Bargain-Hunting Millennials Jump At Cheaper San Francisco Rents
After a year-long exodus of residents, San Francisco begins to see people returning as the economy gradually reopens. The folks who are moving back are taking advantage of deeply discounted rents and high concessions offered by landlords desperate for new tenants.
The return of people to the metro area should not be viewed as recovery as deep economic scarring, caused mainly by government public health orders, has resulted in the decimation of small and medium-sized enterprises. Also, remote-work turbocharged the exodus from the metro area as many people moved to suburbia or out of state. The result is soaring vacancies putting downward pressure on rents as landlords have lost pricing power.
“It’s going to take years for the average landlord’s revenue to get back to pre-Covid levels,” said John Pawlowski, an analyst at real estate data and research firm Green Street, who Bloomberg quoted. The rapid decline in rents has made higher-end apartment buildings in the city more affordable for broke millennials.
Rents at San Francisco buildings owned by Essex Property Trust Inc plunged 17% during the pandemic. The company offers record concessions, such as three months of free rent and a preloaded debit card with $2k.
A similar trend is happening in Manhattan, where folks capitalize on cheaper rents and record concessions, resulting in a surge of new leases in early 2021.
The pandemic has transformed both San Francisco and Manhattan into ghost towns, but recently some life has returned, though nothing like the boom times of the pre-COVID era.
Data from the Cleveland Fed revealed San Francisco suffered the most significant outflow of people from last year than any other US metro area. In October, the entire downtown area of the city, once vibrant with business and tourism, transformed into a ghost town, mainly due to some of the country’s strictest public health orders, closing restaurants, cafes, bars, nightclubs, among other attractions.
According to Apartment List data, rents in San Francisco sank 27% during the pandemic to an average of around $2,000 per month. In early 2021, there appears to be some stabilization.
“It’s a turning point,” said Igor Popov, the chief economist at Apartment List. “People are moving back in, but we’re not jumping back to pre-Covid rents because the group occupying those units are different and have different price points.”
People like Lindsay Albert, a director of programming for an arts organization in San Francisco, left the city last April because her living situation with other people made her uncomfortable during the pandemic.
Albert is now living in a one-bedroom apartment in the inner Richmond district for $2,000. She said the rent is $1,000 less than what she was looking at one year ago.
“I feel like I’ve won the lottery,” she said as the apartment complex showered her with amenities. “I’m 34 years old and I haven’t ever been able to live alone,” she added.
Miles Garber, vice president of research with real estate marketing company Polaris Pacific in San Francisco, said, “while things have improved recently, there’s still a long way to go.”
Sat, 03/20/2021 – 17:30