Noticeably with recent research, rents have been down in Berkeley and Oakland. With vacancies and aggressive marketing tactics people still can’t afford to live in the newly built apartments/ lofts that have been sprouting up across the East Bay.
After rents have been increasing over recent years, they started to decline in June and have dropped ever since. Two industry groups – Apartment List and Zumper – are reporting that median rents in Berkeley fell anywhere from 3.8% to 15.9% in 2017, and dropped from 10.9% to a shocking 15% in Oakland.
In contrast to those reports, rents went up in 8 of the largest 10 cities including Concord, Walnut Creek and Pleasant Hill, and El Cerrito, according to Zillow.
Per an article from Zillow, Sam Sorokin, a Manager of about 1,000 apartments in Berkeley and Oakland confirmed the industry reports of rents dropping, although believed the decline was a mere 5.8%. He calculated that number by looking at people who first started renting in August 2016 and moved out in August 2017. His company ultimately had to lower rents to attract tenants. Something’s up,” said Sorokin. “All the economic indicators are great: strong job market, good wages, we’re not in a recession. Things just aren’t renting for as much.”“Sorokin said he thinks the drop in rents reflects what he and other building advocates have long been saying: constructing more housing creates more competition, which lowers rents.”“In 2017, a tipping point has happened,” said Sorokin. “The new construction has caused the rents to decline. There is no other reason I can think of.” (www.berkeleyside.com)
Most of the newer apartments are aimed toward upper-income residents. They offer amenities like bamboo floors, stainless steel appliances, views, decks and in-house or nearby gyms. The recent complexes that have been completed in Berkeley in the past three years include: The Dwight and Garden Village (both on Dwight Way) Stonefire Apartments on Milvia Street, Addison Arts and Avalon Berkeley (both on Addison Street), The Higby on San Pablo Avenue, Berkeley Apartments-Touriel and the Aquatic (both on University Avenue) and Varsity Berkeley on Durant Avenue.
According to the article on www.berkeleyside.com, “When these upscale complexes were first completed the apartments were snapped up because there was a pent-up demand for newer units”, said Sorokin. Many foreign students at UC Berkeley, whose parents could afford to pay high rents, moved in.” “These people paying high tuition – their parents are loaded,” said Sorokin. “They don’t want to live in some funky, ’60s style apartment. They want nice places.”
But now that so many of these units are available, the demand has dropped, he said. Units are sitting empty. So some property managers are offering a month’s free rent or are dropping prices to lure new tenants. Developers are feeling the pressure to fill buildings, too. They want to convert their more expensive construction loans to traditional bank loans, and that cannot happen until a complex is filled, he said. Lowered rents reflect those pressures. (www.berkeleyside.com)