The San Francisco metropolitan area has one of the nation’s most expensive rental markets. Still, nearly 40% of landlords listing their units on the real estate listing site Zillow are offering discounts to attract tenants.
These concessions, which can include a few weeks’ free rent, free parking or other deals, have become more common over the past couple of years. The share of units offering concessions shot up from less than 20% in 2019 to more than 45% of rentals at the beginning of 2021, according to Zillow data. In August 2023, the most recent month for which Zillow has data, 39% of rentals offered deals.
That share might not reflect what all San Francisco metro renters are seeing, since Zillow’s listings tend to overrepresent larger, more expensive apartment buildings. The data also doesn’t specify the size of the deals being offered.
Concessions became more prevalent since the pandemic began, when many landlords offered deals — or even lowered rent — in response to the sudden drop in demand. Between January 2020 and January 2021, median rent in the San Francisco metro area fell by more than 13%, according to data from Apartment List.
Between August 2019 and August 2023, the San Francisco metro area saw a 25 percentage point increase in the share of rental units offering concessions, the Zillow data shows. That’s the fifth-highest jump among the United States’ 50 most populous metros. The San Jose metro area saw a 29 percentage point increase over the same period, with 46% of rentals offering deals in August 2023.
Among the 50 largest metro areas, San Francisco had the 12th-highest share of rental units with concessions, while the Salt Lake City metro had the highest percentage at 48%.
Rents in the Bay Area increased after their initial decline, data from Apartment List indicates, with prices in many cities exceeding their pre-pandemic levels. But the continued spike in concessions is a sign the rental market is becoming “friendlier” to renters, according to a Zillow report. The report added that the increase is likely associated with a recent uptick in rental vacancies. In the second quarter of 2023, 6.9% of the San Francisco metro area’s rental units were unoccupied, according to data from the U.S. Census Bureau, up from 5.4% in the second quarter of 2022.
It’s also common for new buildings — those that finished construction within the last two years — to offer concessions as a way to quickly fill vacancies, said Carley Goss, government and public affairs director with the San Francisco Apartment Association. Because those apartment complexes are usually very costly to develop, the owner or developer often needs to generate revenue immediately to pay down construction loans and other expenses.
Concessions are likely less common in San Francisco than in the metro area overall, according to association director Janan New. That’s because providing a concession for a rent-controlled home — which comprise the majority of the city’s rental stock — can sometimes reduce the amount the landlord can raise their price later.
“We caution our people to be very careful when they’re offering that,” New said.
Reach Christian Leonard: Christian.Leonard@hearst.com
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