Report on rental ownership scopes blame for pricing in Redwood City

“We really believe residents deserve to know who is responsible for the rising rents increasing,” he said. 

“We felt it was really important to reveal the scale of dominance of corporate real estate because it’s impossible to advocate for your rights as a tenant if you don’t even know who your landlord is.”

Its data shows 87% of multiunit housing — properties with three or more units — in Redwood City are owned by corporations and real estate investments trusts. Almost half are owned by just 20 corporations. 

Conversely, of the 12,030 multifamily units in the city, the report states only 187 are owned by local mom-and-pop landlords, which are defined in the report as individuals who lived in Redwood City and own six or fewer units in the county. 

Between 2020 and 2023, the average asking rent increased among all rental units, regardless of owner. While corporations seem to have kept rents at relatively similar rates during this time period, the report said this is because they were already charging the highest rents in 2020, and still continue to do so. 

This can largely be attributed to the cost of construction. The economics of building a multiunit apartment building are significant, with costs averaging $1 million per unit. 

“With a number like that, it’s going to take somebody that has the capital or access to capital to build housing,” Mayor Jeff Gee said. “When we’re talking about needs of hundreds of units of housing and access to funds to build at $1 million per unit, there’s not a lot of people or organizations that can do that at this time.” 

With new development starting prices marked high, individual-owned units trying to “catch up” to large corporate landlords, Sakaguchi said. He said this indicates a strong influence on the rental market across all owner types. 

Supply and demand?

However, Jeremy Levine, policy manager for the Housing Leadership Council of San Mateo County said it’s important to note that corporate ownership and new development has risen all over the Bay Area, but rents have not risen at the same rate everywhere. For instance, Oakland has seen rent prices down by more than 10% after significant amounts of housing came online in recent years. 

High housing costs ultimately come down to a massive housing shortage, Levine said, and it all comes down to supply and demand.

“New housing increases competition between landlords and competition between landlords keeps rent prices lower,” Levine said. 

The vast majority of multifamily housing in Redwood City are 20 units or more, Levine noted, so the large corporation ownership is not surprising. He also said this is simply what current law incentivizes. 

“Redwood City is the most pro-housing city on the Peninsula, yet, 62% of residential land is single-family zoned only,” Levine said. “That’s a ban on affordable housing, on apartments, it’s complete exclusion of low-income people from those neighborhoods.” 

The report also considers disparities among neighborhoods. In both Friendly Acres and east Woodside Road, between 2020 and 2023, rents have on average increased 9.4%. The Central neighborhood saw an 8.2% average increase. 

These three neighborhoods are also the same neighborhoods with the highest concentration of corporate-owned multifamily rental units that would be eligible to be protected by rent control. Though downtown hosts the most corporate-owned multifamily rental units, only about 7% of the units would qualify for rent control protections. 

Rental units constructed 15 years ago, on a rolling basis, are not eligible to be protected by rent control under state law. Only 55 of the 187 identified mom-and-pop landlords units would be eligible under state law to be susceptible by a local rent control policy, according to the report. 

“The point there is that a rent control policy would target those corporations and keep rents down and keep Redwood City residents home,” Sakaguchi said. “It’d be an effective intervention to target the out-of-town and corporate owners who are responsible for rising rents.” 

Levine said corporate landlords are not necessarily more profit-driven than other landlords, who both profit from restricted housing supply. 

“Yes, corporate landlords do some things that aren’t great; the story is a little more complicated than they’re abusive,” Levine said. “They take advantage of what the law allows, more than mom-and-pop landlords.”

Corporate landlords evict tenants and raise rents more often than mom-and-pop landlords, but that’s often due to their close understanding of the market, Levine said. This is why the Housing Leadership Council often supports tenant protections such as just cause eviction ordinances and relocation payouts. 

Failed initiative

A recent citizen-led initiative to put a Fair and Affordable Housing Ordinance on the November ballot was recently denied due to insufficient register voter signatures, after review by the county’s Elections Office. The ordinance sought to address rises in rent by establishing a cap on increase rates of at most 5% each year and strengthening protections to prevent unjust evictions and tenants.  

The California Apartment Association has consistently expressed opposition against any increase in rent control protections. Efforts should be focused elsewhere, such as rental assistance programs for low-income families, Joshua Howard, executive vice president of Local Government Affairs, said previously. 

Another point often raised against stricter rent control measures concerns the mom-and-pop rental owners who may often be retirees who depend on the sources of income, said Martha Beetley, a volunteer who helped efforts to get the rent control ordinance on the November ballot. 

Though she recognizes that each case can be unique, a major takeaway from the report is that a majority of properties that would be influenced by more rent control are overwhelmingly corporate or trust owned.

“You think maybe that’s the norm,” Beetley said. “But a report like this put in front of the electorate, you hope is really going to inform them as to the realities of the situation.” 

Though it won’t be on this upcoming year’s ballot, Beetley said the “numbers haven’t changed.”

“The issue has not gone away just because the signatures were insufficient,” she said. “We will continue to meet, continue to discuss this. I know we’ll put our heads together and come up with a path forward.” 

City action

In May, before the ordinance was submitted for review, the Redwood City Council voted to pause tenant protection and mobile home activity efforts outlined in its Anti-Displacement Strategy plan until the first quarter of 2025. This was approved as the city awaited the potential impact of the ballot measure, hoping to avoid efforts made obsolete by a new framework. 

“Although that work is currently paused, City staff continue to carry out other ADS efforts in addition to working on projects and programs for new affordable housing production,” Deputy City Manager Jennifer Yamaguma said in a statement. “The continued ADS work includes administration of the Affordable Housing Preservation Program and launching the Project Sentinel Tenant and Landlord Service Pilot Project. Given the city’s current housing workload, the tenant protection measures of the ADS will continue to be paused through the end of the year.”