October 2021: Q3 San Francisco Apartment Insider

Sales activity has picked up significantly since the plunge in values in 2020 after the Pandemic hit. But, last quarter was on par with Q2 as it relates to sales; I expect Q4 to be in line with Q3 or slightly down to close out the year. 

Looking at some data points, the price per foot took a slight dip along with the GRM and PPU numbers. We were seeing a solid uptick across the board in terms of numbers until the Delta Variant caused the major employers to put the brakes on office reopening’s. On the same vein, office occupancy remains very low, with San Francisco probably having the lowest rate of any major metro area in the nation. Lack of returning workers will slow upward movement on rent rates and keep landlords competing for good tenants. 

From a boots on the ground perspective, I’ve seen solid demand for good buildings; regardless of the rent rolls. The Pandemic definitely pushed a lot of landlords to make the decision to cash out (more like exit the rental business). Being a “mom & pop” landlord in San Francisco prior to the Pandemic was tough enough. All the tenant protections & free resources afforded to tenants over the past decade simply added to the stress and anxiety of what once was a relationship business. The inability to collect rent and or to file a UD was the final nail in the coffin for many long term landlords. They (mom & pop) appear to be driving the surge of inventory (even more so in the 3-4 unit category). 

Good news; the eviction moratorium expired at the end of September and although some tenant protections remain, we are starting to see more activity between landlords and tenants as it relates to negotiating keys for debt. Obviously, not all landlords have had success on the tenant negotiations; hence the number of small claims filings (your avenue to collect some unpaid rent) is way up. 

On to the numbers for the quarter.