High Occupancy and Strong Employment Fuel the North Bay Rental Market
The North Bay/Sonoma County rental housing market has strengthened over the past three years. New construction projects are rising and rental occupancy remains high. In fact, a housing shortage following the devastating 2017 wildfires pushed vacancy to near historic lows of 3% at the end of 2017.
Sonoma County’s tourism-led economy is directly tied to the Bay Area. Over the past decade, the region has emerged as a global destination for tourists, helping the local economy outperform the nation. North Bay rental housing also benefits from the success of the Bay Area’s tech sector, with newly minted tech millionaires finding Wine Country an ideal location for weekend getaways.
Developers Remain Busy in the North Bay
Large-scale multifamily projects are rising throughout the region, from Santa Rosa to Rohnert Park to Petaluma, and points in between. In Rohnert Park, one of the biggest projects is the 244-unit, luxury Fiori Estates complex. Other notable developments include The Artisan, a 144-unit high-end rental complex in Petaluma. Units leased up rapidly, and the well-located asset stabilized within two quarters. Amenities include car-charging stations, a concierge, clubhouse, fitness center, pool, spa, a property manager and on-site maintenance staff.
In November 2018, the City of Rohnert Park approved Laulima Development’s plans to redevelop the former State Farm campus near the Sonoma-Marin Area Real Transit (SMART) station into a mixed-use downtown district. Upon completion, the project will contain at least 300 multifamily units.
North Bay rental supply was impacted by the 2017 wildfires. While the destruction was primarily relegated to single-family houses, several apartment properties were also demolished.
Key North Bay/Sonoma County Rental Housing Market Indicators
- Q4 2018 Unemployment: 2.6% vs. 3.8% Nationwide
- Q4 2018 Year-Over-Year Vacancy Rate: 4.3%
- Q4 2018 YOY Asking Rent Growth: -1.1%
Rents Projected to Remain Steady in 2019
Rental housing demand soared following the 2017 North Bay wildfires. With demand at an all-time high, property owners pushed rental rates higher. Emergency legislation passed in Mendocino, Napa, Solano and Sonoma counties capped annual rent increases at 10% through April 2018. Despite the immediate short-term gains, average asking rents in Sonoma County remain slightly below Napa County’s. In addition, they were 15% higher than Vallejo average rents at the end of Q4.
The wildfires pushed Santa Rosa rents up 2% in October 2017 and annual rent growth reached nearly 7% by year-end 2017, leading all California markets. Nonetheless, rent growth throughout 2018 remained negligible as the market has given back some of the gains from achieved in 2017.