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S.F.'s Slowdown Noted By Starwood Capital Group Head Barry Sternlicht


Starwood Capital Group’s head, Barry Sternlicht, singled out Oakland for praise in an interview on CNBC. He called it “the Brooklyn of San Francisco” while noting that S.F. was cooling due to the tech slowdown.

The conversation began with a frank admission that low interest rates had created an asset bubble in real estate. He did say, however, the core fundamentals of real estate hadn’t been better in 20 years. Sternlicht pointed to strong household formation and a rise in apartment rents. The company went on an $8B apartment buying spree within the last six months.

Among the list of hot markets he mentioned—Nashville, Denver, Seattle and Southern California—he was particularly enthusiastic about Oakland. San Francisco’s sister city has acted like Brooklyn did to Manhattan, drawing people fleeing the high cost of housing.

San Francisco is a less compelling growth story. The tech bubble’s deflation phase has started and is exerting downward pressure on real estate, Sternlicht said.

The historical relationship between richer San Francisco and poorer Oakland has seen signs of equalizing in recent years. Office rents have driven cost-conscious startups Oakland's way, and Mayor Libby Schaaf has actively courted these companies. Bisnow's annual Oakland Multifamily and Mixed-Use Rundown will look at these trends on June 28.