Press & Media

Capital is moving back into San Francisco and San Mateo County apartments. The market recorded 413 transactions over the past 12 months, roughly $2.6 billion across 392 properties and 11,200 units, well ahead of the $2.1 billion ten year average. Market pricing now stands at $556,119 per unit, up from $519,439 a year ago, while the market cap rate has edged down to 4.54%. The transaction data tells a more grounded story. Deals closed an average of 5.8% below asking price, the average transaction cap rate was 5.6%, average price per unit on actual trades was $236,200, and the typical deal was a 27 unit building that was 93.8% leased at close. The gap between market level pricing and what buildings actually trade for is the number most owners get wrong. Philip Batlin, Managing Director Investments at Marcus & Millichap, shares the Q3 2026 capital markets report covering pricing trends, buyer and seller composition, submarket sales activity and the most active buyers in the market.

San Francisco's apartment market is as tight as it has been in years. Vacancy across the 191,657 unit market closed the third quarter of 2026 at 3.6%, well below the 5.2% long run average, and asking rents climbed 12.7% over the past 12 months to $3,751. Net absorption of 2,552 units ran far ahead of the 628 units delivered, and with only 4,121 units under construction, relief on the supply side is not coming soon. Investors have noticed. Sales volume reached $2.7 billion over the trailing 12 months against a $1.6 billion historical average, and market participants report cap rates roughly 75 basis points tighter than two years ago. Recent trades ran from Carmel Partners' $174 million sale of the 320 unit Towers at Rincon at $544,000 per unit, down to value add plays such as the 117 unit Terraces Apartments on Bush Street at $214,000 per unit. Philip Batlin, Managing Director Investments at Marcus & Millichap, shares this quarter's report for Bay Area apartment owners deciding whether to hold, refinance, or sell.

Philip Batlin of Marcus & Millichap is pleased to announce the successful sale of 395 Euclid Avenue, an 18-unit multifamily property in San Francisco's Laurel Heights neighborhood, for $8.6 million. Batlin represented the seller, Skyline Pacific Properties, and procured the buyer, Fort Point Real Estate Partners. Built in 1977, the three-story, 15,783-square-foot building traded with several recent capital improvements in place, including a new roof completed in 2025, a completed soft-story seismic retrofit, and an upgraded fire alarm system. Five of the building's units have been fully renovated with modern finishes and in-unit laundry, while the property's 19 secure garage parking spaces and elevator access added to its appeal. Located near the University of San Francisco and the Presidio, the property drew strong buyer interest given its supply-constrained submarket and stable, long-term cash flow profile. The transaction closed on July 1, 2026.

The San Francisco metro multifamily market is outperforming the broader U.S. apartment market on nearly every key metric, driven by a construction pipeline at its thinnest since 2012 and renter demand that has steadily outpaced new supply since 2021. Metrowide vacancy is forecast to reach 3.5 percent by year-end — a 30-basis-point decline year-over-year — while average effective rents are projected to climb to $3,270, representing 5.2 percent growth and the second-highest rate among major U.S. markets. The City of San Francisco is leading the charge, with Class A rent growth exceeding 13 percent year-over-year in SoMa, Mission Bay, Richmond–Western Addition, and Downtown San Francisco. The CBD, which struggled during the pandemic, has rebounded sharply, with vacancy now in the 3-percent range following a 160-basis-point decline in 2025. Transaction activity has surged roughly 40 percent year-over-year — surpassing even 2022 levels — driven primarily by private capital concentrating in high-income, supply-constrained neighborhoods. After four consecutive years of price-per-unit declines, values reversed course in 2025 and are expected to post meaningful growth through 2026, with cap rates reaching their highest level since 2011 at 5.2 percent.