Northern California’s multifamily market has a strong development pipeline right now, but after 2020, it drops off dramatically. There is an increasingly toxic political climate in California, with measures like AB 1482 and the revival of Prop 10, which will likely throw a wrench in any planned development beyond 2020.
Some of the most notable projects currently underway include Brooklyn Basin’s Orion in Oakland. The first 241 units out of a planned 3,700 have been completed. Brooklyn Basin is a $1.5 billion project that is reshaping the Oakland waterfront and transforming the area into a new, vibrant neighborhood. In San Jose, the area around the proposed Google downtown campus is also on everyone’s radar.
Kalah Espinosa, Colliers
The majority of current Bay Area development is concentrated in Oakland and Santa Clara County, with the latter currently experiencing a 4.57 percent vacancy rate.
Market fundamentals, including proximity to jobs and a more welcoming environment toward multifamily development have attracted developers and renters alike to these two places. Developers Carmel Partner, Hanover and Holland have been particularly active in Oakland, as of late.
Current conditions in Northern California have produced a tenant’s market, with an abundance of new units coming online at once. We are seeing concessions and rent stabilization in markets like Oakland. However, once this product has been absorbed, we expect to see the market settle. At this point, the lack of new deliveries will revert the market back to a landlord’s market.
— By Kalah Espinosa, vice president, Colliers. This article first appeared in the September 2019 issue of Western Real Estate Business magazine.