By David M. Greenwald
Executive Editor
Davis, CA – BAE Urban Economics released its annual apartment vacancy and rental rate survey this week and it showed modestly good news as the vacancy rate “eased some from its pre-pandemic lows as students returned to the University of California, Davis, for in-person instruction in the fall.”
While the 1.4 percent vacancy rate is significantly lower than the deceptive 12.2 percent from the fall of 2020, when the campus had planned for remote instruction during the 2020-21 school year, however, excluding that year, the 1.4 percent rate is the highest since 2016.
However, rent continued to climb with a 10.9 percent increase in the fall of 2021 compared to 2020.
“The combined average rental rate increased 10.9% from $2,183 per unit in fall 2020 to $2,420,” the university said this week in a release. “The report attributes the increase, in part, to the growing number of larger bed-leased units, which bring in more rent per unit compared with unit-leased apartments. It also suggests that properties may have increased rents in 2021 at a higher rate to make up for lower 
increases in 2020.”
A total of 119 apartment complexes and property management companies representing 10,540 rental units, or 18% more units than last year, responded to the survey, commissioned by UC Davis Student Housing and Dining Services. The report’s calculations exclude units rented at below-market rates; only the 10,079 market-rate units were included.
The university also reports that UC Davis housed about 14,080 students.
The university notes, “With capacity to accommodate slightly more than 15,000 students on campus, the campus has already met the goal of providing at least that many beds by fall 2023 under the terms of a 2018 memorandum of understanding with the city of Davis and Yolo County.”
Even during the pandemic, UC Davis said, “the campus has continued planning and constructing new student housing and addressing issues of affordability of student housing more broadly.”
It opened the Green at West Village in the fall of 2020, with more than 1000 beds for transfer and continuing students.
That expanded to 2300 beds at the Green in fall 2021. It also opened Shasta Hall with 800 residence hall beds—that facility opened a year before expected.
Anticipated to open in the fall 2023, the expanded Orchard Park redevelopment project will provide up to 200 two-bedroom units for students with families and housing for up to 1,100 graduate students. The total bed count for the new Orchard Park will be approximately 1,550.
Bed leases are on the rise. While the majority of the surveyed properties were leasing whole units, the survey noted that 2996 of the units were leased on a per-bed basis.
“This inventory of bed leasing properties represents nearly double the number of bed-leasing properties in prior survey periods,” BAE reports. “This increase is driven by several factors, including the delivery of new bed-leasing properties, expansion of existing bed-leasing properties, conversion of unit-leasing properties to a bed leasing program, and a slightly higher response rate from bed-leasing properties relative to prior year surveys.”
The report notes, “Only nine percent of respondents reported decreasing rental rates relative to the prior leasing period. This is slightly higher than the historical average, of between zero and five percent, but is significantly lower than the 2020 survey where over one-third of respondents reported decreasing rents to help fill vacancies.”
The report, as indicated above, also found a primary reason for the increased rent “is the growing number of larger bed-leased units present in the market, which bring in more rent per unit compared to unit-leased apartments.”
However, they found that “the increase in the blended rental rate between 2020 and 2021 is well above historical increases.” However, “when averaged with the 3.1 percent increase experienced between 2019 and 2020, the average annual increase over these two years is comparable to historical annual averages. This suggests that properties may have increased rents in 2021 at a higher rate in order to make up for a lower increase in the prior year.”
Finally, the report noted, “Although the 12-month leases still represent the predominant lease structure, the number of alternative leasing structures reported in the 2021 survey is significantly higher than any prior survey period. These flexible lease terms may have been offered to provide further incentives to residents.”
They add that bed-leasing complexes allow “units to partially turnover, meaning the re-lease of a bed or bedroom within an already occupied unit. This turnover strategy provides additional flexibility for tenants and allows the property owner or manager to minimize long-term vacancy.”
Does it? Cuz I know a student who has that bed lease arrangement in a place that formerly was by the unit. Filling in fall is easy in Davis. The rest of the year – not terrible, but not so much. Student’s flatmate left, and they have the whole place to themselves and paying for only one bed cuz the owner can’t fill it. Great for the student, not so great for the owner.
Uh, oh – sounds like someone is advocating for more housing which doesn’t count toward RHNA requirements, again!
This is progress, and with the projects that are coming on line we should get to 2 – 3% apartment vacancy rate within a few years. 4 – 5% would be better and should be our benchmark for a healthy rental market. This does answer the question as to what effect the pandemic would have on UCD enrollment: none.
Apartment vacancy rate 1988 – 2021. Note: this is the unit rate, not the blended rate.
Will the vacancy rate go up? I thought UCD was adding students faster than apartment building can occur, plus the exodus from the Bay Area, plus maybe DISC.
Time will tell… mixed variables… more remote learning, variations in building already approved projects, the price of tea, etc.
Anyone asserting a ‘solid ‘ answer to,
is suspect… I’d be a huge skeptic, given the significant variables in play… I do believe (opinion) that a 3-5% vacancy rate is a “healthy” rate for rentals… keeps both landowners and tenants ‘honest’…
I can easily see where both landlords and tenants (potential, or current) and advocates for ‘affordable housing’, would strongly disagree with my opinion… whatever… just an opinion formed over a 50 year period… when we came back to Davis in 1979, rental vacancy rate was 0.25%… we bought a home within a year, and it was a ‘push’ (except for the 12% mortgage interest rates) between rental and ‘ownership’…
We appear to be well under the 3-5% rate… but some will say, see, there is no need for more housing (vacancy rates ‘improving’), others will say we need to build, build, build. I have no truck with either end of that spectrum. I lean towards the concept that we need to provide more housing, but not laissez-faire.
In other words suck it up city of Davis and students. The city should continue to feel obligated to house our revenue producing assets.
On the other hand, the city and the Downtown city merchants who are worried about DISC impacting downtown sales should really worry about when the University starts adding significant retail opportunities on UCD land to service all of those students living on Campus. Russell Blvd and nearby streets should be the city’s answer to housing students and capturing sales tax revenue from them. But I suspect the people of Davis will get in their own way to efficiently capitalize on that opportunity.
“ On the other hand, the city and the Downtown city merchants who are worried about DISC impacting downtown sales should really worry about when the University starts adding significant retail opportunities on UCD land to service all of those students living on Campus. ”
One of the points I have been making on why housing on campus is not necessarily the best option for the city. Not sure where you are going with the rest of your point, however.
My point is that the rental rates in Davis continue to be infected by UCD’s in ability (or desire) to house their own sources of revenue. And you know what? That’s fine, that’s UCD’s business. But it’s not the city’s obligation either.
What I find unacceptable are these craptacular student housing projects that have been sprinkled about in town. There’s no reason for the city to approve these things (other than to subsidize….through services provided… UCD’s need for housing). If it was affordable housing that students happen to qualify…that’s fine I suppose….but student focused housing???
I’ve said many times that while I don’t care for a student presence in town, that the city should focus the student presence in a specific area and capture some revenue from them. It’d also be nice to be able to segregate the students to a student oriented area where they can make all the noise they want, eat all the pizza, burgers, burritos…etc… they want….while other types of restaurants and stores and services populate downtown to service working professionals.
The ideal situation would be to populate Russell Blvd. and some of the nearby streets with student focused commercial offerings while all of the residential is on UCD’s property. But like all housing, I’d be willing to swallow some residential development in a student focused area to get the primary commercial component up and going.
Pretty good chance that some of the 460 residential units planned at DiSC will end up being occupied by students, who will then commute 4-5 miles to campus.
But if the commercial is actually successful, student who support it will be shooting themselves in the foot. As will the city itself.
Nah…new housing is expensive. I’m guessing most of those units will be out of the price range for the majority of students.
I’m not sure what your last comment means.
All new housing is new, including that designed for students. When there’s a low vacancy rate, you can be sure that they’ll look throughout the city. They share units and houses, as well.
We don’t know what the rent would be, at DiSC. For that matter, the “mix” of housing apparently hasn’t even been defined (e.g., rental vs. for-sale) of the 460 units. At least, I’m not seeing it in the developer document below.
I don’t envision a lot of families living at DiSC, given that there’s only going to be one parking space per household. Not to mention the probable size and costs of the units, compared to what they can get outside of the city. (And yet, still more than 2,000 parking spaces, total.)
Families and workers are probably more likely to live outside the city, than students.
Regarding my last comment, if the commercial is successful it will create more demand for housing than what’s planned to be included. The same problem as the earlier proposal. (At least, that’s a problem to those who somehow believe that DiSC will solve their perceived “housing crisis”, rather than make it worse.)
Of course, a lot of those people are also rooting for the other “half” of DiSC (as a housing development), Shriner’s, Palomino Ranch, etc.
Not all students are “poor”. (Or perhaps more importantly, not all students’ parents are “poor”.) For that matter, Sterling is pretty pricey (and yet, designed for students).
http://documents.cityofdavis.org/Media/CommunityDevelopment/Documents/PDF/CDD/Planning/Project-Applications/DiSC%202022/Project%20Description%20DiSC%202022_070721.pdf
To clarify, when I say “will”, that assumes it will pass (and actually be built).
I wonder what the rent will be at Nishi, when they finally build it.
For that matter, what’s the deal with Bretton Woods? (The former site of another failed “innovation center” proposal?)
I’m still trying to figure out why Chiles Ranch has been sitting empty for more than a decade. No one discusses this, on here. That site seems likely to house “micro-families”, if they actually build small single-family dwellings. The days of boatloads of kids are over. (Same with the 30 units they’re planning to cram-onto the site of the former convalescent facility. By the way, is there no “demand” for convalescent facilities, for an aging population?)
I had initially assumed that the developer wrote the puff-piece document above (complete with a nifty DiSC logo), but in looking at it again, it’s written in a somewhat “third-person” (but clearly-supportive) manner.
The description lacks any pretense of objectivity, and reads like a sales brochure.
You’d never know that we’re talking about a business park (some 4-5 miles from campus), which would never even be proposed without the profit from housing.