San Francisco's apartment market is experiencing a dramatic resurgence, with major investors aggressively acquiring multifamily properties across the city as the artificial intelligence industry continues to drive up demand for housing.
Among the most active buyers is Ballast Investments, one of San Francisco's largest multifamily operators. The firm recently added 1690 Broadway to its growing portfolio, an 80-unit, four-story building from the 1970s located just blocks from the hilltop estates of Pacific Heights. The property, formerly called Grosvenor Atrium, was previously held by Grosvenor Properties. Financial terms of the transaction were not disclosed.
Ballast Vice President of Acquisitions Mari Yamato called the opportunity rare: "It's exceptionally uncommon to see a property of this scale and quality become available in Pacific Heights, especially one that has been held and cared for over such a long period of time."
The acquisition is part of a broader wave of investor activity sweeping the city, particularly in neighborhoods popular with tech workers. According to CoStar data, San Francisco's asking rents climbed 7.7% year over year as of April, reaching a monthly average exceeding $3,500, the fastest pace of any major U.S. metro area and a sharp acceleration from the tepid growth seen earlier this decade. CoStar Senior Director of Market Analytics Nigel Hughes described the current surge as the strongest rental price increase the city has seen in 20 years.
Vacancy rates tell a similar story. The Marina/Pacific Heights/Presidio submarket sits at just over 3% vacancy, while the broader city average has fallen to 3.8%, a decade low and a sharp reversal from the 9.2% vacancy rate recorded in 2020.
Ballast CEO Greg MacDonald noted that San Francisco's most desirable residential neighborhoods are performing better than they have in years, pointing to the combination of near-zero vacancy and strong demographic demand as key drivers.
The firm's activity has been relentless. Just weeks before the 1690 Broadway deal, Ballast purchased three adjacent Spanish Colonial-style apartment buildings on Van Ness Avenue, known collectively as the Three Sisters, for $48.5 million. Built in the late 1920s, the 110-unit portfolio was 97% occupied at the time of sale. The seller was Flynn Investments, a San Francisco-based firm formerly led by the late investor Russell Flynn, which at its peak owned thousands of apartments across the city.
Ballast is far from alone in its conviction. So far this year, Tidewater Capital and Canyon Partners paid $174 million for the 320-unit Rincon Center towers at 88 Howard Street in SoMa, while Boston-based Berkshire Residential Investments acquired several "working loft" properties in and around SoMa and Potrero Hill for $134 million.
What's drawing so many investors back to a city that struggled with vacancy and out-migration just a few years ago? The answer lies partly in the AI boom reshaping San Francisco's economy, and partly in the near-impossibility of building new supply. Rising construction costs and high interest rates have made new development exceptionally difficult, tightening inventory and pushing investors toward existing buildings.
As of early this year, Ballast owned and operated more than 7,400 residential units nationwide, including roughly 6,000 apartments and 1,000 manufactured housing sites. The firm has partnered with major institutional capital to fund its San Francisco push, teaming with Brookfield in late 2023 to acquire a 2,149-unit SF portfolio in one of the first large bets on the city's recovery, and later joining forces with the Carlyle Group to snap up additional vintage properties in Nob Hill and Pacific Heights.
