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Worst Submarket-Level Rent Cuts

Worst Submarket-Level Rent Cuts

While month-over-month rent growth proved promising during February for some of the nation’s gateway markets, annual trends are still bleak for some key submarkets. Neighborhoods in the nation’s gateway markets continued to dominate the list of worst submarket-level performances in the year-ending February, though Midland/Odessa also made an appearance. In fact, Midland/Odessa’s two submarkets ranked as the worst of the worst, with a year-over-year effective asking rent decline of 32.8% in Midland and cuts of 28.6% in Odessa. Of the Bay Area submarkets landing among the bottom 10, three were in San Francisco and two were in San Jose. Downtown San Francisco recorded the deepest annual rent cuts of 26.9%, followed by SoMa’s price decline of 25%. Meanwhile, Central San Mateo County recorded a 21.4% year-over-year drop in rents. In the San Jose market, North Sunnyvale was the laggard, with annual rent cuts of 22.8%, followed by South Sunnyvale/Cupertino’s pullback of 19.7%. Also landing among the nation’s bottom 10 submarkets for annual rent change in February were some other gateway submarkets: New York’s Financial District (-23.7%), Intown Boston (-21.1%) and Washington, DC’s Crystal City/Pentagon City (-20%). However, some of these could be reversing course, as five posted at least some month-over-month rent growth in February including: South Sunnyvale/Cupertino (2.2%), Downtown San Francisco (1%), Intown Boston (1%), North Sunnyvale (0.4%) and SoMa (0.1%).