Anecdotal experience: I rented an apartment where the bathroom was literally rotting away on itself. The landlord would do cosmetic fixes only as the walls sagged and warped.
The incentive wasn't there for her to make a large capital expenditure on maintenance because the land appreciation was what she was banking on and rental demand was such that she could always rent the apartment.
While this example is extreme I've seen similar deferred maintenance behaviors repeated over and over again by the most successful (read: largest portfolio holding) landlords.
The costs you mentioned are associated with the building itself. However, in a city like SF, much of the rent is driven by land value, which has no such holding costs [0]. So they still have a lot of "free" income coming in, as owners of a government granted monopoly in perpetuity (sounds a lot like feudalism...).
[0] - Except property taxes, but CA caps their increase, so if you've owned the property for a while now, the tax isn't in line with the rent you can charge.
How do people not know this? Commercial landlords seriously have no risk. Taxes and insurance are passed straight through to tenants and the bank is carrying the capital risk.
Their risk is when they can't find a tenant or a tenant quits mid-lease. Then they owe the bank from their pocket. Commercial real estate is much more susceptible to the economy. Bad economy or good, people need a place to live. But in a bad economy, businesses just close up, declare bankruptcy, and leave.
When "they" owe the bank in a bad economy, "they" is a disposable corporate entity, not a normal person who might have to suffer consequences for their reckless behavior with debt. The actual people involved spent the last decade stuffing their pockets with rents and setting up asset protection strategies.
