“In Walnut Creek, we haven’t seen the big rent increases that we’ve seen in other areas,” says David Fiore of Mill Creek Residential. “There’s some room for growth.”

Apartments remain the darling for Bay Area housing development, but condo conversions and new construction are poised to make a comeback.

Sticker-shock-inducing rental rates — such as $4,000 for a one-bedroom — in San Francisco have made outlying areas such as the Peninsula and the Interstate 680 corridor more attractive for renters and developers.

About 2,500 apartments are expected to hit the San Francisco market in 2013 with hundreds more under construction in cities such as Redwood City, Foster City, Dublin, Emeryville and Berkeley.

Next year, developers in Walnut Creek plan to break ground on numerous apartment projects such as Mill Creek Residential’s 126 units at 1960 North Main St. and Laconia Development’s 141 units at 1500 N. California Blvd.

“In Walnut Creek, we haven’t seen the big rent increases that we’ve seen in other areas,” said David Fiore of Mill Creek. “There’s some room for growth.”

Mill Creek recently broke ground on the 105-unit Mission Piers in San Francisco’s Dogpatch neighborhood, which will probably start leasing in the first half of 2014, and Walnut Creek will finish in late 2014. Like many developers, Mill Creek projects rents to keep growing or at least remain steady by the time units hit the market, Fiore said.

Soaring apartment rents are also making buying a more palatable alternative. New for-sale housing, whether condo or single-family, is finally on the upswing. Homebuilders with units ready and on the market have seen brisk sales at their developments, and many say they can’t find enough development sites in the core Bay Area. It’s a function not so much of a booming economy but the result of a lack of inventory across the board.

J.K. Dineen covers real estate for the San Francisco Business Times.

Article source: http://www.bizjournals.com/sanfrancisco/print-edition/2013/01/04/residential-real-estate-balance.html