San Francisco’s Empty Offices Delay Apartment-Rent Recovery

(Bloomberg) -- San Francisco is the only U.S. apartment market that hasn’t seen a full recovery to pre-pandemic rents, landlord Equity Residential said in its earnings call Wednesday. 

A halting return of employees to their offices is still weighing down demand for apartments in the city. That’s limiting how much Equity Residential can raise rents, Chief Operating Officer Michael Manelis said. Once local firms set formal return dates -- likely in 2022 -- rents in San Francisco are set to improve, he said.

“The tech companies have been all over the place,” Manelis said on the call. “So just a little bit more clarity probably brings some incremental demand.” 

The San Francisco region had just 25% of employees back in their offices in the week ended Oct. 20, the lowest share among 10 U.S. metropolitan areas, according to swipe-card data from security firm Kastle Systems. An index measuring national returns was at 37%.

Among large tech employers, Google and Facebook Inc. have said employees don’t need to be back to campuses until January. Apple Inc. won’t compel corporate workers back until early next year, saying it will give employees one-month notice before asking them to come in.

Landlord AvalonBay Communities Inc. showed similar trends in its third-quarter earnings report Wednesday. Rental revenue declined 7.8% in Northern California from a year earlier, while climbing in almost every other market where the company owns apartments. That includes a 2.5% gain in the New York area, which had also been hit by moves during the pandemic. 

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