Rising Multifamily Rents Suggest Thawing San Francisco Leasing Market

Rising Multifamily Rents Suggest Thawing San Francisco Leasing Market

Apartment rents in San Francisco continued trending upward in the first quarter of 2024, giving the city its longest period of rent growth for two years.

After recording four straight months of rent growth by the end of March, average rents were 1.7% above their November 2023 number. Maintaining that growth rate could give San Francisco a 5% annual growth rate, its highest year-over-year increase since the end of 2021.

The positive trend in rents also puts San Francisco on track to catch up to the all-time high in rents that occurred in 2019, before the COVID-19 pandemic. The city is the only major metropolitan area where rents remain below their previous peak.

While rents in San Francisco remain some of the highest in the nation, the absence of rent growth during a period of substantial inflation has made renting in the city much more affordable. This is particularly true at the higher end of the market.

Luxury and premium properties were the most heavily impacted by San Francisco’s fall in population between 2019 and 2022 when tech employees working remotely led to an exodus that saw the city’s population decrease by around 7%.

This decline hit demand for rental apartments in newer buildings in and around downtown San Francisco particularly hard.

Apartment building owners could be encouraged by recent signs that San Francisco’s population is growing and that the city’s frozen office leasing market may be starting to thaw. The return of residents and office workers should set the stage for a healthier and more vibrant renting environment in the quarters ahead.

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