SANTA CRUZ >> As more market-rate housing proposals come to Downtown Santa Cruz, some residents fear the high rental prices will leave scores of apartments empty. But local developers say apartments are filling up, and they’re not worried about filling new buildings.
Some residents have pointed to Anton Pacific, a 207-unit market-rate building on Pacific Avenue, as proof of a vacancy problem. This week, about one year after the apartments opened, 32 of 207 apartments were vacant.
“I would really like to see the other market-rate housing in this area filled before we start building more housing,” said Rush Inn owner Karen Madura at a June 5 Santa Cruz Planning Commission meeting. “We have so much that is currently sitting vacant because it’s too expensive for people to be able to live in it.”
In the meeting, the commission advanced a proposal for a 178-unit market-rate building near the Town Clock that would knock down the Rush Inn dive bar.
At Pacific Avenue, Front and Laurel streets, the seven-story Anton Pacific apartments first offered lease applications in April 2024 and opened in July 2024. With about 15% of the apartments vacant as of this week, Property Manager Christian Pacardi said she had “no anxiety” about the vacancies.
“We’ve exceeded our expectations,” Pacardi said. She expects the building to be fully rented by fall.
Anton Pacific apartments range from $3,095 to $4,050 monthly rent for a studio of 524 square feet to 977 square feet.
For a two-bedroom apartment, the monthly rent is $5,798 to $5,861 — steeper than many apartments listed elsewhere in the city.
Developers and city staff have said market-rate rents in new buildings aim to recoup the high cost of construction. Pacardi said Anton Pacific’s prices were based on “different avenues” of assessing the local market.
Anton Pacific property managers are offering a promotion of $2,500 off first month’s rent, plus free rent for the second and third month—if prospective tenants sign a lease immediately after touring the building.
Many property management companies use pricing software like Realpage, which uses public and non-public data to recommend rental pricing. The company has faced two antitrust lawsuits from Washington and California state attorneys for alleged collusion and price-fixing.
Pacardi did not answer whether Anton Pacific uses Realpage or other pricing software.
Construction continues on 175 apartments at 504 Front St. in Santa Cruz on June 9. (Stephen Baxter — Santa Cruz Local)
Ground-floor shops and wide paths to the Santa Cruz Riverwalk, are expected at 504 Front St. apartments. (Humphreys & Partners Architects, L.P.)
Vacancies at other apartment buildings
Three other mostly market-rate apartment complexes on Pacific Avenue appear to have low vacancy rates. As of Wednesday, online listings showed two apartments immediately available at 555 Pacific Ave., one at 1547 Pacific Ave. and none at 1010 Pacific Ave. The buildings have 94 units, 79 units, and 113 units, respectively.
If renters don’t move into new market-rate buildings, lenders will no longer back similar projects, Santa Cruz Director of Planning and Community Development Lee Butler wrote in a statement. “The real test of market conditions will be whether developers continue to build market-rate projects,” he wrote.
A 175-unit mostly market-rate building at 504 Front St. is under construction. The proposed 178-unit Clocktower Center and a proposed 245-unit building at Ace Hardware would also be predominantly market rate. Those proposals “show a strong, continued interest in downtown mixed-use development, and we are hopeful that the developers can get the financing needed to move those projects forward to construction,” Butler wrote.
Most market-rent projects include some below-market-rent units to comply with the city’s inclusionary laws. Many projects include additional affordable homes to qualify for state Density Bonuses, which allow taller and denser buildings than city rules allow. To address the state’s housing crisis, recent state laws have streamlined approval of housing projects on areas zoned for housing and stripped city councils’ ability to block or change many proposal details.
Anton Pacific does not include below-market-rate apartments. Instead, the owners donated land to the city for its 100% below-market-rate Pacific Station North and Pacific Station South developments. Those projects are expected to include 69 apartments and 124 apartments, respectively.
Santa Cruz-based Workbench is behind the Clocktower project and has planned multiple other market-rate projects around the county. Workbench CEO Tim Gordin said he isn’t concerned about vacancies at Anton Pacific or in Workbench’s future developments.
“These big buildings take a while to fill up, and people have to exit other leases to be able to enter a lease here,” he said. “We project that in all of our projects.”
The lack of housing in Santa Cruz means there’s ample demand for new apartments, Gordin said. State housing laws have sought to reverse a decades-long trend of population growth without much new housing development, a key driver of Santa Cruz’s housing crisis.
“Putting 200 more [apartments] on the market is not really going to make a dent in need,” Gordin said.
Thursday morning, residents entering Anton Pacific included a second-year UC Santa Cruz student from Orange County and a man who said he relocated to Santa Cruz from Oakland for work. He said he liked the building and would recommend it.
Another tenant, Chunmei Mo, said she moved to Santa Cruz from Beijing to live near her son as he attends UCSC.
“It’s a very good place,” she said.
A person huddles under a tarp outside Nanda on Pacific apartments in January 2024. (Stephen Baxter — Santa Cruz Local file)
