Silicon Valley reigns as state’s toughest rental market

For every apartment for rent across Silicon Valley, 12 people line up in front of its leasing office with a deposit in hand.

The competition for apartments in the nation’s technology capital places it as the toughest rental market in the state and the sixth most competitive in the U.S., the San Francisco Mercury News reported, citing figures from Rentcafe.

“This remarkable surge has been largely driven by a rebound in the tech sector, which faced economic challenges and layoffs in 2022-2023,” RentCafe said in its mid-year report. “Currently, venture capital firms are heavily investing in emerging technologies like AI, cybersecurity, fintech, healthcare tech, climate tech and quantum computing. 

“And, many of these firms and their startups are based in Silicon Valley, further adding to its appeal as a top rental destination.”

RentCafe ranked each market from January through March based on apartment occupancy; average days each unit stood vacant; prospective renters per empty apartment; renewal lease rate and the sliver of vacant newly built rentals.

The analysis gave the region defined from San Jose to Menlo Park a competitive score of 80.8 percent, compared to a competitive rank of 72.6 percent for California as a whole, and 73.4 percent for the nation.

“Silicon Valley emerged as the hottest renting spot in California and sixth in the U.S., up from 21st place just a year ago,” RentCafe said.

In the Peninsula, San Francisco and North Bay, there were seven people competing for each available apartment, with an occupancy rate of 93 percent, according to Rentcafe. Nearly half of renters there renewed their leases, while the new apartment inventory rose slightly, resulting in a competitive score of 67 percent.

In the East Bay, the occupancy rate was 93.4 percent, with nine prospective renters competing for each apartment. Some 50.5 percent of renters renewed their leases, while the apartment inventory grew 0.54 percent. The competitive score was 66.8 percent.

The most competitive rental city in the nation was Miami-Dade County in Florida; the least competitive was Omaha, Nebraska, according to the report.

Among the biggest reasons for the elbow-to-elbow competition in Silicon Valley is that more people renewed their leases last year, Doug Ressler, a senior analyst at RentCafe, told the Mercury News. With an occupancy rate of 95.1 percent, this leaves very few apartments for new would-be renters.

“You have more folks that are really applying for apartments, and you have less vacant days on the market,” Ressler said.

The average number of days apartments sat vacant in Silicon Valley was 40, while 54.1 percent of renters renewed their leases from the previous year. There were no new apartments completed this year.

The average rent in Santa Clara County is $3,085, with an average apartment size of 892 square feet, according to RentCafe.

Jobs are on the rebound, with more than 7,500 new jobs added in the South Bay this year, after 40,000 Silicon Valley layoffs since 2022.

Despite the challenges, the quality of life and career growth opportunities keep Silicon Valley an in-demand region for renters, Ressler said.

“You’ve got one of the top universities, Stanford, along with other top schools,” Ressler said. “A lot of the folks are locating around these tech hubs and they stay very close. They’re going to have excellent salary opportunities. So with that, you build a sense of community, just best-paced, very healthy lifestyles.”

— Dana Bartholomew

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