The apartment market in the Greater Salt Lake area continues to be strong and vibrant. The past two quarters of 2011 demonstrated an upward pressure on rents. Overall occupancy is at 94.9 percent, up from 93 percent in 2010. Vacancy presently hovers around 5 percent and appears as though it will remain so, which is evidence of a tight rental market. These signs enable managers/owners to increase rental rates and drop concession offerings with exception to newly constructed projects during their initial lease up.
Apartment development also remains robust in the downtown Salt Lake market where the City Creek project, being developed by the Church of Jesus Christ of Latter Day Saints, will be adding more than 1,000 new units. These units will be a part of a significant redevelopment of several downtown city blocks that will add new office and retail product in addition to multifamily. With this kind of unit increase in the immediate downtown market, nearby small and large projects will soon be able to raise rents as the new units will command the highest rates.
The total amount of new units expected to come onto the market in the next year is approximately 1,900, with the following year bringing an additional 2,000 units. These added units will have little effect on the market’s rental rates as absorption will be over time when the units are actually completed and are rent ready. Any effect on rental rates may slow rental growth but only in select submarket areas.
The Wasatch Front has seen a lot of attention from prospectivebuyers across the nation due to the strong economic fundamentals that continue to exist here in Utah. Unemployment has remained lower than the national average and job growth has continued to be positive and is presently at a 3 percent growth rate. It is expected that the apartment market will continue to grow and units will be absorbed as long as the growth rate remains positive and steady.
— Patrick Bodnar, investment specialist, NAI Mountain West