In a move that shouldn’t catch any plugged-in readers by surprise, with rents continuing to tumble and vacancy rates on the rise, Related has just upped the rental concession ante in San Francisco and is now offering up to three (3) months of complimentary rent to new residents who sign a lease for a vacant apartment in The Avery (450 Folsom), The Paramount (680 Mission) or Fifteen Fifty (1550 Mission) and move in by the end of the month.
The properties being most dramatically impacted are those located in areas that are largely undesirable residential neighborhoods. They did okay when there was insane demand and when they offered the advantage of proximity to many jobs. But now that almost everyone in tech is working remotely, why would anyone want to live in SoMa if they have a choice?
These properties are giving months of free rent because they see things coming back at some point, and they don’t want to drive market rents lower if they can help it. And 9/12 of the annual rent collection for an apartment beats 0/12 every day of the week.
It’s 3 months free on a 15-month lease, but agree. The ‘Van Mission’ one is rather tempting, actually.
Based on our tracking and index of rents, the weighted average asking rent for an apartment in San Francisco is now down around 20 percent on a year-over-year basis, as we first outlined earlier this week and driven by a sharp increase in vacancy rates. And if we divide 3 by 15…
FWIW a friend of a friend got 1515 to lower the rent on top of the concession (which, at the time, was 8 wks free plus a $2k visa gift card), because the unit had been marketed for so long.
Also, parking is $500/mo (!!!!) but my understanding is that the current ‘special’ is $250/mo for the initial term of your lease.
I’ve been watching 1515 and the units are on very low floors, like #2 and #3. I would like 9th floor and above. It still doesn’t look very desirable.
They try to fill lower floors first. If they rent the higher floors first it sets a ceiling on what they can charge. Just wait.
Cool picture of the Goodwill circle tipped up 45 degrees as it gets demolished…
I don’t consider Soma “largely undesirable” or even undesirable. Excelsior/ Portola / Visitacion Valley definitely fits into those categories though.
What a fascinating choice of neighborhoods to call undesirable. They have many low-traffic streets, and surround the second biggest park in the city, beautiful McLaren Park, at a time when bars and clubs are closed and people can only safely recreate outside. Meanwhile there’s essentially one little park for all of Central and Western SoMa, whose wide traffic arteries are almost as jammed as before the pandemic.
I’ve long wanted to believe in SoMa as an urbanist, but it’s not really going to compete on quality of life until the city creates a lot more park space and gets a lot of the cars out of there.
You do realize that parks require openspace and healthy green soil, sunlight, and water. Given the decision to cover every square foot of undeveloped space with concrete and erect dense high-rises, and the lack of protections against shade, the downtown neighborhoods have little chance of having parks. The parks they do have will be concrete and astroturf parks that do not require any natural nutrients.
Many people moved out of SOMA and the downtown area so they could live closer to nature and have the option of their own yard, a larger park, or less dense dark crowded streets. This trend is growing with the popularity of work at home. If you like SOMA stay there and take advantage of the low rents.
San Francisco saw a 43% drop in sales taxes. From last year. The worst in California per the City’s chief economist Ted Egan. At the same time online sales to San Francisco residents increased by only 1%. The most likely explanation for the disparity is a drop in population per Egan. Egan’s biggest worries are the future of small business in SF and the future of the downtown office core. This could mean rents will continue to drop and SFH’s might begin to see significant price declines – especially given the problematic future of the downtown office core.
Are you seriously suggesting that the population fell ~43%? Curiously omitted from any of the discussion – the story appeared in the ‘Examiner’ – was the loss of tourist dollars, which have indeed collapsed. Also curious is that this story – which one would think qualifies as “news” for San Franciscans – seems not to have appeared in a paper that people actually read…hmm, wonder what THAT implies.
No, the disparity between the drop in sales tax revenue and the very small increase in online numbers suggest, as Egan says, a population drop. He did not quantify but obviously it wasn’t 43%. My crystal ball says a 10% – 15% drop over the next year and a half or so. As to reading the Examiner (and that story was basically quotes from Egan) or Chronicle, I generally don’t – either. Though I just noticed a Chronicle headline as I left Mollie Stone’s saying the SF office vacancy rate has surged to 14%.
Indeed there is – and it looks like it was intended to be the lead story (until news from DC prompted an insertion) – but maybe a cap on just how many ‘bad news’ stories they’re willing to run.
Hopefully bad news can be turned into good news and at least the City is seemingly looking at ways to deal with the new SF norm. Stripe formally announced it is putting its 300K foot office up for sublease and Alexandria Properties, which owns the building, is said to be looking to sell it and perhaps some of its other SF properties. .
Why not encourage the new owner of the Stripe building to convert it to residential use. A combination of marker rate and BMR housing. Give them and other building owners incentives to repurpose empty office space. It’s likely many of the residential projects set to break ground in the next few years won’t so converting office space to housing is a way to fill the void resulting from new residential projects not moving forward.
That’s not going to happen.
The economics of converting a Class A/B building would never work unless it was acquired for pennies on the dollar or rolled up into a much larger project like the new Four Seasons development.
It would also take a minimum of 3-5 years to plan, propose and entitle.
Not going to happen.
The drop in tourism is a big driver.
Have you been to pier 39 recently? Busier than ever!
Seattle Dave is right. There was a bill in Sacramento aimed at turning empty shopping malls into workspace housing. Not sure where that one went. I number of state legislators and some of our SF supervisors are considering this option. Pay attention to the Land Use Committee meetings on Monday if you want to see the ideas or send your suggestions to the Supervisors or the Mayor. If enough people send in requests or demands something may get done. This will not take much time. It could happen within less than three months. Temporary zoning is already going through the system.
If you want to blame someone for slow processing the in Planning and DBI, could start by looking at the City employees who are being charged by the FBI and City Attorney, who are investigating complaints that contractors who did not pay to play were put on a slow track and often denied service in a timely manner.
I’m not convinced that Class A and B office space can’t be economically converted to residential use. Maybe not in a tower but shorter buildings such as Stripe’s current headquarters as well as that of Dropbox (which is subleasing space as it shrinks its SF footprint) might be viable for conversion. Egan is worried about the future of the downtown core. I assume he means the possibility of large swaths of unoccupied office buildings and the impact that will have – for instance on the ability of retail businesses to survive downtown. Office space has been converted to residential use in the past – hence the effort at one time to get around Prop. M by adding to the pool space that had been used for offices but converted to residential use.
You don’t know what you’re talking about.
Past conversions were outdated buildings acquired on the cheap.
Do you have any idea how much the Stripe and Dropbox buildings are worth as office buildings? How much it would cost to covert them to residential use? Or how long it would take? The economics don’t work. Not even close.
This whole argument has gotten off track: you don’t start with converting Class A space to residential, you start w/ Class C and B, Think of all those small plate buildings in the FiDi from the 20’s and 20’s.
$4500 for a modest, convenient apartment isn’t a big deal if the company you’re working for has, on top of already giving you a very large salary, included an addendum to cover your astronomical rent because the company itself is practically printing money. Until the phenomenon of workers needing to physically occupy the same building in order to accomplish the profitability of a company, these new monolithic apartment houses will continue to empty until they are sold as condos in the near future.