San Francisco Multifamily Market Report
2024 Investment Forecast
Market Dynamics Favor Mid-Tier Assets;
Legacy Inventory Draws Local Capital
Incoming supply injection poses little risk to Class B and C performance. The market’s broader employment outlook marks a note of positivity, with overall hiring this year to bring the metrowide staffing count 1.7 percent ahead of its year-end 2019 level. Aiding matters, the health and education services sectors have grown roughly 10 percent since the onset of the pandemic, double the national pace. Employers in these categories are dispersed throughout the metro, supporting leasing for mid- and lower-tier units in a wide variety of neighborhoods. With over 90 percent of deliveries this year in San Francisco County located in the Downtown and SoMa submarkets, near-term supply-side pressure will be limited elsewhere. This bodes well for the Marina-Pacific Heights-Presidio area, where vacancy trailed the long-term average of 5.5 percent by 70 basis points in late 2023. Furthermore, in downtown-adjacent zones, a notable affordability gap between unit tiers in areas of rapid supply gains indicates that a largely luxury construction pipeline will have little impact on mid-tier performance. Late last year, the difference in effective monthly rents between Class A and B units in the SoMa district was $723.