Portofino Riviera Apartments -Portofino apts. for sale sausalito

There is a market/deli within the block and many restaurants and shops within walking distance.

The two SF ferries that run every hour to two different ports in SF are a 10 minute walk along the waterfront.

The Golden Gate Bus stop is across the street. Non-stop commuter runs to the Financial District.

A man from New York stated: "This is the best apartment house in the United States - on the water with views of San Francisco."

But after three months of searching in vain she is frustrated by the lack of rentals within her rent budget of up to $1,300 a month.

"It's a total nightmare," she said. "There's only dumps out there for huge prices."

While it has never been cheap to rent in Marin, apartments are more expensive now than they have been in at least six years despite a sluggish economy and housing market. The average monthly rent for an apartment in Marin jumped to $1,790 in the third quarter of 2011, a 6.3 percent increase from $1,684 in the same period last year, according to data released Thursday by Realfacts, a Novato-based tracking firm.

The occupancy rate in Marin rose from 96.4 percent in the second quarter to 97.2 percent in the third quarter, making vacant units the scarcest they have been since the 97.3 percent occupancy rate posted in the third quarter of 2008.

Kimberly Fairbank, manager of the Oaktops Apartments complex north of the Marin Civic Center in San Rafael, said her property has seen waiting lists for some apartments, and rents have been increasing by $100 to $200 when apartments turn over.

"A year ago I would not have had a waiting list and we would have had to offer move-in bonuses, and we don't have to do that now," Fairbank said.

Among the new tenants are couples who have downsized from houses or lost their homes because of mortgage trouble, Fairbank said. Others are longtime renters who still cannot afford the down payment for a house or condominium despite steep price declines, she said.

"Before, you could put 5 percent down and get loans and now, even with a good credit rating, you have to put 20 percent down and people don't have that kind of money because they have been out of work or tapping into their savings," she said.

Over the past five years, the median Marin single-family home price fell 16.7 percent, from $906,000 in September 2006 to $755,000 in the same month of 2011; also, the median condo price fell 46.8 percent over the same period, from $540,000 to $287,000.

But rents have been pushed higher by a wave of foreclosures, an economic downturn and a lack of financing for home purchases that have flooded the market with tenants. The average monthly rent in Marin in the past five years increased 14.6 percent, from $1,562 in the third quarter of 2006 to $1,790 in the same period of 2011.

At the same time, the average weekly wage for Marin workers rose at only two-thirds the pace of rents, increasing 9.6 percent from $1,006 in the first quarter of 2006 to $1,103 in the first quarter of 2011, the last quarter for which data was available, according to the federal Bureau of Labor Statistics.

"Despite the poor economy, we are seeing substantial increases in rent levels in many areas," said Mary Murtagh, president and CEO of EAH Housing, a San Rafael-based nonprofit affordable housing developer and manager. "We are inundated with applicants for recently opened properties."

Lower-priced apartments are being snapped up quickly, said Nikki Maida, an assistant property manager for San Rafael-based Prandi Property Management, which manages about 500 Marin rental units. In one 35-unit apartment complex in San Anselmo, small one-bedroom units that rent for $1,000 to $1,050 are being claimed as soon as they are listed, Maida said.

"We just have people who are desperate looking in that price range," she said.

For Walsh, it is starting to look less likely that she will be able to leave her room in a Terra Linda house she shares with a male roommate and his daughter.

"I'm not looking to buy a house — that is a pipe dream — but even renting is starting to feel the same way," she said.

Kristin Davie misses her freedom. The 22-year-old has been living with her parents in Colonia, N.J., since graduating from Marist College in May. She and two friends set a deadline of September to find jobs and a New York City apartment they could afford to share. September's long gone, and she's still at home. Davie left her first job, where she was unhappy; now she has a new one. "I'm hoping we'll be in the city by the end of April," she says.

The managers of AvalonBay Communities are hoping right along with her. While most apartment construction is on hold, AvalonBay (AVB), a real estate investment trust based in Alexandria, Va., plans to start $400 million worth of new rental units this year, mainly in the Northeast.

With the unemployment rate at 9.7% and the apartment vacancy rate at 8%—the highest ever, according to research firm Reis (REIS)—this might seem like the worst possible time to start building. Rents plunged last year, yet AvalonBay CEO Bryce Blair says it won't be long before the job market recovers and people in their twenties, such as Davie, move away from home or out of their shared apartments and into rentals of their own. The units AvalonBay plans to start this year won't be ready for occupancy until 2012, and by then Blair expects demand to be strong. "If we're able to build and deliver new product into a period that is really absent of supply," he says, "we'll have a competitive advantage."

With $300 million in cash and a $1 billion credit line, AvalonBay, the second-largest publicly traded apartment owner in the U.S., can afford to be contrarian. Construction financing for private developers—a category that includes most of AvalonBay's rivals—dried up as banks were swamped by bad loans. U.S. builders started 92,000 units in 2009, a 58% decline from 2008 and the fewest since the government began collecting the data in 1974. AvalonBay built nothing for the first nine months of last year, then started two projects.

"It is as difficult to finance a new development today as in any time in my 30 years in the real estate business," says Charles R. Brindell Jr., president and CEO of closely held Trammell Crow Residential, which has developed more than 225,000 multifamily units across the U.S. For the first time in its 33-year history, Trammell Crow didn't start a single development last year, when it failed to line up financing for four planned projects in the Northeast.

The largest publicly traded apartment owner, Equity Residential (EQR), the real estate investment trust founded by billionaire Sam Zell, is emphasizing acquisitions over construction. It does, though, plan to build 111 units on a property in the Chelsea neighborhood of Manhattan that it acquired in 2009.

RIVALS READY TO POUNCE

Will AvalonBay's bet pay off? Ron Witten, founder of Witten Advisors in Dallas, is a believer. "We will have fewer apartments than the market will have need for," he says, "which will drive rents higher." Witten says rents may increase by about 6.5% and the vacancy rate drop below 5% by 2012. Others think any shortage won't last long. "When financing gets better," says Victor Calanog, director of research at Reis, "building is going to be quick."

Certainly, some areas will rebound faster than others, and Kristin Davie may want to find a place soon. According to forecasts by research firm Axiometrics, New York City rents could climb 6.7% next year and 8.6% in 2012.

Almost 300 eating, drinking and food-related establishments have opened in the last two years, spurring a surge in demand for street-level real estate, The retail vacancy rate, already the lowest in the U.S., will drop further and rents are poised to rise as more businesses seek space.

“The city is firing on all cylinders and we don’t have a lot of space that’s turn-key ready or easy to convert,”. Food deals acount for a third of the brokerage’s retail business in the city, she said.

The dining revival wouldn’t be possible without the technology industry that’s fueling a rebound in the economy and providing customers for new restaurants,

Hiring at such San Francisco-based firms as Twitter Inc. and Salesforce.com Inc. (CRM) has contributed to five straight quarters of office occupancy gains and the lowest jobless rate of any metropolitan area in California.

Visitors to the city spent an almost-record $8.3 billion in 2010, the most recent data available, according to the San Francisco Travel Association, a trade group. The San Francisco area’s retail vacancy rate was 3.7 percent in the third quarter, compared with 11 percent for the U.S. average, Reis data show.

‘On Fire’

The boom stretches from the Financial District, where Michael Mina merges Japanese and French influences with haute- cuisine technique, to South of Market, where Sushirrito serves Asian fusion burritos. Dozens of specialty stores in neighborhoods across the city sell such artisan products as salt-and-pepper ice cream and gluten-free cupcakes.

Michelin & Cie, a producer of dining guides since 1900, this month added 19 entrants to its list of best-value restaurants in the San Francisco area, while the Los Angeles Times ventured north to sample six hot spots and pronounced the scene “on fire.”

“It seems like a new golden age,” Meesha Halm, San Francisco editor for Google Inc. (GOOG)’s Zagat Survey dining guides, said after reviewing thousands of results from the 2012 edition.

Landlords have taken notice and are seeking the “sex appeal” of a popular restaurant for their buildings, said Vikki Johnson, senior managing director at Colliers International.

Bids for Space

A ground-floor space in 101 California St., a Financial District high-rise owned by Houston-based Hines, has at least four potential candidates, according to Colliers. Johnson said JPMorgan Chase & Co. at 450 Sansome St. and Broadway Partners at 100 California St. are fielding bids for real estate from restaurant groups showing “keen interest.”

A thriving dining business can give property owners a competitive advantage in a city like San Francisco with a “creative and innovative” business community because it can help attract office tenants, said Rob Black, director of the Golden Gate Restaurant Association, a lobbying group.

For some property owners, eateries may not be the first choice of tenant because they often entail risk that chain retailers with national credit don’t have, according to Morgan of Cushman & Wakefield. Restaurants have high upfront costs for design and equipment and are usually structured as limited liability companies, restricting what landlords can recover if the business fails, she said.

Startup costs average $250,000 to $500,000, according to Thad Vogler, an industry consultant who helped start the acclaimed restaurants Jardiniere and the Slanted Door.

‘Extraordinary Expectations’

The recent successes are carrying the day for landlords, according to Johnson.

“People are giddy about seeing the new concepts being developed by chefs and restaurateurs who already have a huge fan base,” she said. “These aren’t sandwich shops. They’re very competitive businesses with extraordinary expectations.”

The San Francisco area has been in the forefront of food culture in the U.S. since at least 1971, when Alice Waters opened Chez Panisse in Berkeley. Her emphasis on cooking with the finest and freshest ingredients, and buying from local producers, came to be known as “California cuisine” and inspired a generation of chefs nationwide, according to Halm.

Current trends include more-affordable offshoots of high- end establishments, and “head-to-tail” -- cooking with all parts of the animal. Some chefs are offering “offal nights,” with exquisitely prepared meals of gizzard, tripe and other low cuts of meat, according to Black of the Golden Gate lobbying group.

Retail Leasing

The openings follow the 2008 financial crisis and ensuing recession, when retail leasing demand and rents plunged across the U.S. Rates in the San Francisco metropolitan area averaged $29.84 a square foot in the third quarter, little changed from a year earlier and down only 3.4 percent from the third quarter of 2009, according to New York-based Reis.

The city’s traditional strength as a retail market and international tourist destination may have persuaded landlords they’d be able to lure tenants without substantially lowering rents, Severino said.

While the city’s retail rents have held their ground, the published numbers don’t reflect concessions property owners granted to tenants after the economic downturn, according to Anna Weinberg, who opened Park Tavern in the North Beach neighborhood last month.

‘More Agreeable’

“Hard-line leases” that could penalize a restaurateur with the loss of personal assets have fallen by the wayside and landlords have been “much more agreeable,” said Weinberg. In February 2010, she started Marlowe in the South of Market district, also known as SOMA.

The recovery in San Francisco has made it easier for restaurant groups to raise money, compared with the immediate aftermath of the credit crisis, when banks froze lending and investors were scarce, according to Johnson.

Many in the current crop kept their plans alive during the recession, Vogler said. He obtained a $200,000 loan from his landlord to turn a former SOMA garage into his first restaurant, Bar Agricole.

“I think this recent group of restaurants is this strongest group ever, because we’ve worked so hard to get things open,” said Vogler, whose “modern urban tavern” was this year’s James Beard Foundation Award winner for best design. “They’re survivors who wouldn’t let things go under.”

Empty Properties

Nationwide, U.S. mall owners are also turning to restaurants to fill their empty properties, giving patrons a reason to stay on the premises as Internet shopping cuts visits to stores, according to Green Street Advisors Inc.

“Restaurants can’t be replicated online,” said Cedrik Lachance, managing director at the Newport Beach, California- based research firm. “You’re seeing more food uses in malls and strip centers around the country. Landlords are pragmatic.”

San Francisco’s revival shows no sign of letting up as eateries serving Austrian, Cajun and Vietnamese fare -- along with taco trucks that serve food out of vans, and so-called pop- up restaurants that temporarily take over unexpected locations - - enter the scene, said Halm of Zagat.

A run-down neighborhood near City Hall known as Mid-Market, which has a 21 percent office vacancy rate, may be the next frontier for fledgling chefs. Twitter, the messaging service with a stated 100 million users, has announced plans to relocate there in mid-2012 and will probably lure other businesses, said Adam Lasoff, a Cushman & Wakefield broker.

“It’s not reflected yet, but you’re going to see a lot of retail follow Twitter,” he said.

Last month's rate was down from 7.5 percent in September and 8 percent in October 2010, the state Employment Development Department reported.

Marin remained the county with the lowest unemployment in California, which recorded a statewide rate of 11.2 percent in October, down from 11.4 percent in the previous month and 12.1 percent a year earlier,

"It's certainly a hopeful indicator that the unemployment indicators keep moving downward, but we shouldn't forget that there are 6 million Americans who have been unemployed for over one year," said Racy Ming, manager of the Marin Employment Connection, citing a figure from Beacon Economics.

Other Bay Area counties also posted jobless rates well below the state figure, including San Mateo with California's second-lowest rate of 7.9 percent and San Francisco third with 8.1 percent and Napa fourth with 8.3 percent.

Solano County posted the region's highest rate of 10.9 percent, followed by Alameda with 10.1 percent and Contra Costa with 10 percent.

When adjusted for seasonal changes, California's jobless rate fell slightly to 11.7 percent in October from 11.9 percent a month earlier as the state added nearly 26,000 jobs in areas including professional and business services, education and health services.

Seasonal adjustments:

and industry data were not available for Marin.
The state's job gain is remarkable in light of the fact that the United States added a total of 80,000 jobs in the same period, said Michael Bernick, a former director of EDD who is now a fellow at the Milken Institute.

"This is one of the best job numbers, best job months we've seen in the past four years," Bernick said. "On the other hand, it's still an economy that's going to have a number of fits and starts. We still have a long way to go to make up those 1.4 million payroll jobs lost between 2008 and 2010, and we still have over 2 million Californians unemployed."

California's unemployment rate has hovered around 12 percent for months and has been stuck above 11 percent since 2009. The state's jobless rate is the second-highest in the nation, behind Nevada, which had a rate of 13.4 percent in September, the most recent data available.

California's new payroll jobs were spread among various sectors of the economy, including some in the hard-hit construction field, which is a positive sign, Bernick said.

Steve Levy, an economist with the Center for Continuing Study of the California Economy in Palo Alto, said the state's urban coastal regions are leading the economic comeback, benefiting from the growth in technology, trade and tourism.

Job growth has also returned to the Inland Empire, which added 15,200 jobs in the last year, Levy said.

In October 2010, California's unemployment rate was 12.5 percent. The state has added 192,000 jobs since January.

The national unemployment rate also dropped slightly to 9 percent in October.

About 495,000 people continue to receive unemployment insurance benefits in California, and nearly 69,000 new claims were received in October, the Employment Development Department said.

The SAN FRANCISCO and BAY AREA has been the hottest place in the country for rent growth. San Francisco's annual effective rent growth of 13.0% in July was bested only by San Jose's growth of 15.1%.

San Francisco's average level of rent of $2,242 is the second highest in the country behind New York. Its occupancy rate of 97.4% in July was higher than any market in the country.

Even through the downturn it maintained an occupancy rate of at least 95.0%. Oakland has also been one of the top markets, with 8.8% annual rent growth and an occupancy rate of 96.5%.

2012 Outlook: Effective rent growth for San Francisco of 6.8%, San Jose 9.1%, and Oakland 7.5%.

San Francisco, San Jose and Oakland will be over 97.0% occupied.

Full story here: www.MarketWatch.com

"You have to pounce as soon as you see an ad you like," said Chris Covert, a manager at Symantec who was among 18 people vying for a $1,395 Nob Hill studio last week. "It's definitely nuts."

Driving the demand is a new wave of tech workers at the city's rapidly growing social media and technology companies.

"We're seeing a new demographic entering the housing market - Generation Y," said Sarah Bridge, owner of RealFacts, a Novato firm that tracks the apartment market. "Their preference is to live in the heart of a vital, thriving community like San Francisco. They want to be where the action is, and they don't mind being in a small studio apartment as long as it's well-located."

San Francisco has always been a city of renters. Only about a third of its residents are homeowners - half the national homeownership rate. Post-housing crash, with mortgages difficult to get and ample evidence of how quickly home values can slide, people are more inclined than before to rent. The national homeownership rate, which peaked at 69 percent in 2004 during the housing boom, is now down to 66 percent.

"Part of the preference to rent is tied to demographics and changes in attitudes," said Hessam Nadji, managing director at Marcus & Millichap, a real estate investment firm. "The housing crash is still fresh, and homes are not being viewed as an attractive investment. Renters like the flexibility and mobility of being an apartment dweller, being close to work, and the benefits of the urban lifestyle."

Falling vacancy rates

The net result is that vacancy rates are falling and rents are rising in the city. RealFacts says that the average monthly asking price in San Francisco for studio apartments in complexes with at least 50 units hit $1,801 this year, up 13 percent from $1,595 a year ago. Across apartment units of all sizes, landlords at these big complexes are now asking for an average of $2,361 a month, up 5 percent from a year ago.

Marcus & Millichap said the city's vacancy rate is now 4.2 percent, compared with 4.8 percent in 2010 and 5 percent in 2009.

Over in the East Bay, the rental market is not as hot, with rates and vacancies holding steady. But in tech-dense Santa Clara County, rents grew 6.6 percent, from $1,650 a month to $1,759 on average, according to RealFacts.

Full Story here: SF Gate