The San Francisco rental market has exploded the last couple of years and shows no signs of slowing down. As people search for housing they have no choice but to look outside of San Francisco. Even the peninsula is pricey but also very boring.
This leads them to the East Bay. And while they may come kicking, screaming and disgruntled they are pleasantly surprised. Some even purchase because they cannot believe they can buy a home for what they would pay in rent for a 1 bedroom in the city.
More and more people are going to be pushed out and as job opportunities increase in the city and south bay, people will continue to migrate from the rest of the country. Most will not land in San Francisco because of sticker shock and won’t pay out of principal unless they are from a similar city like New York, Boston, etc. So with the combination of people moving to the East Bay from San Francisco and out of state, people that live here currently have to compete with the added population and given the current conditions the long time residents won’t be moving soon. Many just can’t because they have nowhere to move to and the same goes for selling unless they move out of the area and that means a drastic change in lifestyle because of commute times and while they might have more home pricing won’t necessarily be better. Because of this, rentals that become available are a hot commodity and for someone who is eager and or needs to find a place immediately the cost is directly related to the need. This increases the rental value for any home/building owner. And as large development projects are completed, they are the ones who can set the market because they have the most units to rent and the area is not hindered by rent control because it only applies to buildings built prior to 1979 and residents who moved into a home or condo before 1996. Hence, why SOMA has the highest rental rates in San Francisco. They simply have the most new buildings/developments in the last 20 years for residential condo, live/work (exempt) and large high rise apartment buildings. You wouldn’t know it but almost every new apartment building has close to 25% of its space master leased by corporate housing companies who offer short term fully furnished rentals for those that come here with short term contracts or who are transitioning into permanent housing in the area.
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The good news is with the population boom services come to the areas to support the needs of the people. 20 years ago there were no grocery options in SOMA now you have a choice from Trader Joe’s, Costco, Safeway, Whole Foods and smaller specialty stores. Alameda is about to have the same experience with Alameda Landing where it is adding 120,000 sq ft of retail which will house a Target and Safeway. Had the economy not crashed West Oakland/Central Station area would have had these stores but development came to a halt. However, the Alameda Landing development will be supporting the new condo’s and converted residential warehouses in Jack London Square, Uptown, Old Oakland and the Pacific Cannery Lofts and Zephyr Townhomes of West Oakland. Alameda can only benefit by the exposure and also the much needed sales tax revenue. But with that exposure comes a price and that is people’s desire to live here only adding to the burdens of the rental and housing market. Berkeley has always mirrored SF with the tight rental market because of who she is and the University. They too took a industrial area and built a community around the rail lines. Berkeley Bowl West would have never opened unless peoples income and the immediate population could support it. 4th Street is a swanky little retail area and if you walk through WEst Berkeley there are a ton of converted loft buildings as well as new housing. This leaves Oakland which is the largest city in the East Bay and also some of the priciest areas from Rockridge, Jack London Square, Tresle Glen, Crocker Highlands, etc. All neighborhoods have a different feel and also give the people the option to be in a residential neighborhood with a quaint retail area like College Ave and Montclair Village or a hip happening neighborhood like Old Oakland, Uptown and JLS with its new restaurants, bars and live music venues. Throw in quick access to public transportation to the City and these areas will continue to see a rise in population, rental rates and housing prices.
Click the link for neighborhood rental rates and rental increases since 2011.
