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Apartment vacancy rate 1.9 percent: survey

UniCourtW

Hong Nguyen, the business team leader for University Court Apartments, shows a bed-leasing room. The Sycamore Lane complex converted a number of its units from room-based to fully-furnished bed-based leases. Fred Gladdis/Enterprise photo

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From page C2 | May 11, 2014 |

The city’s apartment vacancy rate stands at 1.9 percent for complexes that rent by the unit and 3.5 percent that rent per bed, according to a UC Davis report released in April.

Based on a landlord survey conducted primarily in November and December, the report also found a $1,275 per month average rent for unfurnished, two-bedroom units.

Ramona Hernández, UCD Student Housing’s director of business services, said that by separating out complexes that rent by the bed, the report may have solved a puzzle: why housing staff saw for-rent signs around town while hearing from students that apartments were difficult to find.

Bed leasing has pluses and minuses for students, she said. On one hand, if a roommate leaves during the lease, those left behind aren’t left covering the rent; on the other, the landlord may match up tenants.

That may make such a lease less desirable and might explain a higher vacancy rate about complexes that lease that way, Hernández said.

Leasing by bed popped up in Davis about five years ago, Hernández said. Its impact grew dramatically with West Village, now with a capacity of 1,980 beds, first opened its doors in 2011. The developer’s ground lease calls for bed leasing in most instances.

It’s become more common elsewhere, too, as landlords with three-, four- or rare five-bedroom units to advertise them as a unit lease, then opt for bed leasing if all the rooms can’t be filled, she said.

More details from the report:

* One-bedroom units have a vacancy rate of 1.2 percent and three-bedroom units a rate of 3.7 percent.

Two-bedroom units makes up 45.9 percent of the apartments included in the survey. One-bedroom units are the second-most common (31.2 percent), followed by three-bedroom units (14 percent).

* Rental rates for unit leases averaged $1,321.

Broken down by size, average rents were: for a studio, $911; one-bedroom, $1,005, two-bedroom, $1,275; three-bedroom, $1,764; four-bedroom, $2,338; five-bedroom, $2,500.

* Complexes with bed-lease arrangements accounted for 818 units, most with three beds (28 percent) or four beds (46 percent). Two-bed units made up 19 percent.

Among those, the vacancy rate was 5.6 percent for two-bed units, 4.9 percent for three beds and 2.7 percent for four beds.

* The average rental rate bed leases was $825. Rates for two-bedroom units averaged $912, three-bedroom $825 and four-bedroom $774.

A total of 126 apartment complexes responded to this year’s survey. They represent 9,772 rental units — about 82 percent of the city’s stock.

The report includes apartments inside Davis, as well as the privately managed complexes on campus: The Colleges at LaRue, The Atriums, Russell Park and West Village.

For the first time, UCD hired Davis-based BAE Urban Economics, a private real estate consulting firm, to compile the report, and the survey was conducted primarily online. The firm was able to attract responses that included that represented about 25 more complexes and units than a year earlier.

Because of the change in methodology, this year’s report doesn’t make a year-to-year comparison of overall vacancy rate. Last year’s survey, which combined both kinds of leases, found a 1.7 percent vacancy rate.

An ideal vacancy rate for a city is typically considered to be about 5 percent. Davis’ has mirrored patterns in undergraduate enrollment, with a recent low of 0.2 percent in 2002 and high of 4.2 percent in 2005.

UCD anticipates a net gain of about 220 beds by fall as it continues its 2020 plan to increase student enrollment. Among the changes the works on campus:

* A private developer is constructing 60 apartments totaling 236 beds for primarily single graduate students at a complex, dubbed “8th and Wake,” for fall.

* Tercero Phase 3, with 1,186 beds for first-year students, is also set to open by fall.

* Orchard Park, with 400 beds, will close in July. UCD is negotiating with a developer to create a new, 840-unit complex on the site for student families and single graduate students, as well as some transitioning faculty and staff. The university has targeted a fall 2016 opening.

* UCD is in the preliminary design stage for Tercero Phase 4. The proposed complex will add 500 beds by fall 2017.

This year’s survey is UCD’s 38th annual. The university has announced that it will conduct them every other year, from now on.

The university offers housing to all entering freshmen and transfer students who request it. About 4,900 students live in residence halls, with another 475 families and single graduate students in Orchard and Solano parks. About 1,400 students live in privately managed housing complexes on campus.

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Cory Golden

Cory Golden

The Enterprise's higher-education and congressional reporter. http://about.me/cory_golden
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