San Francisco Rents Fall 35% as Remote Work Fuels Exodus out of Metro Areas
As coronavirus cases continue to mount across the US, life returning to normal likely will not happen anytime soon, even amid positive vaccine news. In fact, the pandemic has forced many companies to adapt new temporary work-from-home policies, which now nine months into the pandemic are beginning to look more and more permanent.
According to a new report published by Realtor.com and cited by Bloomberg, the median rent for a studio apartment in San Francisco plummeted by nearly 35% to $2,100 in November compared to the same time only a year ago. The decline in rent prices further attests to the dwindling demand for the Bay Area living, as more and more working Americans continue to hightail it for the suburbs and rural communities.
Given that the Bay Area is home to numerous tech companies that can offer more flexible working conditions, the coronavirus pandemic has allowed employees to take advantage of remote offices and forego the otherwise pricey rent that accompanies downtown living accommodations. Moreover, given that the San Francisco, Santa Clara, and Contra Costa counties have all been the subject of soaring Covid-19 cases throughout the pandemic, it is unlikely that tech workers will be returning to their offices anytime soon.
Indeed, many companies have already begun adjusting for a long-term work-from-home model, as San Francisco’s vacancy rate has doubled to 8.3% this year, according to real estate firm CBRE. In fact, Bloomberg revealed that Pinterest Inc. had paid a whopping $90 million penalty in order to cancel its lease at a downtown San Francisco office building, citing it wants to “rethink where future employees could be based.”
Other San Francisco-based companies have also joined the exodus of downsizing their office space in search of lower-cost rents, including Charles Schwab Corp and Hewlett Packard Enterprise Co. Thus, with major companies packing their bags in troves, workers will certainly follow suit, thus putting added pressure on rents in the Bay Area. On the other hand though, the ensuing decline in rent prices could be a silver lining for other potential tenants, especially those that may not hold the lucrative jobs associated with tech companies.
The falling rent prices could soon become opportunistic for those that have thus far been priced out of the Bay Area housing market. As noted by Bloomberg, one individual by the name of Robert Dumas currently works for Uber and Lyft in the Bay Area, but lives over two hours away from San Francisco. He says that the astronomical rent prices associated with city living have kept him from settling down closer to work, but with the ongoing exodus out of metro areas, his opportunity may soon arise.
Information for this briefing was found via Bloomberg and Realtor.com. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
