(To read more on the multifamily market, click here.)

SACRAMENTO, CA-The apartment market here is being strengthened by strong in-migration, employment growth, rising single-family home prices and slowing construction activity, according to the latest report on the local apartment market by Marcus & Millichap Real Estate Investment Brokerage Co. The situation is allowing absorption the opportunity to gain slack on the supply side and improve vacancy, according to the report.

“Drawn by improving fundamentals and the metro’s striking growth profile, price appreciation and strong investor interest will continue through the remainder of the year,” predicts Robert Hicks, senior vice president and regional manager of M&M’s Sacramento office.

Among the positive indicators is job growth. Sacramento area employers are expected to increase payrolls by 1.8% (15,100 new jobs) this year as the area’s population-driven industries—such as professional and business services and financial activities–continue to outweigh losses in other sectors, according to the report.

As well, the report found that developers are on track to deliver 2,600 apartments this year, which is a 16% drop from 2004. “Although there are several thousand units in the planning stage, developers appear to be taking a much-needed break until greater improvement in market fundamentals occurs,” states Hicks in his report.

As a result, the overall vacancy is expected to fall modestly to 7.2% by the end of the year after rising for the past four years. As well, asking rents are on pace to climb 2% by year-end 2005 to $923 per month, according to the report, and concessions are on the decline, accounting for 5% of asking rents, a slight improvement from year-end 2004. Having said that, Hicks states that vacancy and concessions will continue to be above average in pricier areas, such as Folsom, Roseville, Rocklin and Elk Grove, where the luxury rental market has lost many renters to home ownership.

The improving fundamentals has attracted investors who like the fact that the area has comparatively low acquisition prices, though recent strong demand has put upward pressure on prices. The median price climbed 11% in 2004, to $82,000 per unit, and has risen to more than $86,000 per unit so far this year.

Of course, being the median price means few sales actually come in at that figure. Data on three apartment sales here in August show per-unit prices ranging from $43,750 per unit to $150,000 per unit.

The least expensive deals were for properties in Sacramento proper. Dawson Holdings Inc. of Sausalito, CA, acquired Rosewood Manor, a 97-unit property located at 9400 N. Kiefer Blvd., for $5.02 million or about $51,804 per unit. As well, one week later, Dawson Holdings acquired Willow Tree, a 108-unit community at 2300 Norwood Ave. for $4.72 million or $43,750 per unit. The seller in both cases was a California LP based in the City of Gold River.

The more expensive deal was in the Sacramento suburb of Carmichael. Parkview Investors LLC of Sacramento paid $6.45 million for a 43-unit complex located at 7032 Fair Oaks Blvd. The seller was Donald Meagher of Coastal Exchange Group in San Diego County. The new owner plans to convert the property to condominiums.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.



Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2023 ALM Global, LLC. All Rights Reserved.