Behind Resiliency for Multifamily in Inland Empire and San Jose Amid Supply Wave
The resilience of multifamily housing in the Inland Empire can be underscored with a mix of affordability, structural demand spillover from coastal Southern California and tenant needs that are broader than just tech—even while the region navigates a supply wave.
"The primary driver is renters being priced out of Los Angeles and Orange County, who keep flowing east, making it the default relocation market for cost-constrained households who still want access to coastal job centers," Doug Ressler, business manager, Yardi Matrix, told GlobeSt.com.
Despite elevated deliveries in the Inland Empire, the three-month trailing rents remained flat through October, while advertised asking rents rose 1.7 percent year-over-year to $2,165, according to Yardi's Rent Café. Additionally, occupancy ticked up 10 bps YoY to 95.4 percent in September.
Meanwhile, the rebound being seen in San Jose and San Francisco multifamily—especially relative to many other U.S. markets—is real, according to RentCafé.
It is driven by a very specific mix of supply constraints, demand recovery and structural advantages that don't exist in most Sun Belt or Midwest metros. Ballooning investment in San Jose is decelerating rents.
San Jose investment volume reached $1.5 billion in the year-to-date through October, already exceeding every previous year of the decade and signaling heightened confidence in the market's performance.
On the other hand, rents slid 10 bps on a trailing 3-month basis through October, to $3,310.
"The single biggest driver is that new multifamily supply in the Bay Area has fallen to among the lowest levels in the US," Ressler said.
"San Francisco and the broader Bay Area are adding 1–1.5% new inventory, versus 3–4% nationally.
Units under construction in the Bay Area fell more than 20% to 30% year-over-year. In contrast, many Sun Belt markets (Austin, Phoenix, Nashville, Charlotte) are still digesting record deliveries from 2022–2024.
"The Bay Area rebound is not population-driven in volume terms, but income-driven," Ressler said. "This favors Class A and B apartments, where San Francisco and San Jose are seeing the strongest rent growth."
Source: GlobeSt/ALM