A Closer Look - Gross Rent Multipliers

A Gross Rent Multiplier (GRM), which is derived by dividing the property price by its annual gross rents, is often considered an indicator of perceived future value. In general, an investor looking to buy might expect to pay a higher GRM if they believe future rent growth for the property will be higher compared to properties with a lower GRM.

Oct - GRM's.PNG

The average GRM for 5+ unit buildings in San Francisco has hit a new high of 17.8 for 2015 year-to-date. As a comparison, the 2009-2013 average GRM for 5+ unit buildings in San Francisco was 13.4. If one were to consider a 13.4 GRM as a long-term average, we're approximately 33% above what would be considered a historical market norm.