This might be a good time to consider selling multifamily assets in the Bay Area.
San Francisco, San Jose and Oakland were listed as Ten-X’s top sell markets in its most recent U.S. Apartment Outlook report, which compared Q3 rents and vacancy rates to 2021 projections.
Bay Area cities are expected to face rising vacancies and flattening rent by 2021 following a flood of new supply from years of development. Ten-X’s models take into account a cyclical downturn in 2019-20 and a recovery by 2021.
San Francisco is particularly vulnerable to the cycle due to a heavy construction pipeline that is already impacting the market, according to Ten-X. Vacancy rates are at 4.5%, up 140 basis points from the cyclical low, and rates are expected to increase through 2020. Ten-X forecasts rents will contract by 7.5% over the recessionary period, which will result in severe net operating income declines.