Axiometrics reports that the average apartment rental rate in the Bay Area declined by about 8.1% from $2,040/month in March to $1,874/month in late May. In San Francisco proper, rates fell an average of 10.6% between March and May and occupancy fell to 94.5%. In San Jose, rental rates fell 9.1% and occupancy dropped to 95.5%. In Oakland rates fell 5.4% and occupancy declined to 95%.
Despite that, San Francisco's average rental asking price still ranks second in the nation at $2,115/month, followed by San Jose at $1,738 and Oakland and the East Bay at $1,314, according to a report by Reis Inc.
In addition, Marcus & Millichap's National Multi Housing Group has completed a national study of apartment market trends. The report says the apartment market will remain strong and favorable as investors look for opportunities despite the economic slowdown.
The report covers 25 markets and finds that on average the nationwide vacancy rate will remain steady at 6%. Although vacancy is rising in San Francisco Bay Area markets, they will remain among the tightest in the nation due in some part to pent-up demand.
The latest research by Lend Lease Real Estate Investments states that the best places to invest in multifamily residential property over the new five years is California, in addition of the New York/New Jersey metro area.
The research underscores the impact of the technology bust on San Jose, according to Richard Gold, Lean Lease principal, but it does not spell trouble for all of California. The situation in San Jose could be viewed as an investment opportunity and San Francisco and Oakland still remain desirable investment markets, according to Gold.
San Francisco-based National Real Estate Index reports that the class A apartment sector was the sole category to see an average price hike, albeit a small one, form the fourth quarter of 2000 to the first quarter of 2001. According to the report, while other sectors showed an average price decline during the period, class A apartments showed a 0.23% increase.
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