It seems like after six long years of stagnant rental growth the East Bay has finally got a run up in apartment rents. Driven by the strong tech job market in San Francisco and a flourishing new art and restaurant scene in Oakland, rents are shooting up across Alameda county and specifically in trendy areas of Oakland.
Of the three biggest cities in the Bay Area, Oakland rent increases have toped the charts, most likely due to “spill over” renters who couldn’t afford apartments in San Francisco.
Sarah Bridge, president of RealFacts, feels that apartments in Oakland are still relatively inexpensive compared to apartments in San Francisco. She also keyed in on the fact that Oakland, as an urban core, offers some of the same amenities that San Francisco does. On a relative scale, Oakland rents are still about $800 a month less than San Francisco.
According to RealFacts, Oakland apartment buildings with at least 50 units hit an average asking rent of $1,925 in the third quarter, which represents a 19% rise from the same time last year. That figure is the average rent for units ranging from studio to three bedrooms. Asking rent for one-bedroom apartments were $1,761, which is 20.1% increase from 2011.
The new average asking rent in San Francisco is $2,768 at big complexes, which is up by 7.6% from a year ago and San Jose saw an average increase of 9.6%.
Big increases in 4 years
In 2008, rent of a three bedroom apartment in Lower Haight was $3,000 a month and a nice one-bedroom in a safe neighborhood in Oakland was $875 a month. Now those rents have almost doubled.
The good news for tenants is that hikes in rent appear to be slowing in San Francisco, which might mean the rental market in San Francisco is close to saturation.
For apartment investors its been a long time coming at least in Oakland where some owners have not seen this kind of rent growth in nearly ten years. Its a great time to buy apartment buildings in the Bay Area even with rents rising as they are. Competition is fierce for well located properties but rent control can make it a challenge to manage and operate multi-family properties. I’m still a buyer even in this heated market!