Stockton Student Housing vs. Multi-Family Market: An Investor Analysis

MMCG
Jun 12
10 min read

844 Dave Brubeck Way, Stockton, CA - Student Housing

Enrollment Surge and Occupancy Dynamics

Stockton’s University of the Pacific (UOP) is experiencing a significant enrollment surge. Full-time enrollment jumped 6.6% year-over-year in the 2023–2024 academic year, reaching 5,895 students This pace far outstrips the university’s 0.7% five-year average growth and stands among the fastest growth rates for any California campus. Such robust enrollment gains are fueling unprecedented housing demand, effectively making Stockton one of the state’s fastest-growing university rental markets. UOP’s on-campus dormitories can accommodate only about 2,100 beds, “leaving the balance of full-time students searching for housing off-campus,” as the university report notes. This means roughly 3,800 students must rely on private housing in the community, intensifying competition for rentals near campus.

Off-campus housing around UOP is effectively full. The combined occupancy rate for student-oriented properties and nearby apartments is in the high-90% range (approximately 97% occupied). By comparison, Stockton’s broader multi-family market posts a 5.0% vacancy rate (95% occupancy), indicating healthy demand regionwide. In the UOP vicinity, virtually every available bed is filled – a testament to the demand-pressure from rising enrollment. This tight occupancy environment provides landlords with pricing power and gives investors confidence that well-located assets will remain leased up.

Supply Constraints: Zero New Development

Both the student housing sector and the general apartment market in Stockton are facing severe supply constraints. In the past 12 months, not a single new purpose-built student housing bed or conventional multi-family unit was delivered near the UOP campus, nor is any currently under construction. The lone off-campus student apartment property serving UOP (164 beds delivered in 2013) has seen no expansion in over a decade The story is similar for conventional apartments: the immediate university submarket has added no new units in recent years, and the construction pipeline in Stockton has dried up, with no projects currently in development Developers cite higher construction costs, expensive financing, and only modest rent growth as reasons for this pullback.

This lack of new supply is a critical factor for investors. Zero new deliveries means existing assets face little new competition, and the growing tenant demand is chasing a fixed pool of beds. Indeed, historical data show that Stockton’s multi-family inventory has remained essentially flat, with no net new units added and even slight declines due to demolitions in some years. In the student segment, the inventory of 164 off-campus beds has not grown at all since 2013 In short, Stockton’s rental housing stock – both student-focused and broader multi-family – is constrained by a de facto moratorium on new construction, creating a supply/demand imbalance that favors property owners.

Rent Levels and Growth Trends Near Campus

Rents in the UOP campus area reflect the scarcity of housing and the premium for proximity. As of mid-2025, purpose-built student housing beds within a 10-minute walk of campus command about $1,174 per bed per month, whereas conventional apartments in the same radius average around $820 per bed (assuming one occupant per bedroom). This ~43% “walk-to-campus” rent premium underscores how much students are willing to pay for dedicated housing close to classes. Notably, even the average rent across all housing types near campus (student and non-student) is about $857 per bed, which is still well below the student-specific rate. In other words, the Brubeck Commons student apartments (the only private student complex by campus) achieve substantially higher rents than the surrounding rental market – a clear sign of unmet demand for student-centric housing.

Table: Comparison of Key Metrics – Student Housing vs. Nearby Multi-Family (within 10-min walk of UOP)

Metric (10-min walk zone)	Student Housing	Conventional Multi-Family
Avg. Rent per Bed (monthly)	$1,174	~$820
Occupancy Rate	~97.1%	98.7%
12-mo Rent Growth	+0.7%	–0.3%
New Supply (Last 12 mo)	0 beds	0 units

Despite surging enrollment and rising demand, rent growth in the past year was relatively subdued – essentially flat in the campus submarket. Student bed rents ticked up just 0.7% year-over-year, while nearby conventional apartments actually saw a slight decline (–0.3%). This pause in rent acceleration is likely due to broader economic forces (e.g. inflation pressures on students, rent control effects, or the lagging impact of new supply delivered in late 2023 in the wider Stockton area). However, this muted recent rent growth is expected to be temporary. Market observers anticipate rent increases will regain momentum; in fact, for the overall Stockton multi-family market, rent growth is forecast to return to a more normal ~4% annual pace by late 2025.

Looking ahead, the outlook for student housing rents is especially favorable given the supply-demand mismatch. CoStar’s projections for the UOP area show effective rents per bed rising roughly 2.5–3% per year in the coming years – reaching an estimated $1,350 per bed by 2029. With campus enrollment on an upswing and no new housing alternatives in sight, landlords should regain leverage to push rents upward. Moreover, the monthly cost of on-campus dorms (about $1,051 per bed) is now lower than off-campus rates, which suggests room for off-campus landlords to justify higher rents based on superior amenities, privacy, or freedom compared to dorm life. All indicators point toward strong rent growth potential in the student-oriented segment once economic conditions normalize, outpacing the broader market’s modest 1.3% recent growth.

Walk-to-Campus Premium and Location Advantage

Proximity to campus clearly translates into pricing power. Properties within walking distance to UOP extract higher rents and maintain ultra-low vacancies. The “walk-to-campus premium” – the rent boost for locations a short walk from class – is evident when comparing rents by distance. As noted, student-designated housing literally adjacent to campus achieves ~$1,174/bed, vastly more than the ~$820/bed for other apartments in the same 0–0.5 mile radius. Even compared to Stockton apartments slightly farther out (10–20 minutes from campus), which average ~$840/bed, the on-foot convenience of being next door to campus allows a rent premium of roughly 40%. High occupancy figures accompany these rents; essentially all units within a few blocks of campus stay filled (≈97%+ occupancy), whereas properties elsewhere in the city can tolerate a bit more vacancy (up to 5% vacant citywide).

For investors, this underscores a key strategy: location is paramount in student housing. Assets within a 5–10 minute walk of campus not only command higher rents per bedroom, but also enjoy deeper tenant demand pools (every student without a car wants to live nearby). This can result in higher effective revenue per unit. For example, one 4-bedroom student apartment rented by-the-bed can generate nearly $4,700 a month (4 × $1,174), far above what a typical 4-bed unit in Stockton would rent for as a whole. Such income potential can make well-located student properties extremely lucrative if they are acquired or developed at reasonable cost. The lack of new construction also means any existing property near campus effectively has a protected monopoly on location – a durable competitive advantage as enrollment grows.

Asset Pricing and Investment Yields

Investor pricing in Stockton’s student housing niche versus its broader apartment market shows an intriguing dichotomy. Student housing assets have transacted at significantly lower prices on a per-unit basis than traditional apartments, despite comparable (or better) occupancy. Over the past 12 months, there were two notable off-campus student housing sales near UOP, averaging just $58,100 per unit sale price. These student assets were almost fully leased at sale (only 3.3% vacancy on average), reflecting strong tenant demand. In contrast, conventional multi-family properties in the Stockton market (38 sales in the past year) traded around $139,000 per unit on average – more than double the student housing valuation – with about 4.8% vacancy at sale.

Several factors may explain why Stockton’s student rentals are changing hands at lower unit prices. Many of the student-oriented properties are older, smaller buildings (e.g. 10–56 unit garden apartments from the 1940s–1970s) close to campus. These may require renovation or have operational complexities (leasing by the bed, academic-year turnover) that deter some buyers, thereby keeping prices depressed relative to mainstream apartments. In addition, the investor pool for student housing in secondary markets is often dominated by local private buyers rather than larger institutions, which can mean less bidding pressure. Meanwhile, the broader Stockton apartment sales include some newer or larger assets (for instance, the 152-unit Laurel Glen traded for $268k/unit) that pull the average up.

It’s important to note that capitalization rates in Stockton’s multi-family sector have been softening (rising) in the face of higher interest rates and slower rent growth. Recent conventional apartment sales reflect an average cap rate around 6.5% (with deals ranging roughly 5%–9%). As one report highlights, “pricing is softening throughout the market as tepid rent growth and the rising cost of capital cause many investors to hesitate”. For student housing, specific cap rate data weren’t reported (likely due to the low number of sales), but given the low price points and solid occupancy, implied cap rates could be quite attractive (potentially higher than those of traditional apartments). In other words, investors may find better yield in the UOP student market – buying income streams at $58k/unit that rent for ~$1,200/bed – assuming they can manage the unique aspects of student rentals. The flip side is that liquidity is thinner in the student niche; an investor might acquire at a low price, but disposition options could be limited to specialized buyers, hence the pricing discount.

Broader Stockton Multi-Family Fundamentals

Outside the university submarket, Stockton’s overall multi-family fundamentals are stable but subdued. The metro’s vacancy rate is hovering around 5.0% – a slight uptick of 40 bps over the past year, partly due to a wave of new deliveries in late 2023. Indeed, Stockton absorbed approximately 230 units over the last 12 months, but this was outpaced by 367 new units delivered during the same period, leading to the marginal vacancy rise. Notably, absorption has been highly concentrated in the top-tier segment: nearly 200 of those 230 units absorbed were in 4- & 5-Star (Class A) properties, primarily in the Tracy and Manteca submarkets. These high-end communities (which offer the latest amenities) saw robust leasing, leveraging Stockton’s role as an affordable commuter alternative to the Bay Area. Meanwhile, demand in older Class B/C stock was positive but comparatively modes.

Rent growth for the broader Stockton apartment market has decelerated to 1.3% year-over-year as of mid-2025. This is a comedown from the rapid post-pandemic rent surges and below the 2.9% historical average. Class A units even outperformed slightly, posting ~2.3% rent growth, but essentially the market’s rent trajectory has flattened in the short term. Economic uncertainty and affordability limits are keeping a lid on rent increases for now. However, with vacancy still low and no new construction on the horizon, landlords could regain pricing power. Stockton’s pipeline is truly dry – 0 units are under construction anywhere in the market – so as the excess new supply from 2023 gets absorbed, the conditions are in place for a tighter rental market going forward.

From an investor’s perspective, Stockton’s conventional multi-family offers steady income with mild growth, and current cap rates (~6–7% for typical assets) provide a decent spread over debt costs. The tenant base is diverse (not just students, but families, professionals, etc.), which can mean lower volatility than the academic cycle. Yet, the upside appears higher in the student housing sub-sector given the clear demand surge and zero-supply situation specific to UOP. In contrast, the citywide apartment market, while healthy, is more mature and was recently tested by new supply; its rent growth is only expected to return to ~4% annually by late 2025 according to forecast – a solid outlook but not explosive.

Investment Outlook and Recommendations

For institutional investors evaluating Stockton, the data suggests a bifurcated strategy:

Focus on Student Housing Opportunities: The combination of enrollment growth (+6.6% YoY), extreme housing undersupply (0 new beds added), and high effective occupancy (~97%) makes the UOP student housing market uniquely attractive. Rents per bed are already at a premium and are forecast to climb steadily ~3% per yearfile-9m5vftjlbdfpinnvauhwyo, fueled by demand from incoming students. Yet asset pricing has not fully caught up – recent sales around $58k/unit indicate relatively low entry valuations. Investors should consider acquiring existing student-focused properties near campus or converting nearby vintage apartments to student-friendly rentals. With virtually no competition from new development, any well-located acquisition can enjoy long-term occupancy security and rent growth. We recommend targeting assets within walking distance of UOP, where the rent premiums and stable occupancy fundamentally enhance cash flow yields. Given the small scale of many student assets, aggregating several properties or partnering with local operators may be prudent to achieve economies of scale in management.
Selective Plays in Conventional Multifamily: Stockton’s broader apartment sector offers reliable, if unspectacular, performance. Occupancies are strong (~95%) and expected to stay healthy as the city’s economy grows modestly and new supply is nil. Current cap rates in the mid-6% range provide reasonable yield, and there is upside if rent growth indeed rebounds toward 4% annually by 2025. We suggest focusing on high-quality assets (4 & 5 Star) in submarkets with proven demand (e.g. Tracy/Manteca, which have attracted Bay Area commuters) since those absorbed well and achieved above-market rent gains. These Class A properties could see outsized rent growth as Stockton’s rental market re-tightens, and they face no new competition due to the construction freeze. However, investors should remain cautious of the interest rate environment – “rising cost of capital” and plateauing rents have softened pricing recently. This could be an opportunity to negotiate favorable acquisitions, but one should underwrite conservatively. For value-add seekers, Class B/C properties in Stockton proper can be acquired at lower per-unit prices; modest renovations and perhaps marketing to the student population (given overflow housing needs) could unlock higher rents and occupancy.

In summary, Stockton’s student housing segment is a high-growth, supply-constrained niche ripe for investment, whereas the overall multi-family market offers stability with moderate growth. The smart capital will recognize that UOP’s enrollment gains – in a city adding no new housing – create a classic demand/supply imbalance that can drive returns. By securing well-located assets and implementing professional management, investors can capitalize on walk-to-campus premiums, near-100% occupancies, and upward rent trends. At the same time, the broader apartment market shouldn’t be overlooked for diversification; its consistent performance and softening cap rates might allow savvy buys at a discount today, with the knowledge that fundamental demand in Stockton remains intact. Overall, a weighted approach – overweight student housing for growth, and selectively hold conventional apartments for yield – could position an investor to benefit from Stockton’s unique dynamics as both a fast-growing university town and a stable rental market.