Lathrop, a town in California’s Central Valley farming region, began in the 1870s as a stop on the transcontinental railroad. It's prone to flooding and extreme heat in the summer, and has no downtown or public transit. The highlight of the town’s nightlife is a friendly dive bar called the Fireside Inn.
It is also one of fastest-growing cities in the state.
The town nearly doubled its housing units from 2020 to 2025, while Lathrop’s population has jumped by 43% to around 40,000 people since 2020, according to the U.S. Census Bureau. Average apartment rents have surged nearly 20% since 2020 to a monthly average of around $2,100 for the Manteca/Lathrop multifamily submarket, compared to a national average of $1,772, according to CoStar.
Commercial investors across the product type spectrum are taking notice.
Rubik Built, Wright Equities and The Grupe Co. recently secured a $51 million loan for the 204-unit Mossdale Landing Apartments in Lathrop, JLL said in a press release this month. Investor Erik Stone paid $15.6 million for the Manteca Golf & Tennis Villas, a newly renovated 56-unit apartment complex at 367 N. Union Road.
On the retail front, big box chain Sam’s Club announced this year that it was set to open its first San Joaquin County store in Lathrop, near the sprawling Stanford Crossing development, which ultimately aims to add some 2,000-plus residential units plus commercial and retail space.
Lathrop and surrounding towns have also drawn a surge in industrial and logistics investment, thanks to their proximity to Interstate 5, a crucial economic and transportation spine that runs up and down the West Coast. In June, Reno, Nevada-based Dermody purchased a 1.1 million-square-foot warehouse in Lathrop that houses furniture giant Wayfair. In 2022, Tesla opened a so-called megafactory in Lathrop, its largest plant outside Fremont, California, which now employs more than 2,000 people, making it the town’s biggest employer.
Cheaper real estate
The state’s projections suggest that San Joaquin will be California’s second-fastest-growing county over the next four decades, reaching around 1 million residents by 2060.
This is because birth rates are higher inland than in population centers on the coast, and there is a migration eastward within California, up and down the state. Only Butte County, where the town of Paradise is rebuilding after being destroyed by a deadly wildfire in 2018, is expected to grow faster.
Growth has been steadily spreading eastward in Northern California for decades as housing prices rose in the Bay Area, with subdivisions marketed to commuters filling former farmland east of the grassy Altamont Pass, which connects the Bay Area with what historically were farming communities in San Joaquin County.
After the pandemic hit in 2020, Lathrop and surrounding towns such as Manteca and Tracy that are within commuting distance of the Bay Area but far enough inland to offer significantly cheaper real estate suddenly looked even more appealing to many residents who found themselves no longer having to report to an office in or near San Francisco five days a week.
“People were saying, ‘I can get a house here with a backyard in a safe neighborhood with good schools for less than half of what I’d pay in San Francisco or Oakland,” Lathrop’s community development director, Rick Caguiat, told CoStar News.
He said the town saw a huge jump in the number of applications for residential building permits from around 300 a year in 2019 and 2020 to a peak of around 1,100 in 2021. The current annual average is around 600.
'Good place to do business'
California’s major cities are lagging behind on state-imposed goals to build more housing. In 2024, Los Angeles approved just 17,200 new residential units — barely 30% of its annual goal — while San Francisco permitted only 1,074, its lowest showing since the aftermath of the Great Recession.
Industry professionals say construction costs, hard-to-obtain financing packages and local red tape have hindered the construction of residential units in recent years, which has in turn spurred housing demand in inland regions such as the Central Valley.
Unlike certain older, affluent cities in the Bay Area, Lathrop and neighboring towns have developed a reputation for imposing minimal permitting requirements on developers, and there are little to no rent control laws in this area, said Adam Levin of Levin Johnston, a Bay Area-based multifamily brokerage that is part of Marcus & Millichap. “People want to invest in that market,” he said.
“Developers know that this is a good place to do business, because there’s not as much red tape," said Caguiat, Lathrop’s community development director.
Suburban sprawl
The crown jewel of the town’s expansion plans is a master planned community called River Islands. The 5,000-acre development on the San Joaquin River delta is eventually set to add 11,000 single-family homes and 4,000 apartments and condos to the town, clustered around new shops, restaurants, a 350-acre business campus, man-made lakes and miles of riverfront trails, schools, sports fields, parks and fire stations.
Officials say the project is about 25% finished, with thousands of families already moved into homes on the water. It eventually aims to connect with nearby freeways and public transit systems in the Bay Area.
The town opened its own police department in 2022, and it has more than a dozen houses of worship.
The vast majority of residential development here — about 85%, according to the city — consists of single-family homes. An estimated 65% of the population commutes to the Bay Area on at least a part-time basis, according to city statistics.
Central Valley towns like Lathrop have “been an escape valve for some of the unmet housing demand” in the Bay Area, as a result of years of policies that essentially “made it illegal to add housing in our cities,” said Zach Subin, associate research director at the UC Berkeley Terner Center for Housing Innovation.
He said concerted moves by governments in cities like San Francisco and Berkeley to promote housing growth have been stymied by red tape, high construction costs and the difficulty in obtaining financing packages as well as economic and political uncertainty that’s hindered the construction of more homes in coastal California and has sent residents to cheaper cities like Lathrop.