Demand remained positive through Q4 2025, with trailing 12-month net absorption totaling 210 units, an improvement over the prior period but still below the post-pandemic peak seen in 2022. Vacancy stabilized around 8.0%, reflecting a market where demand is gradually catching up to new supply. Leasing activity was strongest near UC Berkeley and in downtown submarkets, where access to transit and amenities drives renter interest. Class A properties led absorption and maintained high occupancy, while older Class B assets experienced elevated vacancy above 10%. Mid-tier properties faced the most competitive pressure, frequently offering concessions to sustain leasing velocity. Asking rents averaged $2,718 per month, increasing 0.9% year-over-year and remaining broadly flat in recent quarters. Overall performance suggests a bifurcated market, with asset quality and location playing an outsized role in outcomes.

 

Key Findings

• Berkeley’s multifamily market remains resilient but volatile, as strong underlying demand contends with an active development pipeline and heightened renter price sensitivity.
• Leasing momentum is holding up near UC Berkeley and transit-oriented locations, with premium assets outperforming older and mid-tier properties.
• Investment activity rebounded in late 2025, signaling continued confidence in well-located assets despite elevated interest rates and tempered rent growth expectations.

 

San Francisco Market Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 4.1%
• Current Population: 1,593,049
• Households: 649,662
• Median Household Income: $153,773

 

Rents

Average asking rents in Berkeley ended Q4 2025 at $2,718 per month, up 0.9% year-over-year but largely flat in recent quarters. Rent performance remains segmented, with premium assets near UC Berkeley and transit corridors sustaining stronger pricing, often exceeding $4,000 per month. Mid-tier and older properties face affordability-driven pressure, relying on concessions to maintain leasing momentum and limiting effective rent growth. Renters are increasingly price-sensitive, prompting landlords to adjust expectations. Looking ahead, rent growth is expected to remain flat to modestly positive as new supply is absorbed.

 

Market Asking Rent Per Unit

Source: CoStar Group, Inc.

 

Vacancy

The market recorded its vacancy at 8.0% in Q4 2025 and is expected to fluctuate near this level as new deliveries enter the market. Trailing 12-month net absorption totaled 210 units, indicating demand is gradually catching up with supply. Vacancy trends vary by asset quality, with Class A properties maintaining strong occupancy while older assets experience elevated vacancy. Leasing is strongest near UC Berkeley and downtown, supported by transit access and amenities. Concessions remain prevalent in mid-tier assets, helping stabilize vacancy but extending lease-up periods.

 

Vacancy Rate

Source: CoStar Group, Inc.

 

Construction

Berkeley’s construction pipeline remains active, with approximately 420 units underway, representing one of the highest delivery rates in the East Bay. Development is concentrated near UC Berkeley and major transit corridors, favoring mid-rise, amenity-rich projects. More than 4,000 units are proposed, reflecting sustained long-term interest despite rising costs. Deliveries are expected to peak in late 2026, which may temporarily pressure vacancy. While financing and construction challenges persist, developers remain optimistic that strong demand fundamentals will support lease-up and longer-term market balance.

 

Units Under Construction

Source: CoStar Group, Inc.

 

Sales

Investment activity accelerated in late 2025, driven by several high-profile transactions near UC Berkeley. Trades like The Dwight, Fourth & U, and Berkeley Central underscored sustained investor interest in institutional-quality assets. Pricing per unit remained firm for newer properties, while older assets traded at wider discounts, reflecting concerns around rent growth and capital requirements. Investors remain cautious in underwriting, with many limiting projected rent growth to 3–4% amid lender scrutiny and elevated interest rates. Despite these constraints, Berkeley’s long-term fundamentals continue to attract capital. Looking ahead, sales volume is expected to moderate as financing costs remain high.

 

Sales Volume & Market Sale Price per Unit

Source: CoStar Group, Inc.

 

By the Numbers

Q4 2025 | Source: CoStar Group, Inc.

• Sales Volume: $24.7M
• Price Per Unit: $402K
• Cap Rate: 5.3%
• Vacancy Rate: 7.9%
• Rent Growth: 0.1%
• Asking Rent Per Unit: $402K
• Units Under Construction: 424
• Units Delivered: 0
• Units Absorbed: 26