If you’ve ever considered moving to SoMa or Mid-Market, this could be your moment.
Some of San Francisco’s newest buildings, chock full of amenities, are offering deeply discounted rents in a downtown rental market that’s still clawing back from pandemic lows.
“Renters can get that brand-new place without paying an arm and a leg,” said Kevin Ho, a realtor with Vanguard Properties. “They’ll just ask for your arm, not your leg.”
Rents in these buildings aren’t exactly cheap. But, with special discounts at some properties, tenants can enjoy a never-before-used bathtub for well below The City’s median rents, which currently stand at $2,900 for a one-bedroom apartment, and $4,000 for a two bedroom, according to Zumper. In at least one case, some market rate units are cheaper than comparable below-market rate units in the same building.
These discounted rents are partly a reflection of the high-profile challenges — like homelessness and open air drug dealing — facing Mid-Market, SoMa and the Tenderloin. Yet another factor is the reduced premium for being close to the Financial District, due to the mass adoption of remote work.
As a result, these deluxe apartment buildings are finding a broader base of tenants. “I never thought I would live in a building like this,” said Rob Chua, a non-profit consultant with Avenues Consulting who’s moving into a brand-new unit at The George in SoMa this week. “I was an immigrant kid, grew up in the Philippines. It’s kind of like a dream come true.”
Chua is paying an annualized rent of $2,800 for an 18th-floor one bedroom, which will also get him access to a library-style coworking space, multiple outdoor terraces and barbecues and a communal bar — all styled with vintage hotel decor. The building, part of the 5M development, is across the street from a new park that will host regular performances and community events.
Chua’s rent, whose face value is $3,600, was whittled down thanks to a promotion that gave him two months free, plus an additional $2,500 rent credit. With those incentives, some two-bedroom apartments, with a face value of about $3,800, can be had for about $3,000 with a 12-month lease. After that, renters will need to pay full freight, or pack their bags.
At nearby Trinity Place in Mid-Market, which opened its fourth and final phase in July, leasing agents are “seeing a lot more diversity in terms of who wants to be down here,” said Trinity Vice President Shadd Newman. “Originally, there was a lot of focus on tech, and while that’s still a portion of it, we’re seeing a whole host of people, from retirees to students.”
Two-bedrooms in the new building, which has a panoramic 16th-floor terrace overlooking City Hall and The City’s largest Whole Foods in the basement, are available for about $2,900. Elsewhere in the gargantuan Trinity Place complex, not-quite-brand-new one bedrooms are available for $2,500.
These buildings are not anomalies. At 50 Jones, a Mid-Market building that opened in late 2020, one-bedrooms are available for about $2,500, and two-bedrooms for about $3,100. Next door at Prism, which opened in January, several two-bedrooms are available for about $3,200 with incentives.
“Other neighborhoods have seen a little more pricing demand,” Newman said. “Pacific Heights and the Marina, for example, those are back within I would say 5% of their pre-pandemic rates.” Trinity Place is still about 15% below pre-pandemic rates, Newman said.
For Joel Yawili, the very first tenant at Trinity Place Phase IV, the discounted rents and downtown location were a perfect combination. “Because of the pandemic, I thought, okay, cool, there will be some really good opportunities,” he said. “I lived for nine years in New York and I missed the feeling of — this is going to sound crazy, but — being surrounded by big buildings. And I like the modern look and the modern aesthetic.”
Yawili, a product manager at Google, declined to share the price of his one-bedroom, but described it as a “very good deal,” adding, “If there’s one silver lining that came out of this pandemic, it was definitely moving into this building.”
Despite the relatively slack rental market downtown, developers are incentivized to fill new apartment buildings as quickly as possible, rather than wait for the market to go up.
“The whole goal is to carry the cost and eventually make some money for the investors,” said Ray Amouzandeh, a rental apartment broker who has overseen the lease-up of new buildings in San Francisco. “So if you’re sitting on a vacant unit, not only are you not making any money, you have to pay out of pocket all of the costs and property taxes and other things.”
After 10 months, Trinity Phase IV’s 502 units are about 50% leased, Newman said. That’s a far cry from Phase III, which leased up in a little over 10 months when it opened in 2017. Still, Newman is confident the new building will fill up in the next three to four months, as more companies call their employees back to work. The rest of the Trinity Place complex is 96% leased, he said.
The George’s 302 units are about 25% leased after two months, said Christie Donnelly, Brookfield’s San Francisco director. Nearly one third — 30% — of units in the building are being offered at below-market rates to middle income households, the largest proportion in city history. But because those units are offered in coordination with The City, which handles applications and income checks, just two have been leased so far.
The George’s below market rate units are available to households making between 100% and 150% of the area median income, meaning that in some cases, below-market rate units are being offered at prices higher than market rate units, even before promotions are taken into account. The City’s DAHLIA affordable housing portal shows below market-rate one bedrooms available for about $3,100 and $3,800 for single people making 125% and 150%, respectively, of the area median income.
A recent Budget and Legislative Analyst report on vacancies in below-market rate (BMR) units — which currently stand at 15% — found that affordable units targeting middle income people are in some cases no longer competitive with market rate units.
“Some renters find that they can rent slightly larger units, or units in neighborhoods they prefer, for close to the same price as a BMR unit, especially if the BMR unit they qualify for is priced at 100 percent AMI,” the report reads. BMR rents, which are set at a proportion of a household’s income, are less flexible than market rate rents, which can change rapidly to reflect shifting market conditions. A Brookfield spokesperson highlighted the fact that the below market rate units at The George offer protection from rising rents as the market recovers.
For now, market conditions remain in renters’ favor, at least downtown. That’s one reason few housing projects are currently breaking ground in San Francisco. “When you’re trying to get a new building financed, you have to be able to show high occupancy rates and rents that are at least stable, if not going up,” said Sujata Srivasta, San Francisco director of the urban planning think tank , SPUR. Combined with high construction costs and interest rates, it’s “really challenging to build housing in San Francisco at this moment.”
That means that even if today’s crop of new buildings are losing money right now, they’re set up well for the medium term, with little new development expected to come online in the next year or two. “So many residential projects went on hold during the pandemic,” Donnelly said. “There are very few projects like this going up.”
Chua knows his bargain might not last. “I have my one year and then I have to take a look to see if it’s worth it for me,” he said.
But while he lives at The George, he’s looking forward to helping the building integrate into the wider SoMa community, especially the Filipino community that’s long called the neighborhood home. “I’ve never lived in SoMa, but SoMa holds a place in my heart just because my elders come from here,” Chua said. “It’s important, I think, to understand where you’re at, where you’re situated.”