Apartment rents across Oakland are falling, with a price drop in Downtown driving the citywide decline and a rise in vacancy caused by waning demand.
The city’s median monthly asking rent for a one-bedroom apartment tumbled to $1,800 in April, from $2,400 in January 2019, the San Francisco Chronicle reported, citing figures from Apartment List.
The declines are mostly in Downtown Oakland, home to the city’s biggest apartment buildings.
With no signs the decline will let up, some developers may not want to build in downtown Oakland, an Apartment List researcher said.
In the past year, asking rents in Oakland fell by 10 percent, further than any of the 100 largest U.S. cities followed by Apartment List. Over the past four years, several apartment complexes in central Oakland have seen drastic cuts.
A one-bedroom, 780-square-foot apartment at 528 Thomas L. Berkley Way rented for $3,250 a month in July 2020, according to Zillow. It’s now asking $2,500.
A one-bedroom, 630-square-foot apartment at 17th and Broadway sought $2,740 a month in September 2020, an Internet Archive capture shows. A same-size unit now asks $2,480.
A one-bedroom, 600-square-foot apartment at the Lydian rented for $2,460 a month in November 2020, according to the Internet Archive. In May, the same unit asked $1,950.
Oakland’s largest residential highrises are clustered in the 94612 zip code, Rob Warnock, a housing researcher with Apartment List, told the Chronicle. Data seems to support the idea that the price drop in Downtown Oakland is driving a citywide decline.
Zillow estimates that 94612, which covers Oakland’s Downtown, Uptown and Lakeside neighborhoods, saw a 7 percent slide in asking rents from April 2020 to April, and a 10 decline over the past year.
A four-year dip of 6 percent was estimated in West Oakland’s 94607 zip code, with an annual decline of 3 percent, according to Zillow. The company uses listings on its site as the foundation for rent estimates, while Apartment List bases its estimates on U.S. Census Bureau data.
Softened demand, not more supply, is mainly behind Oakland’s declining rents, Warnock said. A rise of remote work led by tech firms has emptied downtowns in Oakland and San Francisco, he added.
“We didn’t add a ton of new apartments, but we did pull a lot of people out of needing or wanting those apartments,” Warnock told the Chronicle.
The decreased demand has contributed to Oakland’s relatively high apartment vacancy — more than 9 percent in April. That share, based on properties with at least 10 units charted by Apartment List, is the highest of any city in the state.
Those vacancies have dogged apartment developers, with one calling Downtown Oakland “perhaps one of the worst submarkets” in terms of rental revenue. Many larger complexes are offering weeks or months of free rent to lure in tenants.
With developers struggling to profit from rentals and interest rates remaining stubbornly high, it may be hard for investors to justify building new apartments in Oakland, Warnock said.
— Dana Bartholomew
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