerging developments in biotechnology, life sciences, and technology, and is referred to as the “Birthplace of Biotech.” Notable employers within the county include Gilead Sciences, Meta, and Genentech. Gilead Sciences' 72-acre, 2.5 million-square-foot campus is used for both laboratory and office space and is situated along the county’s waterfront.
SUBMARKET MID-YEAR 2024 ANNUAL Inventory Change
SUBMARKET MID-YEAR 2024 ANNUAL Inventory Change
SUBMARKET MID-YEAR 2024 ANNUAL RENT Change
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Berkadia® is a trademark of Berkadia Proprietary Holding LLC Commercial mortgage loan origination and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. This website is not intended to solicit commercial mortgage loan brokerage business in Nevada. Investment sales and realestate brokerage businesses are conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. For state licensing details for the above entities, visit: www.berkadia.com/legal/licensing.aspx
The information contained in this flyer has been obtained from sources we believe to be reliable; however, we have not conducted any investigation regarding these matters and make no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. While we do not doubt its accuracy, we have not verified it and neither we, nor the Owner, make any guarantee, warranty or representation of any kind or nature about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example and do not necessarily represent past, current or future performance of the property. You and your advisors should conduct a careful and independent investigation of the property to determine to your satisfaction the suitability of the property and the quality of itstenancy for your records.
EMPLOYMENT
DELIVERIES & ABSORPTION
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Under Construction/Lease-Up
Lease-Up
Under Construction / Lease-Up
Lease-Up
Deliveries
Absorption
Effective Rent Change
Source: RealPage
Source: RealPage
National Effective Rent
San Francisco-Oakland vs. National Effective Rent & Occupancy
San Francisco-Oakland Occupancy
SUBMARKET PERFORMANCE
Source: Moody’s Analytics
Source: RealPage
Oakland/Berkeley San Ramon/Dublin SoMa South San Mateo County Walnut Creek/Lafayette West San Francisco
92.4% 96.6% 95.0% 95.7% 94.2% 95.8%
-60 10 30 0 -80 100
$2,718 $2,711 $3,397 $3,731 $2,634 $3,340
-4.1% 0.7% 2.3% 4.0% 2.7% 3.4%
Central San Mateo County Concord/Martinez Downtown San Francisco Fremont Hayward/San Leandro/Union City Livermore/Pleasanton Marin County North San Mateo County Northeast Contra Costa County Northwest Contra Costa County
96.3% 95.0% 93.4% 95.6% 94.2% 95.3% 95.8% 97.1% 95.5% 94.3%
0 90 70 -10 -160 30 30 30 120 100
$3,295 $2,321 $3,147 $2,713 $2,409 $2,776 $3,124 $2,857 $2,194 $2,452
0.5% -0.2% -1.0% -0.3% -0.9% -2.0% 3.1% 5.7% 0.2% -1.8%
Q2 2024 Occupancy
YOY (BPS)
Q2 2024 Effective Rent
YOY
1/2
2/2
ANNUAL INVENTORY CHANGE
DELIVERIES & ABSORPTION
EMPLOYMENT
ANNUAL RENT CHANGE
SALES
RENT & OCCUPANCY
SUBMARKET MID-YEAR 2024 ANNUAL RENT Change
SUBMARKET MID-YEAR 2024 ANNUAL Inventory Change
Deliveries, Absorption, & effective rent change
Market Pipeline
Top submarket pipelines
Under Construction
Under Construction
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Unemployment Rate
Total Jobs
San Francisco-Oakland Effective Rent
National Occupancy
Effective rent and occupancy reflect stabilized properties and does not include preleased units or properties in lease-up. A newly constructed property is considered stabilized once it becomes 85% occupied.
*Seasonally Adjusted
