They do. At some point the landlord makes the decision that this is good enough and accepts an offer using whatever factors are in play, maybe some personal circumstances like needing the money sooner rather than later or just liking one of the applicants more, but the next landlord is now informed by what his neighbors charged a month or two ago for a similar space and uses that as the floor for what they should ask for. On and on it goes and suddenly prices trend up and a space that went for $X two years ago now goes for $X+$500 today, or as we see in the original article, $X-$1K versus a year ago.

It is better to rent to an interested party today than wait a month for someone who might pay $200 more per month. When the rent is $3500 a month, it will take 1.5 years to make up that difference.

Time is money.

Why hold out and continuously interview potential tenants, when multiple people are literally asking you to take their money?

Cash today is better than cash in a few days.

Yes this: in real estate investing this is called the vacancy rate and it eats into profits, sometimes significantly. Too much vacancy and you can’t cover the mortgage.

Divide a month's rent into 12 and you see it's a 100-200 dollars, which highlights how much you'd have to raise rent for a month's vacancy.

...and that is if you are only dealing with a single vacant property.

Unless the property is used for money laundering and it's fine to let it sit vacant for years.

> Naive question maybe, but if demand is that high, why don't prices rise even higher to balance it out a bit?

It's not always legal to charge more in San Francisco.

Rent control does not apply to vacant units in SF.

What are you referring to?

(SF rent control does not apply when you're bringing in a new tenant)