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VC funding raises NYC rents by 10 percent: study

Zumper analysis finds San Francisco rents most affected

September 23, 2015 09:38AM

VC funding and its effect on rent

VC Funding and its effect on rent

Most cities dream of being hubs for venture capital investors. But that status comes with a price: higher rents.

VC cash pouring into the city raises average rents by around 10 percent, about $292 for a one-bedroom, and $418 higher for a two-bedroom, according to a study by apartment lister Zumper.

The analysis compared cities’ levels of venture capital funding – just over $4 billion a year in New York – to average rents, and attempted to account for the various factors that determine housing costs, such as population, median income, median home values, vacancy rates, and rent control ordinances, TechCrunch reported.

Unsurprisingly, San Francisco topped the list. The city got an astonishing $15.4 billion in venture funding last year. The study found that a full third of the city’s rents are attributable to that influx.

WeWork recently brought in $400 million in financing, valuing the company at $10 billion. Compass raised $50 million earlier this month, setting its value at $800 million. [TechCrunch]Ariel Stulberg