Apartment Vacancies Down, Rents Up

Tuesday, June 24, 2008
Barbara E. Hernandez
Sacramento Business Journal

The Sacramento region added just 168 new apartment units during the
first three months of 2008, the lowest level for a first quarter since
2001, according to brokerage Hendricks & Partners.

The company has just released its apartment market outlook for
Northern California, which shows that construction and planning for new
apartment buildings slowed dramatically in lockstep with the housing
downturn. Permits were issued for construction of 208 new units, the
lowest total in a decade. Vacancy rates in the market fell, however, to
6.0 percent while rents increased 1.9 percent to an average of $963.

Sales of apartment communities fell from 16 transactions in the
first quarter of 2007 to five this year, though the price per square
foot of those transactions increased from $103 to $111.

The submarket with the smallest vacancy rate and highest rent is
Davis — 2.8 percent in complexes with 50 or more units with average
rent of $1,308 per month. Antelope has a vacancy rate of 7.1 percent,
the highest in the region, and average rent of $929.

Renters, some of whom might be former homeowners, flocked to
apartments in Elk Grove, which had the largest downward shift in
vacancy and was the only submarket to experience a decline in rents. In
the first three months of 2007, apartments there were 12.5 percent
vacant. That rate has fallen to 4.0 percent as average rents decreased
from $1,145 to $1,113.


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