- Boom times over in San Francisco despite soaring tech stocks and imminent IPO’s set to mint millionaires
- Median rents in San Francisco County down -35% in November 2020 compared to last year, according to com
- Rent declines steepening since earlier in pandemic
San Francisco, the city many consider to be the world’s tech hub, may be, according to BloombergNews, “…among the US cities most affected by the trends brought on by COVID-19…” even as its tech industry drives accelerating Wall Street prices and imminent IPO’s of its hometown companies DoorDash and Airbnb.
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COVID’s resurgence has thrust San Francisco, and nearly 80% of Californians into lockdown…again. Couple this lockdown with the fact that tech companies are the most flexible in allowing and even encouraging their employees to work remotely. The result? San Francisco’s office vacancies this year have nearly doubled to 8.3% while rents are down nearly -9%, according to CBRE and some tech giants, such as Pinterest, have paid millions to terminate their leases because they are not sure “…where future employees could be based…” post-COVID.
Even before this month’s seemingly recurrent lockdown situation, the median rent last month in San Francisco’s apartments looked like this, according to realtor.com:
- Studio apartments – -35% to $2,100
- One-bedrooms – -27% to $2,716
Clearly, San Franciscans who have had the flexibility, income/wealth and otherwise, have already moved to the suburbs, Sacramento, Lake Tahoe and beyond. Who’s to say how many more, in light of this latest lockdown, will move from The City By The Bay that, to this day, is still among the country’s most expensive for housing.
Apartment tenants remaining in San Francisco are trying to negotiate rent reductions while nearly 9% of remaining renters didn’t make full rent payments in November, according to data from the San Francisco Apartment Association. Charley Goss, this association’s government and community affairs manager, said that downtown apartments near office buildings have been “decimated” while apartments in more residential areas continue to be “comparatively” stable.
Jed Kolko, chief economist with San Francisco-based Indeed, believes that the city will continue as one of the word’s leading tech hubs but that the overall real estate industry may have to embrace the concept of relative affordability and “…a sustained drop in real estate prices (in order to) draw people in.”
For the time being, it’s looking more and more as though real estate’s residential and commercial boom times in San Francisco are over. We’ll see what happens in a year or two…or five.
Thanks to BloombergNews.
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