SAN FRANCISCO—The San Francisco apartmentmarket is in the midst of the largest buildingboom in decades, spurred by frenzied growth fromtechnology firms. Dozens of cranes dot the San Franciscoskyline as high-rise residential and office buildings race tocompletion. That is according to a recent report from Marcus &Millichap.

Currently, seven residential towers eclipsing 15 stories areunder construction in San Francisco County, the firm says, and theplanning pipeline is robust, especially at the intersection ofMarket and Van Ness. “While new units should alleviate some of thepent-up demand for housing in the area, increased competition andrenter fatigue are beginning to pull rent growth back from theblistering pace set over the past four years.”

Effective rents are already more than 25% above thepre-recession peak, and residents are challenged to scrape togethermonthly payments, the firm says. “While employment growth will helpreplace residents that fall out of the local rental market or movedown the quality ladder, operators charged with leasing largeapartment buildings will ease rate hikes in the near term to widenthe pool of top-of-the-market renters.”