(May/2010) … March 2010 was the first time in 23 months that the San Francisco side of the Bay added jobs, according to California’s Employment Development Department (EDD). Past articles in this column have proven how important San Francisco is to the rental economy in RHANAC’s service area which includes Oakland, Berkeley, Alameda and Emeryville.

If the San Francisco/Peninsula area continues to add net jobs this should mean a pick up in their rental market and since there appears to be about a six month delay before rental trends hit the East Bay look for more signs of strengthening in our rental market later this year.

The EDD said there were 921,100 jobs in the San Francisco-San Mateo-Redwood City area in March, up from 920,900 in February — a gain of 200 jobs. Yes, 200 net new jobs is a puny gain and, yes, they could be census workers, but seeing that string of 23 straight monthly net losses broken is a milestone. The big question is whether it continues. It might interest you to know that the San Jose-Sunnyvale-Santa Clara MSA has added net jobs for three straight months beginning in January, totaling 3,900 net new jobs.

Meanwhile job growth on both sides of the Bay continues to spike up in a V-shaped recovery meaning that the worst of the downturn in the rental market is behind us. Job growth is still negative, despite the fact that San Francisco added jobs in March, because job growth is calculated on a year-over-year basis, monthly. Rents will only go up when job growth goes positive on both sides of the Bay according to our analysis of historical trends. At the RHANAC Investors Expo in March we predicted that our rental market would slowly improve during 2010 but that rents might continue to drift downward, just not nearly as much as before, and that vacancies will become easier to rent.

From talking with my clients and other apartment owners there seems to be a lot more optimism. One large owner with six buildings in Oakland and two in San Leandro said that things were “picking up a little” and he predicts that in the next couple months the rent concessions he offers in some cases will “disappear.” Another owner who owns a medium sized building above 580 on Oakland Avenue said that he just rented three apartments and he sees a “positive change.”

Yet I also heard comments like “still slow” and “tons available” so not all owners are bullish on the rental market yet. Jon Shahoian, who owns and operates Lapham Management Co. in Oakland, recently told me that his overall occupancy rate was better than 96%, and they manage many, many buildings. At my recent Apartment Market Symposium in March (click here to see videos), the panelists commented on their current experiences with the rental market, saying that they had strong occupancy levels. Yet, having said all this I find very few owners telling me they are raising rents, just that things are better than they were.