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Essex Property Trust (NYSE:ESS)
Q3 2020 Earnings Call
Oct 30, 2020, 8:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Essex Property Trust Third Quarter 2020 Earnings Conference Call. As a reminder, today's conference call is being recorded. Statements made on this call regarding expected operating results and other future events are forward-looking statements that involve risks and uncertainties. Forward-looking statements are made based on current expectations, assumptions and beliefs as well as information available to the Company at this time. A number of factors could cause actual results to differ materially from those anticipated. Further information about these risks can be found in the Company's filings with the SEC. It is now my pleasure to introduce your host, Mr. Michael Schall, President and Chief Executive Officer for Essex Property Trust. Thank you. Mr. Schall, you may begin.

Michael J. Schall -- President and Chief Executive Officer

Thank you for joining the call today. Once again, we would like to offer our best wishes to all of those impacted by COVID-19. On today's call, John Burkart and Angela Kleiman will follow me with comments and Adam Berry is here for Q&A. Our results continued to be negatively impacted by the COVID-19 pandemic, including extraordinary local and state government responses. Our reported results for Q3 reflect these unprecedented challenges, resulting in a 6% decline in core FFO and 6.7% lower same property revenues. Despite a variety of challenges, we were mostly successful in our goal of maintaining occupancy and rental rates to the extent possible, which John Burkart will discuss in a moment. Our first priority continues to be the safety of our employees and residents while deploying technology throughout our portfolio, given a strong consumer preference for touchless interaction. Regulatory hurdles have been pervasive across our markets, creating a new level of complexity and administration for our property teams. As can be seen on Page F16 of our supplemental package, California has developed a four-tier system applied to each county for determining the severity of COVID-19 restrictions.

Fortunately, recent changes have been mostly moving Essex markets into less restrictive tiers. San Francisco recently reached the least restrictive yellow tier for allowing offices and indoor dining to reopen, among other improvements. Similar positive changes have occurred across several of our markets in recent weeks which represent welcome news for local businesses and residents. We have previously noted that the apartment business closely follows local housing supply and demand trends and seasonal patterns. Given the pandemic, these normal seasonal patterns were disrupted by massive job losses resulting from the pandemic and related shelter-in-place orders. In April, year-over-year, job losses were 13.7%, followed by a solid job growth in May and June. Job gains then moderated again this summer as shelter-in-place orders were extended upon a surge of COVID-19 cases. By September, job losses in Essex markets were still down 8.7% year-over-year, a positive trend from April but still lagging the 6.4% national average job loss. For perspective in the financial crisis, peak to trough U.S. job losses were 9.1 million over 20 months. This year, the nation lost 20.8 million jobs in just two months.

We attribute the greater job loss and slower economic recovery in California and Washington to very restrictive shelter-in-place mandates. We see the recovery path ahead as reversing the job losses in the cities and industries that suffered the greatest impact from the shutdown. Tourism, travel, leisure and hospitality sectors were among the hardest hit and they are concentrated in the urban core of various cities. The restaurant industry provides a good example. Using the open table data as of last week, the number of dining reservations in Los Angeles fell by 66% compared to one year ago, while Seattle and San Francisco both declined 78%. This compares to other large cities like Miami, Denver, Dallas and Atlanta, with only 30% to 40% declines. Similarly, employment in hotels, live entertainment, and local transportation activities are down 37% to 50%. And they should have a strong recovery as cities reopen. In Southern California, the TV and film industry is a significant wealth creator and it was decimated by COVID restrictions. In the third quarter, the number of shoot days began to recover from near shut down but remained down 54% year-over-year. The industry is now trending in the right direction and production permits has steadily increased since June, suggesting employment will continue to rise.

Younger workers have faced many challenges in the pandemic, including greater job loss and higher unemployment rates compared to more experienced workers. Employers often delayed hiring and reduce the number of job openings during the pandemic as offices and small businesses closed from shelter-in-place orders. Many college graduates chose to move home rather than relocate in proximity to their new employer as a result of work from home flexibility.

As a result of these conditions, the share of 18 to 29-year olds living with a parent increased to 52% this summer, up 500 basis points year-over-year and the highest level in over 100 years. The combination of lower immigration from new graduates and higher out migration from young singles has played out in different ways across our market. We have seen pockets of strength in Ventura, Orange County, San Diego, and outer suburban markets in Seattle in Northern California. By contrast, our urban and tech centric sub markets are deeply discounted to attract residents. Meanwhile, tech companies are speaking with their pocketbooks, companies, including Google, Facebook and Amazon continue to expand their real estate footprint in our markets. Notably, Facebook's expanded campus in Menlo Park, and their acquisition of our REI new headquarters in Bellevue, Google's continued plans for urban village in San Jose, and Amazon's continued growth in Bellevue and other sub markets in the Seattle area.

As always, we continue to monitor the pace of job openings among the top 10 tech employers in our market. And while these numbers are down year-over-year, we are encouraged by recent increases in openings from 9 of the 10 companies in our survey. While today's 17,000 openings are significantly lower compared to the pre-COVID period, today's level is consistent with the pace of hiring they experienced in 2016 and 2017. It appears that the most successful tech companies in the world remain committed to our markets, and most of them have announced work-return to office plans in 2021. Turning to our initial thoughts about 2021, we plan to provide annual guidance as part of our fourth quarter earnings report. There are many moving parts to the guidance discussion, including the impact of the winter's Coronavirus trajectory, the timing of vaccines and improved therapeutics and any new government stimulus measures. With that said, we base our modeling on the consensus of third-party economists for next year's GDP growth, which is currently around 3.7% and compares to this year's minus 3.6%. If that proves accurate, we would expect to benefit from positive tailwind in the form of steady employment growth and rising consumer confidence.

In addition to the boost from an improving job outlook, the potential for a COVID vaccine to become widely available next year is an obvious positive that would reduce the need for social distancing and shift the work from home dynamic from a requirement to a lifestyle decision to come to several negative such as potential pay reductions for remote workers, lack of face-to-face collaboration and networking, and potentially fewer career advancement opportunities.

Finally, with respect to our year-over-year growth trajectory next year, we would expect to hit an inflection point, during the second quarter as we anniversary the steep COVID related declines. This could set the stage for gradual improvement in rental growth in the back half of 2021. Again, assuming further easing of COVID related restrictions. Our data and analytics team completes its own fundamental research on supply, indicating around 33,000 apartments supply deliveries in 2021, which is similar to 2020. While that continues to represent just below 1% of our apartment stock is still too much supply until the pace of job growth accelerates further. As with the past several years, the 2021 apartment supply estimates from third-party research providers are well in excess of our expectations, implying a ramp up of deliveries that we do not believe is feasible, given skilled labor constraints within the construction industry in our markets.

Turning to the apartment investment markets, we have now sold four apartment properties with a total of 670 apartment homes for $343 million, all of which were placed under contracts subsequent to the implementation of shelter in place orders in March. Given the wide discount and valuation for public rates compared to the private real estate markets, we continue to market additional properties with the goal of funding at a minimum all of our investment needs through dispositions.

Other than the AIMCO sales that were part of its announced reorganization, very few sizable apartment transactions occurred during the quarter. Generally, the number of properties being marketed has been extremely limited since March and is now slowly increasing. Therefore it remains too soon to draw conclusions about cap rates going forward. In the suburbs where rents have remained relatively stable since the start of the pandemic, cap rates and property value should not change materially compared to the pre-pandemic period. In those suburban areas, we expect high quality properties to sale in the low-to-mid 4% range in terms of cap rates. Given significant concessions in hard hit cities, recent price talk around possible sales indicate a 5% to 10% discount to pre COVID valuations, with a few sales that we've seen in these markets assuming a fairly rapid rent recovery. As with previous recessions, Fannie Mae and Freddie Mac have continued to provide very attractive financing with 7-year fixed rate financing in the mid-2% range. Significant positive leverage and active sources of debt significantly limits the amount of distress of the markets. Finally, I'll end with a brief comment related to California Prop 21. Including the extraordinary opposition effort coordinated by the Californian's Responsible Housing Group, I would like to commend the leadership of this group including RM, John Eudy for their unrelenting focus its steadfast effort in opposing this flawed proposal. Prop 21 would surely make housing shortages worse in California.

The No on 21 Campaign has assembled an amazing constituency consisting of hundreds of organizations, including Veterans Groups, Affordable Housing Advocates, the California NAACP, the State Chamber of Commerce, and scores of others along with Governor Newsom. Almost every newspaper in California supports defeating Prop 21. We all greatly appreciate your effort. And now, I'll turn the call over to John Burkart.

John F. Burkart -- Senior Vice President & Chief Operating Officer

Thank you, Mike. I want to start by thanking the E team. Throughout this period of extreme volatility and complex regulations, they acted thoughtfully and tirelessly to serve our customers. We were successful in our objectives of building occupancy during the third quarter by using various pricing strategies, including concessions along with leveraging our technological advantage. We've significantly improved our response times in the overall customer experience.

Our strategy of using upfront concessions when appropriate reduces the impact of the market dislocation on the rent roll. As noted in the table on the bottom of page 2 of our supplemental, our scheduled rents for Q3 2020 is down only 40 basis points from the prior year's quarter. This positions us favorably for revenue growth as concessions continue to abate and our year-over-year comps become a tailwind. As of mid-October, we're offering concessions of three to four weeks in less than half our portfolio compared to over 75% of the portfolio in the third quarter. No material concessions are being offered in Orleans, San Diego, Ventura, in Contra Costa County. Occupancy in these four counties currently average 97.9% with an availability of 2.5%. Like the fact that we are seeing solid signs of stabilization in many of our markets, I do want to acknowledge that we continue to hear anecdotal stories of owners who reacted slowly to delinquency and rapidly changing market conditions and are now attempting to improve their occupancy position during a seasonally slow demand period. As a result, there may be upcoming challenges in various markets.

Consumer behavior related to COVID-19 including consumer preference for larger units, private outdoor space, stairs instead of elevators and communities within commuting distance to employment hubs, yet located in proximity to outdoor recreation amenities continues to impact demand in the marketplace.

Turning to our Q3 2020 results as presented on Page 2 of our press release, year-over-year revenues declined by 6.7%. While the year-over-year revenue growth continues to decline due to the change in the rental market post-COVID, the improvement in the sequential revenue decline is consistent with the signs of stability that we're seeing in the market. Although we're not currently giving guidance, I want to remind everyone that the combination of a very tough occupancy comp of 97.1 from Q4 of last year and the fact that lease transactions on average are below last year, it is likely that our year-over-year fourth quarter revenue growth will decline from Q3. Turnover in the quarter increased 73 basis points from the prior year's quarter. Communities with certain attributes were the key contributors in this increased turnover, specifically high rises, communities with markets with a greater demographic of college students and Silicon Valley contracts and consultants.

On the regulatory front, various governmental bodies have enacted anti eviction and other resident protection. California recently passed AB 3088, which is a positive step toward replacing the patchwork of local ordinances to COVID-19 related delinquency. Impart AB 3088 prohibits eviction for nonpayment of rent between March 1 and August 31 of this year, establishes a minimum future payment threshold to protect against future eviction and establishes access to small claims courts to pursue collection of past due rent. Washington State has similar regulations expiring at the end of this year. While we continue to see many residents paying down prior balances, we also continue to work with our residents on solving delinquency issues. Lastly, expenses in the quarter were negatively impacted by increased property taxes in the Seattle market, and COVID-19 related impacts such as PPE, and higher utilities driven by increased usage from residence for home for longer periods of time. Utility increases in Q3 were offset by year-over-year reduction of 12% in electricity costs, as a result of the various green initiatives we have executed. Turning to our markets, in the Seattle market year-over-year revenues in Q3 were down 1.6%, while year-over-year occupancy for the period was flat. The greatest declines continue to be in Seattle CBD where revenues declined 5.6% followed by the east side with a 1.1% decline. Revenues in the south and north sub markets saw increases of 30 and 60 basis points respectively for the same period.

Seattle job growth in Q3 declined 8.1% year-over-year. However, Washington unemployment in August remained 60 basis points while the U.S. average of 7.7. It's worth noting that Seattle home purchasing activity increased during the third quarter. On a trailing three-month average from August, year-over-year home prices were up 12% in August. In August alone, home prices were up 17.4% on a year-over-year basis. Moving to Northern California, in the Bay Area market year-over-year revenues in Q3 were down 8.5%. Occupancy for the period was 96.2 a year-over-year increase of 30 basis points. Oakland CBD in San Francisco continue to be our most challenged sub markets in Q3 with year-over-year revenue declines of 16.5% to 17.1% respectively, compared to San Jose, where revenue declined 7.2%. In the same period, Contra Costa saw the decline of 4.6%, however, sequential revenues in this sub market increased by 1.6% from Q2. Bay Area job growth declined 9.7% year-over-year in Q3, mainly driven by job losses in leisure and hospitality and trade, transportation and utilities, all heavily impacted by the state's required shutdown. However, there are positive signs of growth in the market. Several Bay Area tech companies filed for IPO during the third quarter, including McAfee, Airbnb, Snowflake and Unity Software. In addition, Google unveiled their plans for a 1.3 million square foot tech village in Mountain View. This new development will have a capacity problem of 6,000 additional employees.

Carry home purchase activity picked up during the third quarter on a trailing three-month average from August. Year-over-year home prices in the Bay Area were up as much as 8.6%. In August alone, San Jose market home prices were up 20% year-over-year while San Francisco and Oakland were up 14% for the same period. The increases in home prices makes the transition from renting to homeownership even more difficult, and it shows the continued long-term demand for housing in our markets. Then in Southern California, year-over-year revenues in the third quarter declined 7.3% while occupancy declined only 20 basis points. The LA market continues to be a challenge. In Q3, our West LA sub markets saw the greatest year-over-year decline of 16% while our remaining LA sub markets declined between 9.1% and 12%. LA job growth was minus 9.7% in the same period, while unemployment remained the highest of our markets at 15% in August. In Orange County, Q3 year-over-year job growth declined 10.8% while revenues declined 2.6% and occupancy increased 1.4% in the same period. I do want to note that quarterly sequential revenues in our Orange County sub markets actually increased by 1.9% in Q3. Finally in San Diego, our year-over-year revenues declined 2.1% in Q3. The Oceanside sub market however continued to grow revenues by 2.3% in the same period. San Diego job growth declined by 8.9% for the period. Currently our same store physical occupancy is 96.4%. Our availability 30-days out is at 4.5%. And our fourth quarter renewals are being sent out with no increase. Thank you. And I will now turn the call over to our CFO, Angela Kleiman.

Angela Kleiman -- Executive Vice President & Chief Financial Officer

Thank you, John. I'll start with a few comments on our third quarter results, followed by an update on capital markets and funding activities. As noted in our earnings release, and early on, this was a challenging quarter with declines of both same property revenues and core FFO per share. The 6.7% decline in same property revenue growth is primarily driven by concessions and delinquencies. We report concessions on a cash basis in our same property results. Because we believe this approach provides a true picture of current market conditions. The cash impact of concessions was 500 basis points. So, excluding this, our same property revenue decline would have been 1.7% instead of 6.7%. Conversely, on our consolidated financials, with straight line concessions in accordance with gap in calculating core and total FFO. Keep in mind that when concessions abate, our approach will impact the future performance in two ways. First, our year-over-year comparison unstained dollar revenue growth will be favorable. Second, the opposite effect will occur on our FFO growth because there will be a headwind as we continue to straight line concessions over the life of the lease. Onto delinquency, we are encouraged to see total delinquencies declined during the third quarter relative to the second quarter. On the other hand, given the current environment and related uncertainties, we maintain the same approach as last quarter and reserved against 75% of our delinquencies with third quarter. This may prove conservative is California law allows us a clear path to collection of COVID-19 related delinquencies as temporarily provided in AB-3088. The negative impact from our delinquency reserve to same property revenue and core FFO growth was 1.6% and 4%, respectively. Please see the bottom of Page two of our press release and S-15 in our supplemental for additional details.

Turning to capital markets. In August, when interest rates dropped down to a level close to the 52-week low, we opportunistically issued 600 million of bonds, consisting of two $300 million tranches, an 11-year and a 30-year maturity at an effective yield of 1.75% and 2.67% respectively. The yield on our 30-year bond was the lowest on record of any Triple B plus rated issuer at that time. Since then, we have repaid a $300 million bond, that's mature in 2022 and have plans to pay up all remaining 2021 maturities at par. The net result is a very low risk maturity schedule for the next two years, was only a $350 million term loan to repay in 2022. As for funding plan for investments in the stock buyback, our structural finance investments are funded by the redemption and our development commitments is less than $73 million over the next two years. Incidentally, because the pandemic has caused delays in development deliveries, our development NOI for the next year will be lower than we expected. Because we are not as far along in our lease offs as we had originally planned.

On the stock buyback year-to-date we have repurchased around a million shares at an average price of about $226 per share. We have match funded the stock repurchased with $343 million of property sales, which is comparable to our pre-COVID consensus NAV of close to $290 per share. While we have been opportunistic in arbitraging the compelling discount between our public and private NAV, we paused our share repurchases when COVID-19 caseloads and hospitalizations 32 summer and severe shelter in place orders were issued.

Even though we have transacted on a leveraged neutral basis and have reduced our net debt, selling assets also reduces EBITDA. Accordingly, we continue to be mindful of the impact and the debt-to-EBITDA of the impact on adjusted EBITDA ratio in the context of our stock buyback strategy.

In summary with minimal near-term funding needs, nothing drawn on our line of credit, and approximately $1.7 billion in total liquidity, our balance sheet remains strong. And we continue to have the flexibility to be opportunistic, while maintaining our disciplined approach to capital allocation.

Thank you, and I will now turn the call back to the operator for question.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Nick Joseph with Citi. Please proceed with your question.

Nick Joseph -- Citi -- Analyst

Thank you and appreciate all the operating update on the call. If I'm looking at page S15 of the supplemental the operating statistics for October, I know they're done on a gross basis and not taken into account concessions. I know you said concessions were abating. But I'm wondering if you can give the operating numbers do renewal of blended when taken into account concessions for both October and then the third quarter?

Michael J. Schall -- President and Chief Executive Officer

So let me see if I can give you some more information. I may not give you everything there, but let me give you some more information. Number one, on that note, it shows that the market rents the decline in market rents has improved. And that is true. But the fact is last year, we had an easier comp. So I want to make sure we have the context, whenever you know, it's always a challenge with transparency, giving out more information and then not having all the context. So there's a little bit of a headache when it shows how the October rents have improved year-over-year. But that said, our markets are doing well and across the board and showing signs of stabilization or they're actually improving. So I want to make sure we get the right message across as we get to a read and further, you'll see that number reverses a little bit. I don't want people thinking, oh, now things are getting worse. It's not the case, it's just the year-over-year comp. But as we get into what's happening in October, as far as for concessions go, we have-we started the October reducing concessions. And this is off of a Q3, which is over 75% of our transactions had concessions of roughly a month. And then we moved into October the first couple of weeks, and we were at less than 50%. And then as we move into the second half of October, we're actually now at less than 25%.

So we're doing that while maintaining occupancy or improving occupancy and while maintaining low availability. So, all those pieces are going in the right direction at Essex. Again, we don't-we're not in the market, we're part of the market, but we're performing very well within that marketplace. When we look at the break between renewals and new leases, there's definitely more leasing incentives on the new leases typically running 3.3% is what we have in there was accurate. On the renewals, it's usually less than a week. Obviously, there's less of an incentive, this is already-people already in the property. Does that answer your question, Nick?

Nick Joseph -- Citi -- Analyst

That sounds very helpful, and especially the color on the year-over-year trend. And then maybe just the second question. Angela, I appreciate the commentary on the share repurchase program. What would get you to restart it and I'm wondering, obviously, the stock is below where you are purchasing and for some of the reasons that you discussed. So what would get you more aggressive there? Is it price? Or should we expect it to be paused for the near-term regardless?

Angela Kleiman -- Executive Vice President & Chief Financial Officer

Yes, I think, Nick, if you look at how we manage our capital allocations, we're not really going to deviate too much from that plan. And so, the key commentary I have is really to make sure that we also at the same time preserve our debt-to-EBITDA ratio. And so, it'll be a little bit of all of the above what are we selling? And what price and what's the impact on the EBITDA reduction? At the same time, what are our opportunities to reinvest the sale proceeds? So there-if we have more preferred equity for example, then that certainly will be an important piece. And of course, the other piece is where the stock is trading, right. And so, it's all of these things I guess, that factored in.

Nick Joseph -- Citi -- Analyst

Thank you.

Operator

Our next question comes from the line of Nick Yulico with Scotiabank. Please proceed with your question.

Sumit Malhotra -- Scotiabank -- Analyst

I this is Sumit here with Nick. Just a question on cash delinquencies, I know there are 2.2% of scheduled rents. And you recently at a conference earlier in September spoke about positive delinquencies. So could you provide us with an update on how collections are trending on the delinquency side? And how much of this 2.2 will likely head into mid-2021? Also, do you have any delinquencies creeping into your utilities expense side like some of your peers?

John F. Burkart -- Senior Vice President & Chief Operating Officer

Yeah, OK. So, overall, delinquencies are definitely improving. And you can obviously see that from Q3 versus Q2, there are some underlying trends there that occur. And so what's happening is, we are collecting a little bit more in prior delinquencies which is a good thing. Again, I've said all along, we're working with all of our residents. And the great, great, great majority are showing very good behavior. So we are getting a little bit more on the current month's delinquency, is a slight uptick. It kind of ties in with the reduction of the federal aid, but it's really not that material overall. Again, the pitcher delinquency is improving. And so my expectation as we move forward, we continue to have the economy opening up.Although, we still have negative year-over-year job comps, they're getting better and better. And so if on a local level, we actually had seasonal job comps, they would actually show seasonal growth. So things are actually improving out here and my expectation is that delinquency will continue to improve as we move forward. As it relates to utilities or any other line item, they're really running a similar path to the rental delinquencies. If the people who are unable to pay rent are really not paying delinquencies but, yeah there's not paying all of it. So or they're paying a percentage, but the percentage is type of thing. So it's a very parallel path, if that makes sense.

Nick Yulico -- Scotiabank -- Analyst

Yeah. Hey, guys, Nick here. Just a question-bigger picture question maybe for Mike, what is sort of the biggest selling point you can get investors right now about your portfolio and addressing some of the bigger worries out there, such as potential increase in rent control in California the fact that tech workers are working remotely, and they are in some cases moving to other states like Washington, where there isn't a state income tax. With all that being said what are people missing about the Essex story right now? And I guess, the other thing I'm wondering is, you talked about it sounds like transaction cap rates staying low, much lower than what your stock price implied cap rate is right now. So I mean how do you think about asset sales in this environment as well?

Michael J. Schall -- President and Chief Executive Officer

Yeah, Nick, those are great questions. And I guess I would start with the latter point you made which is the disconnect between public real estate markets and private real estate markets and trying to monetize that difference. And as Angela stated, we paused a bit in the quarter when the COVID cases were increasing. And it's interesting. We think that's just an obvious benefit for operating the machine in forward direction. We are issuing stock and incurring debt and buying property at a positive differential or arbitrage. And we think that that works pretty well in reverse direction as well. So I'd say that is an obvious way to add value, add NAV per share, add FFO share to the company given the current dislocation. I'd also mention that when we look at the amount of job loss we've had, the rent growth, or the rent reductions that we've seen are really I guess, I would say to be expected. And I know everyone is focused on this work from home issue. But if you just look at LA jobs still as of September down 9.6%, San Francisco down 10% and Oakland down 11%and largely driven by things that will-a big portion of them will come back. Like for example, the tourism, restaurants, hotels, the motion picture business in Southern California. Those are the tech industries. But there's nothing fundamentally wrong with them. And I think that most of the rental revenue loss that we've incurred is just a directly attributable to job growth. And so, I think that this will unwind itself and it's already started to unwind itself as Mr. Burkart just outlined in numbers that are slowly getting better or still, I would say in a pretty tough spot with respect to employment, we need that to recover. But the balance sheet is incredibly well positioned. And we do have some ways to add value to the company. And so we see opportunity there. So I guess that's how it answers your question.

Nick Yulico -- Scotiabank -- Analyst

All right. Thanks, Mike.

Michael J. Schall -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Jeff Spector with Bank of America. Please proceed with your question.

Nick Joseph -- Citi -- Analyst

Thank you. My first question actually was similar to that last question. But, Mike, maybe we could dig a bit deeper into the work from home part? Because, as you stated, it, that seems to be the number one concern for the stock, I believe you said again, as Nick said, cap rates are flat in the suburbs. And did you see talk at least is only minus 5% in the cities verse, I think your stock is implying more of a 20% 25% discount. So the work from home maybe just, can you just talk about that a little bit more and why you're so comfortable that that's not going to impact Essex?

Michael J. Schall -- President and Chief Executive Officer

Yeah, hey again, it's a great question, Jeff. Thanks for joining the call. I guess our thesis is that the hybrid model will likely prevail. And many of the jobs that are in the cities require a physical presence, I would make that point, virtually everything that connects with a customer, from hotels, to restaurants, to bars, et cetera, the motion picture industry where it is pretty hard to film without people being present, et cetera. And so, we see that as probably it's too much focus on, let's say, the tech community, and not enough focused on the number of jobs that are required to actually physically be there to do your job. But, I guess, and thinking about this, and in looking at what others have said, it's pretty interesting. There's obviously a big debate out there. And, the Netflix CEO, for example, said, he doesn't see any positives from working from home. And another CEO, the Zillow CEO says, the easy decision-the easy part of the process of working from home is making the decision, the hard part is actually implementing it. And I think what he means by that is, there are some pretty serious issues that come along with work from home, that are going to take a lot of time and effort to work out. And I would mention, let's say potential for less pay to the employees, how does the compensation issue work out. The productivity issues, how do you continue a culture of collaboration and a vibrant culture when people don't see each other? And I think, it's we found we're largely remote at this point in time, we've found that it's pretty difficult to resolve significant business problems where senior executives have different perspectives on things, when in a work from home type of environment, you're much better off together. So, again, we are thinking that the hybrid model is probably be going to be the main path going forward. The hybrid model will have required some tethering to an office at some point in time to try to keep those collaboration and the vibrancy and the culture together. And so, we still see ourselves has been pretty well position. So, someone may not live in a city, let's say, but we'll live somewhere, potentially nearby, certainly within driving distance. And we don't see that as a bad thing. We have properties in fact, most of our properties are actually out in suburbia. And so, we think we're well positioned for that. And by the way, the other key point here is, we're not producing a lot of housing, and there's not going to be a lot of housing produced out there. So already, as John said earlier, already, we're starting to see rents increase now in suburbia as that dynamic plays out. And they're reducing in the cities and the areas that have previously had higher rents. And so, the market is compensating for all of these issues, as it always does and the decision a renter might have made six months ago, can be very different from the decisions that they're making today. So, net-net we think we're very well positioned and again, we have properties throughout these markets and throughout the commutable locations near the job centers, and we think that's still the right strategy.

Jeff Spector -- Bank of America Merrill Lynch -- Analyst

Thank you, Mike. My follow up would be are you able, you mentioned, I believe that 9 out of the 10 companies you're tracking, you're seeing an increase in job postings. Are you able to track for those postings? I guess, if they're advertising, hybrid, work from anywhere. Is there a way to quantify that or not? No, it's not possible?

Michael J. Schall -- President and Chief Executive Officer

Yes, it's-Jeff, it's hard to do. I mean, we in our September presentation, we gave out the dates for office reopenings of some of the top 10 tech companies, but the reality is that they are moving back to some degree, as if there's another phase of or surge of COVID cases, maybe those get pushed back. It appears and looking at, there was a recent Microsoft announcement that gave greater work from home flexibility, etcetera. But I guess, from our perspective, most of the top 10 tech companies have worked via return to work dates out there. And I think that's significant. Because if they were going-all of them were going a 100% work from home as a couple of smaller tech companies are doing, that would be one thing. But most of them have returned to work dates. And even if they get pushed back a little bit, I guess the significance here is, as long as they ultimately are going back to the office as in some way or another, I think that will solidify the connection to the office. And either way, no one's going to pick up the apple spaceship and move it somewhere else. So, it's there for a reason, there are a lot of services there, including day care and all kinds of things. And it's meant it's there for a reason. And I don't think that that motivation goes away anytime soon. I guess, you're back to the top 10 tech companies in the job outlook, those are data that we take off their websites, and do our own survey, and have tracked what they're doing for many years, because they're so important to our mission. And they, as I said, they're off their peak, which was actually in March of this year by a reasonable amount. I think, looks like somewhere around 27,000 jobs in March open for the top 10 tech companies down to about 17,000-about 18,000 is the most recent number. And but, now starting to move back in the other direction. So, it looks like that is starting to get better, not worse.

Jeff Spector -- Bank of America Merrill Lynch -- Analyst

Great. Thank you.

Michael J. Schall -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Rich Hightower with Evercore ISI. Please proceed with your question.

Rich Hightower -- Evercore ISI -- Analyst

Yeah, hey, good morning out there guys. Covered a lot of ground, but I guess Mike, just a follow up maybe on a prior thread. As we think about COVID cases rising here in the US and globally and you're seeing renewed lockdowns in places like Europe. I mean, how does that make you feel about California potentially being first in line to take a similar posture in the months ahead if current trends continue? And then I guess, on the flip side, I mean, given just lowered seasonality in terms of leasing volumes, do you think the impact of that happening would be a lot less material than what occurred during the sort of the second and third quarter?

Michael J. Schall -- President and Chief Executive Officer

Yes, Rich. Hey, you know what I got to say, I greatly appreciate the work that Evercore ISI has done on this issue on the COVID tracking, etcetera it's been fantastic. And we all use it. So, thanks for that. I think that California has been super conservative when it comes to dealing with COVID. And as I said in my prepared remark that means that it accomplished two things at once, it really curtailed the number of the case spread throughout California. And at the same time, it muted our recovery very significantly. So, we're now I think, at a place in California where things are actually in pretty good order. Not that it can't change, and I believe that what will happen is the state will be very vigilant in terms of pushing us back into a more restrictive tier if they have to. But I think as we sit here today, I think we're in a better spot than some of the areas that have been more open, and have let their economy flow more freely. So, we'll take this on a day by day basis. But we look-it looks like California and Washington are actually very well positioned. And I don't think that you would see this, with the chart on Page S16, I don't think you would see this pretty significant movement to reopen the economy, if that wasn't the case.

Rich Hightower -- Evercore ISI -- Analyst

Yeah, that makes sense. And then, just for quick clarification, I think John mentioned 4.5% availability 30-days out at this particular moment, just how does that-give us some context around that, how is that compared to sort of normal for this time of year or year-over-year or along those lines?

John F. Burkart -- Senior Vice President & Chief Operating Officer

Sure, yeah, no that's actually very good overall. I mean, going into this part of the season, Essex as a general rule, we like to have higher occupancy and lower availability going into the season where there's a decline in demand season like and sitting at 4.5% right now availability is a good spot. It's consistent with where we've been in the last several years, the team has worked very hard to meet the market, and very interactive trying to understand what the consumer wants, and off of that and leased our units up and get quality paying tenants. And I think they've done a terrific job, you can see it in our higher occupancy even into October that 96.6. I mean, that's just really, really doggone good. Now, again, as I mentioned in my prepared remarks, in Q4 of last year, we were at 97.1, the market was very, very strong. And so we still have some headwinds. But in context, I think the whole portfolio is doing very well, if either signs of strength in some markets like Ventura, Contra Costa, Orange, and San Diego, or we see good signs of stabilization in many other markets. Or I'll mention, say, in San Francisco and Oakland, for example we see the beginnings of this backfill, that's starting to happen. And we mentioned this before, how in our markets, they are desirable places to live. And so when it's really a value proposition, so when the price gets to the right point, consumers make changes. And so what we're starting to see now, from January through September, the average was about 6% move ins came from the outlying areas, and this is far off commuting places, like say Antioch that we're moving into the Oakland area, and or San Francisco.

And the numbers vary, but they're fairly close to that 6%, average all the way through pre-COVID, post COVID, all the way through. And now in October, that number jumped to 14%, literally just jumped. And you look and you say OK, what's going on there, I would say this is the super commuters, the people that they're tethered, as Mike said to the employers. Employers are opening up, and they're looking and saying, I have now my value proposition is to move into San Francisco, move into Oakland, and at a lower price point, avoid that commute. This is a great deal. It works for me. And we're starting to see that. That's a real deal thing that actually happened. So, when I look across our markets, again, I get the strength in certain markets. I get the stability in others and I get the very positive signs in the most challenged places like San Francisco and downtown Oakland.

Rich Hightower -- Evercore ISI -- Analyst

Okay, got it. Thank you.

Operator

Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.

John Kim -- BMO Capital Markets -- Analyst

Good morning. You provided some helpful commentary on the incentive in response to Mike, Joe's questions. But I was wondering if you could provide some additional granularity as far as the effective blended rate growth rates in the third quarter and October?

John F. Burkart -- Senior Vice President & Chief Operating Officer

Well, I guess I'm going to look at effective that one month is 8%. Right. And so if we go three weeks, or three quarters, it adds about 6% off of our lease rates, and that would be one way to look at it to get down to that number. But the reason why I'm not going there is I think it's a little bit misleading, to be honest. I mean, we tend to get into this almost bond mentality of doing a calculation and if we did that, I would have gone back in the last several months at GE rent spell this huge amount net effective. And today I would be saying, oh my gosh, rents have moved up this huge amount because concessions are abating. And I think both of those can be a little bit misleading. As Mike has said, for years, concessions can come into the market and go out rather rapidly. We've used them as a tool to increase occupancy as leasing incentives, and to much lesser extent as in renewals. And so my preference in this case is to really look at it and say, OK, what's going on with our street rents, or market rents or coupon rents and then concessions, where they add? They came into the market in a really big way in June. We use them to increase occupancy pretty dramatically, that's worked. The concessions are abating, we're pulling them back. And I think that's the bigger story. But if you get lost in the net effective rents I'd say, you'll have to go all the way back and say they sell a lot. And now they're increasing. And I think-I don't think that's the best way to look at it.

John Kim -- BMO Capital Markets -- Analyst

Should we be adding the free rent period to the 12-month lease, or is the 12-month inclusive of the free rent? In other words, is it 12-month lease or 13 only?

John F. Burkart -- Senior Vice President & Chief Operating Officer

It's typically 12-month lease. And yes, if you try to get to net effective again, as I said, you just take the concession amount and say OK, if it's a month, it's 8%. And you'd make that adjustment. So I mean, that's the simplistic way to get there. But again, I just don't think that's the best way to look at what's happening in the marketplace right now.

John Kim -- BMO Capital Markets -- Analyst

Okay, and my second question is on your suburban portfolio. I was wondering if you could categorize what percentage of your suburban portfolio is transit oriented or is densely populated suburban versus, I guess, your more typical garden style suburban portfolio? And if you do have the breakdown, is there a difference in the performance between the two?

John F. Burkart -- Senior Vice President & Chief Operating Officer

Well. I don't have the details of the breakdown with that. But I will tell you as it relates to performance, transit oriented is really not what's driving anything right now. It's basically a lot of people aren't taking the transit. So they're not on bar and they're not on caltrain. If they're commuting, they're on the road. We've seen that many different ways, but we also see that how much used cars are getting bid up, people are opting to drive. But what we do see is, again the walk-ability as I've mentioned previously, it's the higher the walk-ability typically relates to the higher the price per square foot in rents. And that if you were to look at one correlation that would be the units that are negatively impacted the most. And on the other side, is the lower dollars per square foot or lower walk-ability of the units that have benefited the most in this situation, if that makes sense.

Michael J. Schall -- President and Chief Executive Officer

And hey, John. This is Mike. In our September presentation that's on the internet, there actually is a-there's a chart that describes exactly what John shows you, which is the change in asking rents by Walk Scores on Page 21 of that presentation. So hopefully that'll help. And if you have any follow up questions, give us a call.

John Kim -- BMO Capital Markets -- Analyst

Very helpful, thank you.

John F. Burkart -- Senior Vice President & Chief Operating Officer

Thank you.

Operator

Our next question comes from the line of Rich Hill with Morgan Stanley. Please proceed with your question.

Rich Hill -- Morgan Stanley -- Analyst

Hey, guys. Thanks for taking my call. Hey John, I have a question for you. Because I think we maybe have a little bit different take on some of the questioning on this call. I think the market understands that apartments are under pressure. It's one of the worst kept secrets in the market right now. And I frankly, don't think that market is surprised that same store revenue is going to get worse in 4Q and 1Q. I think what the markets looking for is seems to be less bad. And if I think about what you reported last night, particularly for October, you showed that, right. Occupancies improved, leasing spreads were less bad. And so, I think you were making some really important comments about demand as rents come down. So my questions are really-I guess, are really simple one in theory, have we seen the bottom? Do you think that rents have come down enough to attract that incremental demand? And really are we going to start to just reaccelerate from here? Because I really think that the market just need to see less bad, stable to improving occupancy and less bad leasing spreads. So if we're there, I think that's a real positive.

John F. Burkart -- Senior Vice President & Chief Operating Officer

Yeah, and wish you could ask me this in June of 2021 and we can cook for that course of positive. But, obviously, I don't know the future. What I'm trying to point out is, we do have signs of strength that a third of our portfolio is actually moving increasing occupancy rents, stability in large portions of the portfolio. We are not the market, we're a participant in it. And there's some others in the market that are trying to play catch up right now. So, I see volatility going forward. And then recognizing that seasonally, usually Q4 and Q1 are the low points, it would be hard for me to say that I would believe that Q3 is, it turns out to be a low point. But there's just volatility in Q4. A lot of pieces out there, no one knows what's going on with COVID and everything else, but we're feeling good. There are certainly things have improved from what we saw in June and July, which was tremendous amount of activity, trying to find where the market was, we found the market, where the consumers are interested.To your comment, has places in San Francisco and Oakland I brought that comment up, because we are starting to see that people from outlying areas as super commuters are now moving in that value proposition works for them. And that is a very good sign. It's going to be I call it a leading sign. So, that is a good thing. Those markets are still tough and the word acceleration gives me heartburn. But the stability, yes, strength in some other areas, certainly, we're starting to see sequential improve in those four counties that I mentioned. So, overall, I feel much better than it did last quarter, let's put it that way.

Michael J. Schall -- President and Chief Executive Officer

Hey Rich, this is Mike.

Rich Hill -- Morgan Stanley -- Analyst

Yeah, go ahead Mike.

Michael J. Schall -- President and Chief Executive Officer

Yeah, let me just add one additional item to that. And that is, normally this time of year, we feel pretty good about giving guidance for the next year. And as john said, we don't this year largely because of the COVID uncertainty or unknowns that we talked about in the opening script. It's just, the world can change so rapidly, and for the better or for the worse and it's not-it's things that are completely outside of our purview of understanding. So, we regret not giving our normal guidance on Page S16 for next year. And but we just can't or they're just too many unknowns. One thing that we're focused on and it's so important on Page S9 of the supplement, our average monthly rental rate is down 40 basis points, and we're trying to hold occupancy, we're trying to hold rate. And if we can do that with, again with jobs still down 8.7% on average, and down 11% in Oakland and 10% in San Francisco, trying to hold rate while we have that much job loss, worse than the financial crisis, I think is an amazing piece. So that's what we're trying to do. And we remain both.

Rich Hill -- Morgan Stanley -- Analyst

Yeah, that's really helpful, guys. And like, I would just reiterate to you, given where valuations are right now, I don't think the market needs to see you get back to where you were in 1Q '20. I think the market just needs to see less bad. And I think that's why October was encouraging. That's maybe a long way of saying, if we're not catching a falling knife anymore, and it feels like there's some stability emerging, that sounds like a positive. So, look forward to future updates, guys. Good work on the quarter.

John F. Burkart -- Senior Vice President & Chief Operating Officer

Thank you. Appreciate it.

Operator

Our next question comes from line of John Pawlowski with Green Street Advisors. Please proceed with your question.

John Pawlowski -- Green Street Advisors -- Analyst

Thanks. So just one quick question for me John, as your private competitors play a little catch up on the occupancy side and as larger rent resets, kind of ripple through sub markets in some of your outside of your portfolio, do you expect occupancy to slide here, coming in the next several quarters?

John F. Burkart -- Senior Vice President & Chief Operating Officer

I don't, I wouldn't say that I expect it to slide. I think the team is doing a phenomenal job. We are very aggressive getting data, we have proprietary data hub, and we pull all the data together. We have daily meetings, pricing and strategy meetings. And it is just an amazing team with leadership all the way through it. And so, we're meeting the market.So, we know that a unit that's vacant, does not earn any revenue and we just for years laughed at the proud and vacant concept that it just doesn't get you anywhere. So we typically are doing 12-month leases and we meet the market and try to understand it, meet it in and stay occupied. So, I don't see the occupancy declining a lot. 96.6 is high but maintaining I'd say 96 and north of 96 I think is what I would expect to see for the next couple of quarters.And then, normally as we start to get into the 3Q-2Q and 3Q and there starts to be more turnover, that has an impact on reducing occupancy just because of the nature of the turnover. But we will continue to try to maintain higher occupancy. And I just expect there to be volatility and I brought that up, because I don't want people to be surprised by headlines from different vendors saying this is happening here and that's happening there and also thinks that the whole market is going away.There's just individual players that are really struggling right now. There are some people with lost occupancy in the third quarter, which was probably not the best strategy. And now they're trying to figure out what to do.

John Pawlowski -- Green Street Advisors -- Analyst

Okay. One follow-up there, are any markets in Northern California where you've taken concessions off and you think you'll have to put them back on into the winter?

John F. Burkart -- Senior Vice President & Chief Operating Officer

No. I mean, it floats around. I mean, right. We're going to use them where we need them. But we have it's-again, we're meeting on a regular basis to figure this out and figure out what where the market is, and what's happening. But I'm not looking right now and expecting huge obvious weakness in one spot or another, I expect volatility. And so to that extent, what I mean by that is yeah, we'll make pricing adjustments as necessary if things pop up. But it's more like whack a mole, and then trying to maintain a good position throughout this situation.

Michael J. Schall -- President and Chief Executive Officer

Hey, John, one quick comment. This is Mike. Just one quick follow up with to what John said. Generally, nothing great happens in the fourth quarter, because hiring which is also affected by COVID. But generally, in Q4, companies just wait until Q1 when they have new budgets and business plans, in order to regain resume hiring activity. So you end up with sort of the worst of both worlds. You end up with less hiring, and of course, the supply deliveries keep coming. So keep in mind that that dynamic is definitely is probably greater this quarter, given the pandemic related issues than it has been in the past. So, really, I think we need to get into the New Year before we have really a great sense of what direction we're going to be going in.

John Pawlowski -- Green Street Advisors -- Analyst

Got it. Thank you.

Operator

Our next question comes from the line of Austin Wurschmidt with KeyBanc. Please proceed with your question.

Austin Wurschmidt -- KeyBanc -- Analyst

Hey everybody, thank you for taking the question. First, just curious, given you guys were more aggressive with concessions over the summer to the extent that others are playing catch up. Curious where you kind of peg your in-place effective rents today versus market rents?

John F. Burkart -- Senior Vice President & Chief Operating Officer

Our in place effective rents? Well, do you mean like last delays where are we at?

Austin Wurschmidt -- KeyBanc -- Analyst

So, yeah if you take into account concessions, looking at your effective rents today, how far below or at market are you so to the extent things do soften further, you've already put in some cushion and to the extent the market is coming to you, versus you having to cut further ultimately?

John F. Burkart -- Senior Vice President & Chief Operating Officer

Sure, again, most of our cuts have really been along the lines of concessions, and we've backed away from those. As we noted, our market rents are down about 5.8% in Q3 2020 over Q3 '19. So we've made adjustments down, it varies by market, obviously with San Francisco being greater and other markets much less. But the market as a whole is really hanging in there, as a general rule with the consumer has been looking for is concessions, leasing incentives, and we've continued to structure our pricing along those lines to meet the consumer where they're at. But what we've seen is that over the recent time, certainly over the summer, things were pretty intense. And then as we got into the fall, this need for concessions backed away. And the more we backed away, the more we're able to continue to maintain occupancy and low availability. So, if necessary, we'll adjust, but right now, we've already dropped our market rents by say 5.8%.

Austin Wurschmidt -- KeyBanc -- Analyst

Okay, yeah, I guess I'm just generally looking for sort of a loss to lease type number. You're more full today, and your loss to lease?

John F. Burkart -- Senior Vice President & Chief Operating Officer

Yeah, our loss to lease is like 3.6% if we look at it that way. Yeah upside down, OK. Yeah, gain to lease sorry. Gain to lease.

Austin Wurschmidt -- KeyBanc -- Analyst

Got it. Gain to lease, got it, OK.

John F. Burkart -- Senior Vice President & Chief Operating Officer

It's like not have been use to saying that, I mean just lastly, we have gain to lease.

Austin Wurschmidt -- KeyBanc -- Analyst

Right. Okay. Fair enough. And then in your comments on work from home and you think things kind of get more back to normal over time, you guys are more suburban. So as restrictions get lifted, concerns around the virus, e-services are back up and running. Perhaps the urban cores, take a little longer, so the concessions remain elevated there. Is there a risk that you lose residents that had moved out to more suburban locations, but ultimately want to move back into urban cores and closer to their offices as things do begin to return back to normalcy?

Michael J. Schall -- President and Chief Executive Officer

Yeah, Austin, this is Mike. And John alluded to some of this a minute ago, when he was talking about the October movement of other Northern California markets back into San Francisco and Oakland doubling from the previous numbers. So that definitely there is a there is movement. And largely, it's because of the price differentials. We've discounted now so much in the cities, that they are a relative value compared to the suburban areas. And suburban areas rents is more recently have actually increased, which again, as long as their price differential continues to expand between the cities and the suburban areas, you're going to see more people moving back in. So we think this is just the normal operation of the markets and compensating for find the rent that sells the units in the marketplace. And so, most people don't focus on that relationship of what rents are doing in the suburban markets versus the urban markets, the reality is it very much affects consumer choice. And so now more people are choosing to live in the cities at a lower price point.

Austin Wurschmidt -- KeyBanc -- Analyst

Okay. That makes sense. Okay, thanks for the thoughts.

Operator

Our next question comes from the line of Daniel Santos with Piper Sandler. Please proceed with your question.

Daniel Santos -- Piper Sandler -- Analyst

Hey, good morning, thanks for taking my question. Most of my questions have been answered so just two quick ones for me. I was wondering if you could comment, sorry, if you covered this already, on any sort of future or further operation or balance sheet initiatives that you could look to for cost savings just in the face of continued revenue decline. And then second, I was wondering if you could comment more specifically on whether or not you've considered investing in markets outside of California, just given all the California-the issues California faces both near-term and long-term?

Michael J. Schall -- President and Chief Executive Officer

Yes, this is Mike. Actually, I would say the pressure on costs are-have increased in COVID. As you can imagine, we had a relatively small collection department, it's now much larger. As you can imagine, selling and changing price and strategy is much more complicated now. So I'd say the business-in terms of operating the business, it's more complicated. But as noted in our-again our September presentation, there are some bright things that are happening. And one of them involves technology, where we said that technology will probably lead to a 100 to 200 basis points improvement in margin overtime. And as I said in my prepared remarks that the consumer has accepted technology actually prefers technology given COVID. And that has allowed us to move pretty strongly into deployment of various different types of technologies. And so there is definitely promise there for reduced cost. And I'm sorry, what was the second part of your question?

Daniel Santos -- Piper Sandler -- Analyst

I was just wondering, if you could comment more specifically on whether or not you considered investing in markets outside of California, just looking all the over-hang?

Michael J. Schall -- President and Chief Executive Officer

Yeah. If we can come to believe that advocating for good housing policies in California is something that we're going to do, we're going to be activated, we're going to spend a lot of time and some money doing it. We think that overall, it makes sense to do that, because it's pretty hard to find what we have here. The combination of supply constraints and very vibrant businesses that are growing rapidly, and which is really what drives rents. It forms this virtual cycle of rents push up, wages and then wages allow higher rents, and you will find that in very few markets. So, we do have a process involved in our strategic planning activities that look at other markets that are similar to the West Coast. We don't think any of them are quite as good as the West Coast. But we continue to look at it, obviously, we're just interested in one thing, we're interested in adding value for shareholders and growing the company. And so, if we see the right set of conditions, we would be compelled to take a hard look at it.

Daniel Santos -- Piper Sandler -- Analyst

Got it. Thank you.

Operator

Our next question comes from the line of Neil Malkin with Capital One Security. Please proceed with your question.

Neil Malkin -- Capital One Security -- Analyst

Thanks, guys. Good morning. Thanks for staying on. Appreciate you giving me the time. First one is on the preferred equity side, you continue to be active in that. I would like you originated a couple, one was stabilized. And that was the first time I've seen you do that. Can you just talk about what that market kind of looks like? I thought that, stabilized assets are easy to finance with the agency debt. If you just maybe talk about it, that's a new trends you're seeing or maybe overall, what kind of opportunities you see in that part of your business?

Adam W. Berry -- Senior Vice President & Chief Information Officer

Sure, Neil this is Adam. So, we've definitely seen, we're still very active in the market and have seen more, there is ample debt out there for stabilized assets. But underwriting has definitely has been more challenging for some sponsors. So, we are seeing more and more opportunities on the stabilized side. And you saw the one that we just funded this quarter, and probably a couple more in the pipeline coming down.

Neil Malkin -- Capital One Security -- Analyst

Okay, great. Appreciate that. And then I guess, next question is for Mike, as people talked about the coastal issues, but you're talking about Amazon and Google growing in Seattle, Northern California, putting their money where their mouth is office space. I just, again, kind of maybe want to go back, I've looked at some subleasing data. It looks like the square footage available for sublease has gone from like 1.4% to 4% in Northern California. You look at companies like Facebook and Google who have talked about like around 50% of their workforce being remote during regional location. And then, Reddit said, they're not going to adjust compensation based on location, usually, these companies follow each other's moves. So, I guess, how do you think that the framework around the tech markets or at least in those areas in the West Coast isn't at least partially impaired, given those main driving forces from those large companies?

Michael J. Schall -- President and Chief Executive Officer

Well I guess this is the moment that I would say, I'm glad I'm not an office company, because I agree with what you're saying. Definitely, there's plenty of lease space out there. Although, the vacancy rates that I have don't show huge increases this quarter versus last quarter, but obviously, these things take time to play out. And I guess I'd be cautious to say that, it seems like things are changing rapidly. And, but I still think that we should take some time to wait and see what happens, because, right now, on the work from home thing, again, as noted in the script, it's a pretty much a mandatory thing right now, as opposed to a life's choice that it will be sort of in a post COVID period. So, I think there's a lot of change just being forced upon us. Again, we believe in the hybrid model and we think that that's what will take place going forward. And in fact, we think we'll adopt that model as a company as well, because there are definitely some benefits to it. But at the same time, I'm hyper focused on the culture here and the vibrancy of the company as we all are, everyone in this room is. And, that is critically important to us. I just don't see how you maintain that via whist exclusively and work from home type of format. So, I don't know what's going to happen exactly with these things. But again, I think there's good reason and a lot of issues that need to be resolved on the work from home model, for it to be successful and no doubt there will be some bumps in the road. So, as long as those employees remain within the major metros, I think that we're in good shape. And, they may not we may not get the rent growth in San Francisco, but we will get it out into in the suburban markets. And we'll continue to do pretty well, I think.

Neil Malkin -- Capital One Security -- Analyst

I appreciate the feedback. Thank you.

Operator

Our next question comes from the line of Alexander Calmes with Zelman and Associates. Please proceed with your question.

Alex Calmes -- Zelman and Associates -- Analyst

Hi, thank you for taking my question. Just kind of wrap my arms around going back to the public and private values. If we think about in your opening remarks, you said that there's a 5% to 10% discount in the pre-COVID pricing. But if I think about where volumes are today, there's a significant drop off from last year. So, if we were running at a hypothetical normal rate, would that imply a deeper discount if we were there right now?

Adam W. Berry -- Senior Vice President & Chief Information Officer

Hey, Alexander, this is Adam. So I think, to Mike's comment in the earlier script, the 5% to 10% discount that he was talking about was more urban core markets. We've actually seen valuations on suburban assets be at or above pre-COVID levels. You're right. And that volume has definitely been off of what it historically is. That being said, we're constantly in the market talking to potential buyers on potential dispositions. And there are enough out there that the market is being met, I'd say at that kind of at or above pre-COVID pricing. But just as an example, the deal we just sold in Glendale this week, that sold on pre-COVID pricing, or pre-COVID rents at about a 3A cap and that was about 4%, above our pre-COVID value. Cap on concessions and you're in the low-3s. So yeah, we're still pretty confident that the spread and what Mike mentioned that 5% to 10% discount on core markets, we think that still kind of flows through despite the lack of volume.

Alex Calmes -- Zelman and Associates -- Analyst

Got it. Would you call it even a scarcity premium on sort of those assets?

Adam W. Berry -- Senior Vice President & Chief Information Officer

There is definitely that potential. Yes.

Alex Calmes -- Zelman and Associates -- Analyst

Got it. Thank you. And just in some of the tax plans we're seeing in the Biden administration. If he were to win, he thinks about 10:31 exchanges and eliminating that. I just want to gauge just how big of a factor that would be in California transaction market? Are you-do you know what percentage that would be?

Michael J. Schall -- President and Chief Executive Officer

This is Mike. It's hard to tell. I mean, this year given lower revenue, which is not a good thing, we have plenty of room in terms of taxable income to sell some properties and not have a REIT or dividend issue. So, but it will vary from year to year. And they're already given the Prop 13, they're already-it's already a headwind in selling some of our California properties as well. So, it's hard to tell. That's more of a hypothetical question that it depends on the circumstances and what we see going forward. So it's a difficult one to answer.

Alex Calmes -- Zelman and Associates -- Analyst

Okay, thank you for the color.

Operator

Our next question comes from the line of Amanda Sweitzer with Robert W. Baird. Please proceed with your question.

Amanda Sweitzer -- Robert W. Baird -- Analyst

Great, thanks. Just a quick one from me here, have you seen a change in tenant credit quality as you've had more of those values to be intravenously including those super commuters you're referring to? And then, just for context in past downturn, do you see greater turnover among those value consumers when you do eventually look to raise rent?

John F. Burkart -- Senior Vice President & Chief Operating Officer

Yeah. So as far as the tenant credit quality, no, we have not seen any decline there. It's a situation where if you have a job, you continue to maintain going forward, and then you're able to rent and if you don't, it's a terrible situation, but you're not going to become a new renter. So we haven't seen any declines there. As it relates to turnover, from that type of situation, yeah, the answer is, yeah, there are sometimes I can think of an almost a funny story where we had a resident that moved from one of our outer properties up in Seattle to downtown. They transferred within Essex. And then as the market picked up, this is after the last financial crisis, they moved back into the property that they had started with. And they're very nice person and they wanted to stay with Essex, is an Essex client. But they really did take advantage of the pricing changes. And, again, it's that value proposition that they were making personally between their commute in pricing and everything and making that decision. And that's what we do see goes on. Of course, that's the backdrop there was the rents in Seattle went up, because the economy was growing, demand was increasing because of jobs. And so, the fact that, that person moves out, it really going to impact the overall economic picture. It was a rent rising then.

Amanda Sweitzer -- Robert W. Baird -- Analyst

Make sense. Thanks.

John F. Burkart -- Senior Vice President & Chief Operating Officer

Sure.

Operator

Our next question comes from the line of Haendel St. Juste with Mizuho. Please proceed with your question.

Haendel St. Juste -- Mizuho -- Analyst

Yes, good morning out there.

John F. Burkart -- Senior Vice President & Chief Operating Officer

Hey Haendel.

Haendel St. Juste -- Mizuho -- Analyst

Good morning. First question for me and I'm sorry if I missed this, but did you guys discuss what drove that $8 million increase in non-residential revenue from second quarters up to $19 million? And I guess I'm curious what was behind that as well. And if this builds level, we should be forecasting near term plan on it?

Angela Kleiman -- Executive Vice President & Chief Financial Officer

Hey Haendel, it's Angela. Sure, I see a $19 million increase. I have on the property levels...

Haendel St. Juste -- Mizuho -- Analyst

It's sequentially it's from $11 million to $19 million, this quarter, not $8 million.

Angela Kleiman -- Executive Vice President & Chief Financial Officer

As in to 19, you know what I'll have to get back to you because when I look at our S2 from quarter to quarter, second quarter to third quarter, a growth from $5 million to $6.3 million. So, it's one that is being [Indecipherable]

John F. Burkart -- Senior Vice President & Chief Operating Officer

Where are you looking?

Angela Kleiman -- Executive Vice President & Chief Financial Officer

Yeah, where are you looking?

Haendel St. Juste -- Mizuho -- Analyst

Looking on the-sorry one second, Page S8, I'm looking at the non-residential other line items in third quarter $19.8 million versus second quarter of $11.4 million.

Angela Kleiman -- Executive Vice President & Chief Financial Officer

Okay.

Haendel St. Juste -- Mizuho -- Analyst

Looking up bottom line, I was just curious if that was something you had readily available, but certainly can follow up if it's going to take a bit more digging? And then...

Angela Kleiman -- Executive Vice President & Chief Financial Officer

No, it's-And that is straight line rent. I think that's where you're looking at line rent.

Haendel St. Juste -- Mizuho -- Analyst

Non-residential other income $19.847 million. Right, so, doesn't really look like any other event. We'll do the follow up. Mike, maybe I guess following up on -

Angela Kleiman -- Executive Vice President & Chief Financial Officer

Yeah, it's straight on rental and commercial-on commercial. I think that's what it is. But we'll follow up with you. But I think that's what that is.

Haendel St. Juste -- Mizuho -- Analyst

Okay, fair enough. A question then following up on Daniel's question about new markets, we've talked about this over the past few quarters, few years. I guess I'm curious, what are your peers mentioned Salt Lake City specifically? So, I'm curious to know how the market like that ranks on your hypothetical list and maybe you could, disposition proceeds because that's a use of the source of capital for entering new markets given what seems to be a hesitant here to for more stock buybacks?

Michael J. Schall -- President and Chief Executive Officer

Yeah Haendel, it's a good question. Actually there's a bunch of cities that you can put in that category. They're smaller metros; Boise would be another good example. But there are others as well. I guess, from our perspective, we want to see enough liquidity in the market from an investment perspective, enough local buyers and sellers to create a pretty strong market. And that's one of the issues in each of those markets. The other issue is relatively inexpensive, single family homes. And I think everyone should be very careful with this, about this point in the cycle, because we're starting to see rapid increases in single family home prices. And as soon as you get to a level where, it's more attractive to buy a home than it is to rent an apartment, those markets tend to get hit pretty hard. So, this is why the supply constraints we measure very broadly to include how all types of housing and for sale as well as rental housing, because we've learned that lesson before. We were once upon a time in the city of Portland, another good example of this, although it's a bigger metro than Salt Lake City in Boise. But in the city of Portland, we made some investments based on an urban growth boundary that surrounded Portland that limited the amount of housing production. And we exited Portland actually, because they expanded their urban growth boundary to allow for the production of 10,000 single family homes that are relatively inexpensive price, which made our apartments much less attractive in the overall Housing Choice that were available to consumers.

So, I hear that, we like those markets are growing very rapidly. There's definitely money to be made, but there's definitely a higher risk associated with them.

Haendel St. Juste -- Mizuho -- Analyst

Yeah, thanks for that, Mike. And one final question not to split here, but I guess I'm curious on what you guys are seeing on the demand side for studio apartments? Can you just-given that they tend to be the younger or more nimble renters and as people have fled from the city, certainly in search for more space, curious to how the incremental demand or any pricing power emerging in that part of the portfolio? Thanks.

John F. Burkart -- Senior Vice President & Chief Operating Officer

Well, I wouldn't use the word pricing power and attach that to studios. Basically what we see and we look slice and dice at numerous different ways, but as it relates to say, just unit type, clearly, the three bedrooms have higher demand than two bedrooms than one bedroom, than studio at the bottom. Generally, what we see within the marketplace is the studios now have lower occupancy. And again, this ties back to some of my comments were when we look and see where turnover was or where there's demand issues, this is connected in part to say studies, it's also connected to Silicon Valley consultants and those types of things. It also connects to the COVID preference where people want more space, and lower price per square foot. They want more private outdoor space, usually studios have limited private outdoor space. So, yeah there's no question that studios are impacted more than the other unit types, if that answers your question.

Haendel St. Juste -- Mizuho -- Analyst

Certainly, but also curious, if there's been any incremental move certainly the idea that we're looking for some proven in the second group, it's curious when you start to see any at all on that more challenged piece of the portfolio?

John F. Burkart -- Senior Vice President & Chief Operating Officer

Fair enough. We're doing a little bit better, but we're also doing everything we can to figure out the best way to market those units, whether they be as a second office, or whether it be in different discount prices. So, yes, there's a little bit more incremental demand. In context, I would say that it's a balanced picture, because we're working very aggressively to figure out how to market those. And what I would say is, the decline has stopped. There was a noted decline that occurred in the spring on studio, they occupancy. That stopped, it flattened out, and we're now improving a little bit. But again, I think there's other factors involved.

Haendel St. Juste -- Mizuho -- Analyst

Fair enough. Thank you, guys.

Operator

There are no further questions. I'd like to hand the call back to management for closing remarks.

Michael J. Schall -- President and Chief Executive Officer

Very good. Thank you, operator. And thank you everyone for joining the call today. Hopefully, we'll have a chance to meet with many of you at the upcoming day week in November. Stay safe out there. Thanks for joining us. Good day.

Operator

[Operator Closing Remarks]

Duration: 90 minutes

Call participants:

Michael J. Schall -- President and Chief Executive Officer

John F. Burkart -- Senior Vice President & Chief Operating Officer

Angela Kleiman -- Executive Vice President & Chief Financial Officer

Adam W. Berry -- Senior Vice President & Chief Information Officer

Nick Joseph -- Citi -- Analyst

Sumit Malhotra -- Scotiabank -- Analyst

Nick Yulico -- Scotiabank -- Analyst

Jeff Spector -- Bank of America Merrill Lynch -- Analyst

Rich Hightower -- Evercore ISI -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Rich Hill -- Morgan Stanley -- Analyst

John Pawlowski -- Green Street Advisors -- Analyst

Austin Wurschmidt -- KeyBanc -- Analyst

Daniel Santos -- Piper Sandler -- Analyst

Neil Malkin -- Capital One Security -- Analyst

Alex Calmes -- Zelman and Associates -- Analyst

Amanda Sweitzer -- Robert W. Baird -- Analyst

Haendel St. Juste -- Mizuho -- Analyst

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