Super-deluxe apartments may be coming to Bakersfield
Jan. 22—Bakersfield may soon get some of the swankiest apartments the city has ever seen.
Institutional investors drawn to the city's booming rental market plan to build at least two rental communities with high-end amenities such as resort-style gyms and massive swimming pools in northwest or southwest Bakersfield, said multifamily residential broker Marc Thurston with ASU Commercial.
"We've had smaller versions of that here in Bakersfield but I don't know that we've had it to that extent," he said, declining to disclose the names of the hedge fund-type investors behind the projects.
The good news is that while similarly outfitted rental communities go for $3,200 to $3,400 per month in places like Irvine, Thurston added, in Bakersfield they'll probably run no more than about $2,500 per month when introduced — and they'll offer more interior space per unit than comparable apartments in Southern California.
Institutional investors of the kind Thurston speaks of only recently entered the Central Valley's rental housing market. He said the pair that recently secured property in Bakersfield for development of apartments did so after being unable to find suitable complexes for sale locally.
Such investors have been attracted to the area's open economy, rock-bottom vacancies and rents that recently surpassed $2,000 per month, Thurston said. They will likely find tenants among local health care professionals, engineers and young lawyers, he added.
In recent years, the quality of Bakersfield's rental communities has risen as the city has attracted more people from bigger cities used to writing bigger rent checks.
Sage Equities' 44-unit 17th Place Townhomes, downtown's first market-rate rental complex in many years, has attracted young professionals, many from outside the area. The local developer has since begun construction on a similarly upscale, 53-unit townhome project nearby.
Sage principal Anna Smith said by email interest by institutional investors validates the local rental market's stability. She noted her company has seen demand increase among professionals during the pandemic.
Fuller Apartment Homes, meanwhile, has moved forward together with Bolthouse Properties on Park West at Stockdale River Ranch, a 312-unit luxury rental housing complex at Heath Road and Stockdale Highway in southwest Bakersfield.
Principal Andrew Fuller said by email it's not uncommon for outside developers to enter the local market near the top of a housing cycle. He cast doubt on the notion rents will continue to grow at the high rate they have in recent years, adding that he feels like rents are "at or near (their ceiling) for this cycle."
He added that Park West employed the services of a top national luxury design firm, and the community's amenity package "is consistent with what you'd find in any major suburban market."
Thurston, who has documented unprecedented tightness in the local market with reports showing citywide vacancies hover lately around 1 percent, said the projects he's seeing planned for development during the next year or two are "a notch above" even Park West's amenities.
The level of luxury proposed is akin to rental communities in big cities where developers try to outdo their neighbors' amenities.
"It's almost an escalating arms race to try to compete and attract those kinds of (well-heeled) tenants," Thurston said.
He agreed that there's only so much Bakersfield renters will pay, but he said monthly prices exceeding $2,000 may not be out of the question.
Ian Williams Sharples, a board member of the Income Property Association of Kern, said by email he sees signs demand for rentals remains strong locally and that any new product will only help.
"Adding supply, even at the ultra-high (end), helps alleviate existing pressures on renters because they will have more housing options," Sharples wrote. "However, we still need to find ways to make it more viable to develop affordable housing."
