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Rents in San Francisco’s SOMA neighborhood dropped 9% in May https://www.google.com/amp/s/sf.curbed.com/platform/amp/2020/6/2/21277355/san-francisco-rent-prices
by dmor 6y ago
Rents in San Francisco’s SOMA neighborhood dropped 9% in May https://www.google.com/amp/s/sf.curbed.com/platform/amp/2020/6/2/21277355/san-francisco-rent-prices-coronavirus-2020-may https://www.google.com/amp/s/sf.curbed.com/platform/amp/2020...
My guess is that the departures will continue as unemployment rates grown and that when federal and state payments run out we will see a further decline.
I think companies will soon have to justify why they can afford to have an office with remote as the better (and cheaper option). Other than headcount, rent is usually the largest line item for a startup
- vmception 6y agoRents dropped 9% but landlords are also offering 8 weeks free Which really means an annual lease has dropped 25% quite steep, you could probably offer something closer to 38% lower.
- cannaceo 6y agoIt’s unrealistic to project those incentives in to future years
- vmception 6y agoIt’s realistic to use them as market signals for actual price discovery in the current year
- cannaceo 6y agoI’d wager the rent rate is necessary to cover the mortgage, homeowners policy, other insurance, and repairs. I don’t think landlords have 36% IRR on their investments. Rents at that large of a discount aren’t sustainable.
- beagle3 6y agoNo, they don’t have that IRR if their investments were made at 2019 market prices. They have more than that IRR even with all those expenses if they bought at 1980 prices. What’s unsustainable is the property prices of 2019 (and June 2020 because real estate asset prices are sticky). “Investment” is path dependent and is irrelevant to pricing for the market as a whole (it obviously does to a single player)
- grandmczeb 6y agoMost “x weeks free” are limited to luxury buildings and 8 weeks is on the very high end of those offers. And even before COVID you’d see 4 weeks free advertised reasonably often. IMO the rental drop isn’t nearly as drastic as you’re suggesting.
- unknown2374 6y agoNon-AMPed link: https://sf.curbed.com/2020/6/2/21277355/san-francisco-rent-prices-coronavirus-2020-may https://sf.curbed.com/2020/6/2/21277355/san-francisco-rent-p...