May 5, 2012

Technology Industry Boom = Housing Supply Shortage

The high pace of growth of technology companies based in San Francisco has created, and is expected to continue to create, serious supply constraints in the rental and for-sale residential market. This will be good news for existing property owners but create a more competitive environment for acquisitions in the near future. Residential tenants will continue to struggle to find places to rent as rent applications pile up to landlords and tenants face stiff competition to secure apartments..

May 3, 2012

California Senate Trying to Stiffen Foreclosure Laws

The bill, SB 1191, would require every landlord who is in default under a mortgage or deed of trust secured by a single-family dwelling, or a multifamily dwelling not exceeding 4 units, and who has received a notice of default from the mortgagee, trustee, or other person authorized to take the foreclosure sale to disclose the notice of default in writing to any prospective tenant prior to executing a lease agreement for the property. The bill would also provide that a violation of those provisions would allow the tenant to void the lease and entitle the tenant to recovery of twice the monthly rent or twice the amount of actual damages from the landlord, and all prepaid rent, in addition to any other remedies that are available. The bill would also provide that if the tenant elects not to void the lease and the foreclosure sale has not yet occurred, the tenant may deduct twice the monthly rent from future rent obligations owed the landlord who received the notice of default. The bill would specify the content of the written disclosure notice.

March 27, 2012

Supervisor David Chui introduces legislation to stop

Board of Supervisors President David Chiu introduced legislation March 27 that would protect rental housing from short-term corporate uses, otherwise known as “hotelization.”Chiu said the proposal closes a loophole in city law by prohibiting corporations from signing leases with property owners that are longer than 30 days, but then allowing out-of-town employees to stay short-term.

March 25, 2012

SOMA Apartment Market Remains Robust

  Rental demand for apartments in the South of Market area continues to be very strong, driven by booming employment trends on the Peninsula and more locally. Companies such as, Riverbed Technology, Twitter and Zynga are expanding local presence in San Francisco. In fact, Zynga recently bought it’s entire building, totalling 670,000 square feet, in order to accommodate a growing work force.   The apartment vacancy rate in SOMA is now at 1.4%, down almost 200bp from the prior year. Average rents have increased over 3.5% from a year ago.

March 15, 2012

Access to acquisition financing for apartment buildings continues to improve

  Loans from portfolio lenders are issued at LTVs ranging from 70% to 80%, while the government agencies will work at the high end of the range on the highest-quality properties. The GSEs accounted for 65% of the mortgage originations last year and will continue to have unlimited financial support from the federal government through the end of 2012.   All-in rates on aparment building mortgages of $3 million and more start in the mid-3% range for terms of five years, while 10-year debt varies from the low to mid-4% region. Rates for smaller assets can be up to 30-75bp higher.

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