San Francisco MF Projected Rent Growth Doesn't Mirror Perception
CoStar data says MF Vacancy in SF is at 4%, absorption is at about 4500 units/year and the market is going to deliver about 700 units/year for the next 2 years. With AI continuing to grow in SF, I assume rent is going to go bonkers, but CoStar only projects 15% cumulative rent growth over the next 5 years. Any thoughts on why the tepid forecast? Projected recession coming to kill absorption? Are there other market projections that people like? Feels like the obvious play but would love to get opinions on the third party forecasts and overall SF views. Looking forward to the discussion, first time poster, long time reader.
I think CoStar’s conservative rent growth projection could be factoring in broader economic uncertainty and potential supply from projects still in the pipeline. Even with AI driving job growth, affordability limits and possible remote work shifts might cap rent increases. SF has strong fundamentals, but I agree it feels like the forecasts don’t fully reflect the tech rebound yet.
Yes, agree and makes sense on the broader economic uncertainty. They have very few markets that will average 3% or above growth over the next 5 years and projecting absorption is going to cut in half or less nationwide. It also feels like they recently adjusted it to the negative. Great point on the affordability side. Thanks for the response!
If you back test the CoStar projections you will find they have very little predictive power. Very simplistic and algorithmic.
Any third party forecast provider that you really like?
“With AI continuing to grow in SF, I assume rent is going to go bonkers”
Ah yes, infinite growth based on tech bro evangelism.
There is definitely no LLM bubble…
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