Tag Archives: rent

What’s Driving The Rent Explosion in San Francisco?

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The average 1 bedroom apartment in the Financial District of San Francisco is now $3,500 a month, making it the most expensive rental housing market in the United States, even beating Manhattan. Despite the high rent, the vacancy rate in downtown San Francisco is almost zero. San Francisco has been expensive for a long time, but what’s driving the current rent explosion? It’s the dot-coms. Internet companies in the Bay Area are growing rapidly, and unlike the dot-com boom of the 1990s, this time they are making money, and lots of it. Bay area internet companies are having a hard time finding enough employees. They all need young, smart, well educated, tech savvy people, and lots of them, and they can’t find them in Silicon Valley. The problem is that the kind of people they need don’t want to live in Silicon Valley. While Palo Alto is undeniably clean and safe, it is also dull. Young, tech savvy people want to live in San Francisco, so the dot-coms are expanding there. They have to. Besides, not all the dot-coms are based in Silicon Valley. A lot of internet companies are headquartered in San Francisco and always have been, and they are also growing. This includes Twitter, Yelp, Craigslist, Salesforce, Digg, and dozens of others. There is a limited supply of new rental housing being built in San Francisco, and a lot of well-paid techies are competing for it.

Berkeley Central. Berkeley is getting the spillover effect from all this. Rents in Berkeley are lower than downtown San Francisco, and San Francisco is only a 20 minute subway ride away. The newest apartment houses in Berkeley used to cater to college students, but now they are targeting San Francisco commuters, and commuters can afford to pay higher rent than college students. Berkeley’s newest apartment house is Berkeley Central. It is located at 2055 Center Street, just a few steps away from the downtown Berkeley BART station. 1 bedroom apartments rent for $3,000 a month, and 2 bedrooms start at $3,500 a month. Larger 2 bedroom units go for up to $6,000 a month. Parking is extra.

Windowless bedrooms. A lot of the apartments at Berkeley Central have windowless bedrooms. This is an architectural trend that I don’t like. Actually, the bedrooms aren’t windowless. They have windows, but the windows are not on exterior walls and don’t face outside. The windows face into the apartment. This means that when someone is in the kitchen washing the dishes, he is looking into your bedroom through the window separating the 2 rooms! It seems to me that if someone is paying $3,000 a month for a 1 bedroom apartment, the bedroom should have a window that faces outdoors. Berkeley Central isn’t the only building like this. A lot of new buildings in this area have bedrooms with windows that face inside the apartment. As I said, it’s a trend that I don’t like.

It Is Still More Expensive to Live In New York City

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Last month I said that San Francisco is now the most expensive rental housing market in the United States, beating even Manhattan; however, that doesn’t mean that it costs more to live in San Francisco than New York City. No, it is still more expensive to live in New York City than San Francisco. That is because even though rent is slightly higher in San Francisco, the cost of nearly everything else is higher in New York City. For example, a t-bone steak at D’Agostino’s, one of Manhattan’s biggest supermarket chains, costs $18 a pound. At Safeway in San Francisco, the same steak costs $10 a pound.

San Francisco is Now the Most Expensive Rental Market in the U.S.

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Manhattan has long been the most expensive rental housing market is the U.S., but now it’s San Francisco. The average 1 bedroom apartment in downtown San Francisco is now $2,800 a month – and that’s just the average. These high rents are due to the explosive growth of dot-com jobs in San Francisco. Up until recently, most internet jobs were at the south end of the bay in Silicon Valley: Palo Alto, San Jose, Santa Clara, etc., but now, a lot of the new internet jobs are in San Francisco. The reason for this is simple. San Francisco is where well educated, 20-something, computer savvy people want to live and work, so the internet companies are moving jobs to San Francisco in order to get the people they want and need. Of course, some internet companies were always based in San Francisco, including Craigslist, Twitter, Salesforce, and Yelp; and these companies are growing too. The rental housing supply in San Francisco simply cannot keep up with all these new jobs. It’s created a seller’s market for landlords.

The high rents in San Francisco have spilled over to Berkeley. At Berkeley’s newest apartment house, Berkeley Central, 1 bedroom apartments rent for $2,500 to $3,000 a month, and 2 bedroom apartments rent for $3,000 to $6,000 a month. The owners are not having any difficulty finding tenants. On the day their rental office opened, people were waiting in line and down the sidewalk in order to turn in applications and put down deposits. Gee, when I first got into this business, I was renting 2 bedroom apartments in Berkeley for $150 a month! They were nice apartments too, but I didn’t have a free chocolate room back then.