The development of new rental units skyrocketed in Oakland in 2018 as more businesses, especially tech companies, flocked to the East Bay from San Francisco. This mass exodus has placed upward pressure on regional rents over the past two to three years, thus justifying the construction of new, ground-up multifamily properties. More than 11,000 units were under construction at the end of 2018 in Oakland, which is more than the number of units planned for San Francisco or San Jose. View a list of some of the most notable projects currently rising in Oakland, courtesy of Oakland Magazine.
Downtown Oakland Remains a Hotbed for Growth
More than 45% of the new apartment supply – or 5,000 units – is coming online in Downtown Oakland. While primarily aimed at wealthy renters, this new inventory is a welcomed addition. It’s welcome because booming demand has led to strong rent growth and a lack of desirable options for renters.
As Oakland property owners know, new units have been leased up quickly throughout 2018. Vacancy remains at the historically low, despite this recent addition to supply. Yet, as multifamily development continues to increase and cranes keep filling the skyline, market analysts expect vacancies to rise moderately through 2020.
However, vacancy for 4- to 5-star properties could peak at a high of 16% in 2020 as a possible economic downturn looms in the region. As a result, vacancies for 3-star buildings are expected to remain relatively stable through next year, according to CoStar. Therefore, Oakland property owners may have an easier time leasing up mid-tier properties, which are always in demand during every economic cycle.
Traffic Prompts Building Near Public Transit
Over the past several years, traffic congestion has plagued the entire Bay Area, clogging up major freeways and thoroughfares from Livermore to San Rafael and then down to San Jose. As a result, developers are building rentals within walking distance of BART stations and other public transit. Savvy investors may want to target these infill locations for long-term investment opportunities.
How has this onslaught of new construction impacted the Oakland/East Bay rental housing market as we approach the second month of 2019? Our latest State of the MYND East Bay/Oakland report takes a look. The report also contains a wealth of real estate trends to watch in the East Bay, including:
- Rental rates
- Vacancy forecasts
- Construction starts
- Local infrastructure
If you own Oakland rental property, or plan to invest in 2019, this resource is a must-read.