Last modified on February 15th, 2022
By Stacy Holden
COVID-19 has had a clear and lasting impact on the investment appeal and livability of San Francisco. Although ALN Apartment Data shows occupancy rates in the San Francisco metro area were already starting to decline in the second quarter of 2019, that downward trend was accelerated by the pandemic.
Thankfully, occupancy levels reported by ALN did show a steady climb through 2021, but overall demand for space in the Golden City has softened. As Marcus and Millichap recently reported, several of the city’s largest organizations have continued to drastically scale back their leasing space:
“San Francisco employers are not expected to occupy as much space as they did prior to the health crisis. Salesforce, for example, has backed out of a lease at 550 Howard St. and is sub-leasing hundreds of thousands of square feet. Pinterest paid $90 million to terminate its lease for 490,000 square feet and Twitter is subleasing 100,000 square feet.”
Since residential real estate is connected to commercial real estate, this could indicate that demand for workforce housing in San Francisco will remain softer than it was pre-pandemic.
Because the multifamily market in San Francisco has shifted so much, it’s also understandable that renter preferences and expectations have shifted drastically, too. To help property owners and managers stay on top of and better understand these changes, AppFolio surveyed renters in the San Francisco metro area.
The comprehensive 2022 San Francisco Resident Motivations report is available now, but here are our top three key takeaways for property managers and owners who want to meet the shifting needs of their residents in today’s dynamic Bay Area rental market.
Takeaway #1: Property management technology is more important now than before the pandemic
When we asked participants how important four key areas of property management — responsiveness, flexibility, technology and community — are now, compared to before the pandemic:
- 36% of respondents reported that technology to manage their rental is more important
- 34% said that smart home technology is more important today
- 48% said that prompt response time from the property managers is more important than before
Just like the decline in San Francisco’s occupancy rates, the increased importance of tech for the area’s renters isn’t new — it was just amplified by the pandemic. However, as Eric Andresen, owner of West Coast Property Management and West Coast Property Maintenance in San Francisco, explains:
“That trend started long before COVID, where Silicon Valley tenants, in particular, wanted to live in San Francisco. The problem is that the ability to put that technology in place just doesn’t work in some of these older buildings. But the technology is incredible in most of the new construction now.”
For property managers and owners who do run into technology upgrade limitations, Eric also notes that not all improvements have to be hardwired. In fact, something as simple as an upgrade to digital processes and online communication can be huge for residents:
“The ability to log onto their account and even just see what their balance is. And certainly, to be able to pay online without having to pay a fee if they’re using a transaction directly with their bank. Being able to communicate their concerns in the middle of the night with an email or an online communication tool is tremendous for them.”
Given that almost half of our survey’s respondents said prompt response times were more important than before the pandemic, improved communication tools and tenant portal improvements may be enough to help satisfy San Francisco renters’ needs for more tech.
Takeaway #2: San Francisco residents seek leasing and payment flexibility
When compared to our national survey, San Francisco renters’ desire to renew their lease month to month was 10 points higher. In total, more than 26% of Bay Area renters surveyed said they plan on renewing month to month, compared to 16% of national renters surveyed.
But month-to-month options weren’t all The Golden City residents said they wanted. Almost half of respondents (48%) said flexible payment plans have also become more important since the pandemic began.
Like every city and town across the country, COVID-19 hit San Francisco and its residents hard. But unlike every city and town across the country, San Francisco continues to rank as one of the most expensive cities to live in the United States, has low housing inventory, and is a seller’s market. Ultimately, that means affordable housing options are incredibly limited for those living in the metro area and wanting to stay.
Month-to-month leases and flexible payment plans don’t necessarily make business smoother for property managers and landlords who are on traditional or manual systems today. However, leveraging technology can be a win-win for helping to keep track of nontraditional leases and payment schedules and satisfying renters’ need for improved technology solutions.
Takeaway #3: Timely maintenance is a source of satisfaction and dissatisfaction among S.F. residents
When asked “How has your property manager or landlord disappointed you in the past year?”, maintenance issues were cited as the biggest source of frustration for San Francisco renters.
To give more context to what maintenance issues looked like for our survey participants, we gave respondents the opportunity to explain. Their open feedback included:
“I want to get the dryer replaced or cleaned but it has been 6 months and nothing has been done.”
“The window installation in our bedrooms and living room leaks water when it rains, causing mold. He blamed us for not opening the window to let it air out.”
Interestingly, when we then asked “How has your property manager or landlord exceeded your expectations in the past year?”, 11% cited unit improvements/maintenance.
While this feedback may seem contradictory, respondents’ feedback actually makes sense: maintenance is one of the themes renters care most about. When property management gets it right, residents notice. When they don’t, that will be the focus of their complaints.
The easiest way to ensure maintenance doesn’t become the focus of resident complaints is to implement a centralized property management software to make sure maintenance requests are received, acknowledged, and addressed right away. Andrew Greenberg of Trilogy Real Estate Management offers further proof:
“Requests are handled much more quickly. When a tenant submits a work order, it pops up directly in AppFolio and we’re able to address it almost immediately. Whereas in the past, these inquiries went to the inboxes of our various employees. If those inboxes weren’t being checked, work orders generally weren’t being handled until the next day or potentially even later… It’s greatly improved our efficiency.”
San Francisco renters revealed even more ways property managers can exceed their expectations
While San Francisco renters who participated in our survey said technology, timely maintenance, and flexible leasing and payments are their top concerns, these are just some of the insights that you’ll find in our San Francisco Resident Motivations report.
In that same report, we also received answers to a wide variety of open-ended and closed questions, such as:
- When do you plan to move next?
- What are you going to be looking for in your next home?
- How satisfied are you with your property management company or landlord?
- How likely is it that you would recommend your property management company or landlord to a friend or colleague?
- And more
The full San Francisco Resident Motivations report is available for you to download now. We hope you’ll take advantage of the valuable insights it provides to meet — and exceed — your residents’ expectations.
Comments by Stacy Holden