While the cost of capital has climbed, back to an average rate, the weighted average asking rent for an apartment in San Francisco proper has now held firm at roughly $3,600 a month for the eighth month in a row.

At the same time, the number of apartments listed for rent in San Francisco continues to climb and is now 30 percent higher than at the same time last year and at a two-year high, with over 40 percent more studios and one-bedrooms on the market and local employment down, key facts that aren’t “bearish” or “pessimistic” in nature but simply reality and shouldn’t catch any plugged-in readers by surprise.

While local landlords have been trying to hold firm on rents and returns, with the average asking rent in San Francisco only 2 percent lower than at the same time last year, the average asking rent in San Francisco remains 12 percent lower than prior to the pandemic and 19 percent below its 2015-era peak of nearly $4,500 a month, with the average asking rent for a one-bedroom in San Francisco having slipped back under $3,000 per month, which is 15 percent lower than prior to the pandemic and 19 percent below peak.  And once again, inventory levels are climbing.

Keep in mind that our analysis of the rental market in San Francisco is based on over 170,000 data points going back to 2004 that we maintain, normalize and index on a monthly basis, not simply a few years of data or agents’ recollections. We’ll keep you posted and plugged-in.

12 thoughts on “Rental Inventory/Availability in San Francisco Climbs”
  1. The frenzy surrounding a type of software designed to disemploy white collar workers will no doubt lead to a new boom in demand for and from white collar workers that will surpass the corresponding decline in demand for and from white collar workers. Further, this Ponziesque spectacle of the snake swallowing itself could lead to a boom in local disaster tourism, so there’s a bonus.

    1. This post is a product of AI, correct? To the developers, I recommend extrapolating the natural language dictionaries as there is obvious redundancy in this bot’s output.

    2. If San Francisco truly becomes the hub for AI companies, as it appears is happening, SF will at least get the small bump in wealth creation on that front from the 20-something coder kiddies you despise who work for OpenAI. I’d be far more worried about NYC, Chicago and international customer service hubs like Manila.

      1. I think NYC may make it: after all, they made it thru the draft riots, 9-11 and 300+ years of mail being misdirected to NieuAmsterdam (with postage due!). Manila, OTOH, I’d be worried about – not Oakland level worried, mind you, but still worried – what have they really got but royalties on envelope sales?? They don’t ?? Gee, they really are ****ed, aren’t they ??

      2. There were already so many machine learning companies, plus companies doing AI —in the end potato potato. The NEW thing may be a bit overemphasized as usual …

        However, more layoffs do seem likely — if not soon then as soon as all the generative models percolate through industries.

      3. Just in case you haven’t been following the news since Friday, the 20-something coder kiddies Panhandle Pro is referring to who work for OpenAI are looking increasingly likely to just become workaday employees for Microsoft in the near-future, as former CEO Sam Altman and former President Greg Brockman are as of this past Sunday night, and what would have been a blockbuster IPO for OpenAI might not result in a bang but a whimper of wealth creation, most of which will end up in the portfolios of existing MSFT shareholders.

        Meanwhile, C3.ai is laying off workers in the Bay Area and reportedly plans to replace them with folks off shore, while framing the layoffs as “related to the performance of the individual workers rather than layoffs”.

        1. OpenAI is at the center of the action and their employees will continue to do exceptionally well for some time to come. In contrast to conventional startups, said employees didn’t stand to directly gain from an exit like an IPO, because they weren’t given equity in the organization. OpenAI is not a traditional startup in that regard. To the outside world, there is not much direct impact when/if OpenAI’s workforce is absorbed by Microsoft, other than Microsoft perhaps keeping the lease in 555 California Street after all.

          c3.ai look to me like part of a cottage industry trying to connect existing industries with emerging AI technology. The offshore element seems strong, but not a factor so long they can keep growing business. Trouble being, at this stage, AI in real world industries is not mature to produce consistent results. It is easy to work on a failing project that’s bleeding money. My guess – they’re going to shotgun projects hoping for a winner here and there, which is only sustainable if you push cost of each project down, including offshoring labor.

          1. Well, for a different take on the potential impact of MS effectively absorbing OpenAI’s workforce. From How OpenAI drama could impact San Francisco’s real estate market:

            But Friday’s bombshell news about the ousting of the CEO of one of the city’s most prominent AI companies, OpenAI, highlights the fragility of the burgeoning AI sector and has left many real estate insiders wondering what the turmoil could mean for San Francisco’s beleaguered market.
            “No one has a clue,” said a source who is actively working with AI companies searching for space in San Francisco and therefore requested anonymity. “If 500 people leave OpenAI today, the big question for me is, ‘What happens with the lease they just signed in Mission Bay? ’ ”
            Late last month, OpenAI signed the biggest lease in San Francisco in years, agreeing to take on a 486,600-square-foot sublease at Uber’s headquarters campus in Mission Bay. The space is said to have the capacity to house up to 2,000 OpenAI employees…Should the company lose hundreds of employees and no longer need its new Mission Bay office, a source said that it would likely be considering a lease termination down the road, which usually involves significant penalty charges, or attempt to sublease some of its spaces, depending on how its contracts are structured.
            Either way, it could put large amounts of empty space back on the market, which is already burdened by a historically high overall vacancy rate of more than 30%. OpenAI also currently has three other locations in the Mission District area: It leases about 40,000 square feet at 3180 18th St. and more than 100,000 square feet at 575 Florida St., and in recent months it took on another, roughly 40,000 square feet of sublease space at the Lion Building at 2525 16th St.
            “A few weeks ago there was a lot of positivity — we were raising glasses, because it’s not every day that someone signs a 486,000-square-foot lease,” said a San Francisco broker who also works with AI companies and requested anonymity.

            The whole thing is worth reading, even as it includes a lot of speculation. If OpenAI gets folded into MS, one of her sources says that “is likely a “net negative” for San Francisco’s real estate market, as the software giant already has enough office space to accommodate them.

          2. they were definitely given equity and the mgmt was working on a way for them to cash out early on the 2ndary market with a new valuation. many people (well over 100) would have netted well over $10M each. thats dead now. i would expect investors to be suing the board soon. this was gross negligence

        2. Maybe lay off the Hot Takes about OpenAI for a little while. Seems that he’s back already.
          I don’t know what will happen. You don’t know. No one knows.

  2. Thanks for that link brahma. SF chron has shut down ability to comment on their site recently, so SS could be only place to discuss now. Is Open AI going to be dumping big block of space on sublease market in SF?

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