We zipped up to the 25th floor of 1 Cal—aka Grosvenor Americas’ US HQ—to hear from director of research Eileen Marrinan about housing affordability. Even though interest rates are rising, she says, housing costs are still relatively low as a percentage of income. But if income doesn't rise (as interest rates and housing costs go up) that will be a problem. Bad weather across the country and weak January and February jobs reports have affected sales and construction this year, she says. (Everybody wants a snow day until they realize it screws up their schedule and makes them work more in the summer.)
The jobs update is a good one on both ends of the state, however. Eileen recently crunched re-benchmarked employment figures and found S.F. has almost 50,000 more jobs than we knew about and LA has 200,000 more. (She's like an archeologist finding mummified numbers.) How can that be? Startups aren't on the radar of initial employment reports, but they're reflected in new numbers. When you go through an upturn you lag on seeing increases in employment, she explains. Those new figures got her acquisition teams in SoCal and NorCal giddy. Here, their S.F. office shows off their portfolio, which locally includes the Fifth Avenue-esque 185 Post site that calls De Beers a tenant.
S.F. is running a couple years ahead of the rest of the country and growth has not slowed down much, she says. Above, Grosvenor's 39 high-end condo units are nearing completion at 1645 Pacific. The six-story project will have two penthouses that boast Golden Gate views. Eileen, who lives nearby in Russian Hill, is taking a peek at that priceless vista onsite this week. She recently chatted with a broker friend in the neighborhood, who says condo sales in the city slowed for about six weeks in late summer but have rebounded strongly since then.
At the end of 2013, the expectation was apartment rent growth would drop off because of all the new supply, but demand has surprised all by keeping up. AvalonBay’s new AVA project at 55 Ninth, above, sits next to Twitter. They thought they'd have to offer concessions to fill up because so many rental projects broke ground at once; Crescent Heights' huge new NEMA project also sits nearby. AVA ended up being significantly pre-leased months before construction was done (move ins started this month) and the leasing office tells us the 273 units are already 20% occupied.
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