doesn’t Lie

written by Matthew C. Sheridan

An in-depth breakdown of SFAA’s monthly rent survey findings and local and national unemployment statistics.

Just two weeks into San Francisco’s historic shelter-in-place order, April rent came due for tenants across the spectrum. Imposed to stem the spread of COVID-19, the order resulted in the mass shuttering of businesses—shortly thereafter, employee layoffs and furloughs began. With moratoriums on evictions already in place and rent forbearance agreements inked, there was widespread concern that large numbers of tenants would soon be unable to pay their rent. By
the second week of April, a survey conducted by the San Francisco Apartment Association of their membership showed that 5.7% of tenants were unable to pay all or part of April rent due to the COVID-19 crisis.

The true impact from the limitations on commerce were just beginning to be felt. Palpable anguish for some set in, concerned with how they were going to pay for the essentials: food, transportation, rent. While the survey showed a relatively small percentage of tenants struggling with rent, nearly all housing experts predict the numbers will increase significantly in the months to come.

“We’re expecting at least twice as many deferment requests in May, from what we received in April,” reported J.J. Panzer. “In April, we only had 15, now it’s up to 30, Panzer said last month. Panzer, who owns and runs Real Management Company, says he hasn’t seen any lease breaks yet, but they’ve received notices to vacate related to COVID-19. “We’ve had a number of situations where individual roommates are vacating due to COVID-19, leaving one or two roommates desperately trying to find responsible replacements for their larger flats.”

Nationally, a report by the National Multifamily Housing Council found that 11% of apartment households were unable to issue partial or full rent payment by mid-April. The survey of 11.5 million units of professionally managed apartment units, showed the same figure a year ago was at 7%.

While components of the CARES Act provide some assistance to renters, San Francisco clearly benefits from two key elements unique to our city: a rent control ordinance that dates back to the 1970s and an enormous concentration of high-tech jobs. The portion of tenants living under rent control is significant here, and for those lucky enough to remain holed up in their units for decades, the gift of far-below market rent ensures a lifestyle and benefit few have elsewhere. For many San Franciscans, rent control simply reduces their proportion of standard housing cost. The sudden economic calamity impacting all of us, is slightly more palatable—in my opinion—thanks to rent control.

On the other end of the spectrum are the oft-derided tech workers, fortunate to be in a position to easily work remotely and be employed in an industry that adapted instantly to SIP. There are layoffs occurring in tech, but for the time being, they are not significant. These factors, along with San Francisco’s high standard of living, contribute to a dichotomy were tenants here are in a slightly better position to weather the storm the coronavirus has brought, compared to elsewhere. It will get worse though.

Nationally, the April jobs report is forecasted to reveal the sharpest deterioration in the U.S. labor market since 1939—with payrolls expected to show around a $22 million decline from March and an unemployment rate of 16%. By early May, close to 4 million Californians had filed for unemployment over the previous seven weeks—an astronomical number. San Francisco is not immune from layoffs. Initial unemployment claims for the city rose to 44,306 in March—the previous month February saw 3,303—well over a ten-fold increase. Bear in mind, the SIP order was implemented in mid-March. Additionally, independent contractors, who were just granted new benefits under the federal stimulus package known as CARES, were only recently allowed to apply for unemployment in California.

SFAA’s survey conducted in April also revealed that 16% of owners reported residents broke their leases or had unexpectedly given a 30-Day Notice to Vacate. Some 315 landlords responded to the survey, owning or managing 10,377 residential apartments citywide, which represents 6% of the city’s 172,000 rent-controlled apartments.

Craig Berendt of Berendt Properties reports that he hasn’t seen many tenants break their lease. “We’ve have had more people move at the end of their lease though,” said Berendt. “We typically see about 10 move-outs each month in our management portfolio—but now, we’re up to a couple dozen moves a month.” 

While the survey revealed that 5.7% (596 total) of residential residents were unable to pay all or part of April rent due to COVID-19, many respondents reported that they expect this number to rise significantly in the month of May. The average unpaid monthly rent by tenants was $2,504.  No surprise to anyone, 50% of commercial tenants were unable to pay all or part of April rent due.  Berendt reports that all of his firm’s commercial tenants requested some form of rent forbearance or forgiveness.

Although some housing providers reported owning their property outright, many expressed fear that they would be unable to pay their expenses if the pandemic were to continue. Most expected they could continue to maintain their properties and pay their expenses for between three and six months.

Housing providers with vacant units have either put their showings on hold or have reported that there are almost no inquiries from prospective residents and essentially no demand for apartments at this time. The inability to fill vacancies has compounded the financial impact of COVID-19 on housing providers.

Some prospective tenants appear to be weathering the storm and seeking rentals. “We’re getting multiple applications for most of our available units and most of the jobs we’re seeing from prospective tenants appear to be in industries that can weather the storm (tech, health care, etc.),” reports J.J. Panzer.

Recent news that the first quarter Gross Domestic Product contracted more than expected—almost 5%, led the Federal Reserve to issue a  statement, which cautioned that the coronavirus would pose “considerable risk” to the medium term economic outlook and implicitly signaled that the central bank does not anticipate a V-shaped recovery.

In San Francisco, 17% of apartment owners will be delaying paying their property taxes according to the SFAA survey and already some 5% have negotiated work-outs and mortgage forbearance with their lenders.  Meanwhile, in New York City, a petition has been launched by some landlords to counter the lost rents they are not receiving, with Tax Strike on local property taxes.

SFAA intends to conduct monthly surveys for the time being covering the rent collections, and the association and this magazine will report on the findings regularly.

For more information, or to participate in next month’s SFAA rent survey, visit

Matthew C. Sheridan is an apartment building specialist with Newmark Knight Frank and is the emeritus editor and publisher of this magazine. He can be reached at 415-273-2179.