Luck – often defined as the perfect moment when opportunity meets preparation – can be one of the reasons for San Francisco’s position on top of the national rental market. The city’s thriving technology sector keeps open the gates to Generation Y high-paid professionals who prefer renting over joining the single-family home market, and to no surprise, these days renting is still a relative steal when compared to buying.
Facebook and Twitter continue to hire as their businesses evolve, and Google alone puts in buses 1,200 employees a day from the city to its campus. So far more than 94,000 people in the metro area have jobs in the tech world; and counting. 29,000 positions have been opened on the market for 2012 while the professional and business services sector has added 11,700 employees in the last 12 months. The local leisure and hospitality sector grew with more than 5,000 positions in the last 12 months, due to several tourism events such as the 75th anniversary of the Golden Gate Bridge and the U.S. Open golf tournament.
All these positions have and will continue to put pressure on the rental request in today’s strengthened economy. The vacancy rate started its decline bringing the year-end rate to the lowest level since 2001. However, over 2,000 rentals are under construction in the metro area (especially in the South of the Market area), with more than half of the projects being slated for completion this year.
The figures tell it best: asking rents go up 6.7 percent to $2,011 per month with effective rents increased with 7.2 percent to $1,928 per month. If you’re looking in the Class A sector make ready $2,289 per month (+ 4.8% from last year) while Class B/C rents advanced 5.0 percent asking $1,608 per month.
Are these signs of another era of rental insanity? Will the economy stay strong enough to absorb all the new units that are being added to the market?