Berkeley Multifamily Market Report
Market Overview
The Berkeley multifamily market, one of the East Bay’s largest, boasts over 19,000 units. Its unique selling point is the strong influence of the University of California, Berkeley, which attracts a significant number of graduate and undergraduate renters. The urban college town atmosphere and the high demand from students are key strengths of this submarket. The market is predominantly rental-based, with renters accounting for 60% of households.
Berkeley Multifamily by the Numbers
- Delivered Units: 495
- Absorption Units: 786
- Vacancy Rate: 8.7%
- Asking Rent Growth: -5.5%
Last 12 Months | Source: CoStar Group
Vacancy and Rent
It’s worth noting that vacancies, while historically elevated at 8.0%, have shown a promising trend, falling more than 250 basis points in the last year. Asking rent in Berkeley averages $2,670 monthly, which is among the metro’s top submarkets for asking rent. Berkeley rent control regulation is one of the Bay Area’s strictest. The ordinance firmly caps rent increases for current tenants at 65% of the Bay Area’s Consumer Price Index, allowing for just one increase per year.
Construction and Sales
In the past five years, delivered units totaled 1,300, and 356 more are under construction. As a result, inventory expanded by 1.9%. Development is exclusively in Downtown Berkeley, near the BART station and UC Berkeley campus.
As of Q2 2024, 22 deals have occurred in the past year, totaling up to $85.9 million in transactions. Cap rates are rapidly increasing to the 5% threshold, indicating a 100 basis point increase. One notable outlier is the 16 units located at 214 Parker St acquired by the Nanak Foundation Trust for $6.02 million, yielding a 6.8% cap rate, while other deals likely remain just under 5%.
