Boston may soon overtake San Francisco as the nation’s second-most-expensive rental marketplace, according to a new report from Zumper.
“It’s hard to overstate how astounding that is,” the report reads. The winter before the pandemic, median San Francisco one-bedroom rents were $1,300 more than Boston’s. It now leads the East Coast city by just $130.
Rents fell from 2020 in both cities, as they did in many others at the start of the pandemic. Boston’s didn’t fall as much, however, and recovered much faster in 2021, One-bedroom Boston rents are now 9 percent higher than March 2020. As rents climb about 5 percent each month during the usually slow holiday season, it may soon surpass San Francisco’s $2,850 January median.
Repeated delays of back-to-work policies have left SF in a state of “ongoing stagnation,” according to the report.
“When (or whether) offices reopen in the Bay Area will go a long way toward determining what exactly has happened in San Francisco, but it’s possible we will look back on the pandemic as an event that permanently lowered rent in the Bay Area,” according to the listing site.
Last summer, San Francisco lost its most-expensive title to New York, which remained on top in January with median one-bedroom rents of almost $3,300. Just before the pandemic, San Francisco one-bedroom rents were $3,500 a month, and New York’s were $3,000.
San Francisco multifamily real estate agents, who have watched sales volume for these assets drop 60 percent since before the pandemic, say rents have come back in fits and starts. They say a sustained recovery won’t come until offices reopen.
It’s not so much that the reopenings themselves will bring people back to the city, said Marcus & Millichap agent Clinton Textor, since some form of remote work is likely to remain, especially in tech. Rather, that will be a sign that the biggest perils of the pandemic have passed.
When big tech offices reopen, “that will be a huge indicator because we know how cautious those companies are,” he said.
In addition to being an agent, Textor is also a landlord and he said he has had five vacancies in his 12 units during the pandemic. A ground-floor retail tenant also closed shop and one of his tenants who did stay didn’t pay rent for more than a year.
He remains bullish on the city’s prospects and said that even if tenants don’t ever have to go back to the office, at some point they may want to.
“It’s a lot to ask of a tenant to have their entire existence in their apartment,” he said.
A wider reopening of businesses serving younger renters who are most likely to be paying top rents has already brought some interest back, said Ramon Kochavi, Marcus & Millichap’s San Francisco regional manager.
“There’s more to the city than offices,” he said, comparing San Francisco to a five-star resort full of amenities.
It made sense that people didn’t want to pay top when services were closed “down to the coffee cup,” he said. Now that the city has largely reopened and rents are more affordable, he expects even more tenants will return this spring and especially this summer after a new round of college graduates sets their hearts on San Francisco.
Given that the city, even in the downturn, continues to struggle with a lack of housing, the vacancies could be eaten up in one good quarter, he said, assuming Omicron is the last big surprise Covid has in store.
“The second quarter could be an amazing quarter,” he said. “Mind you, I said the same exact thing last year and then Delta came.”
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