— By Rawley Nielsen and Mark Jensen of Northmarq —
The Salt Lake City apartment market has undergone significant shifts over the past few years, shaped by broader economic headwinds and local supply dynamics. Fortunately, optimism is returning to the market as interest rates stabilize, supply is absorbed and buyers see new opportunities to enter at attractive pricing.
Over the past 36 months, rising interest rates have created challenges for multifamily investment, which have impacted underwriting and transaction velocity. However, recent weeks have provided a reprieve as Treasury rates have come down, bringing renewed energy to the market. Volatility remains a factor, but there is a growing sense that we are at or near the bottom, leading to increased investor interest.
One of the biggest headwinds in Salt Lake City has been the supply wave, particularly in the downtown market where an influx of new multifamily deliveries has made it difficult for buyers to underwrite rent growth. Both 2022 and 2023 brought unit deliveries totaling more than 4,000 units, nearly triple the average annual delivery count from the past 10 years.
We saw nearly 3,000 units delivered last year, and our team is tracking a similar amount for 2025. Heavy concessions remain in the market as new projects compete for absorption, adding to underwriting uncertainty. This has put downward pressure on pricing, with many owners facing challenges in achieving rent premiums.
The supply surge is set to taper dramatically, however. According to our tracking, there are 1,500 projected deliveries in 2026. This is right in line with the 10-year average delivery counts, while 2027 currently only has 700 units in construction. This story has played out along the greater Wasatch Front, with total unit deliveries now stabilizing to pre-pandemic levels. As absorption continues and new supply diminishes, rent growth is expected to return. This should set the stage for improved pricing and potential cap rate compression in the coming years.
Despite recent supply challenges, there is a compelling case for buyers to enter the Salt Lake City market this year. Pricing is well off peak levels, and the bid-ask gap between buyers and sellers — while still present — is beginning to narrow. Buyer sentiment suggests many believe the market has bottomed out, creating an opportunity to acquire assets at a favorable basis.
Recent deals taken to market by our team have seen strong buyer interest, with between 10 and 20 groups engaging in the bidding process. While pricing remains sensitive, the level of demand suggests that investors are recognizing the long-term fundamentals of the Salt Lake City market.
Salt Lake City (and the Wasatch Front at large) is one of the fastest-growing regions in the nation. Ranked the No. 1 state for economic outlook in 2023, its 10-year population growth of 18.4 percent and average unemployment rate of 2.2 percent make it a prime location for businesses. With Silicon Slopes leading the way, Utah is also ranked the No. 1 best state to start a business.
The wide variety of outdoor recreation and exploration opportunities, from national parks to world-class ski resorts, also make Utah a desirable place to live. Approaching the 2034 Olympics in Salt Lake City, the market outlook has never been better.
Once the current supply wave is absorbed, we expect to see rent growth return and multifamily fundamentals strengthen. Salt Lake City’s strong population growth, business-friendly environment and expanding employment base continue to make it a desirable market for long-term investment.
For those seeking a strategic entry point, 2025 presents a unique window of opportunity before the market inevitably rebounds. As supply diminishes and demand catches up, we anticipate that pricing will firm up, interest rates will normalize and investors who enter now will be well-positioned for future gains.
— By Rawley Nielsen and Mark Jensen, managing directors of investment sales at Northmarq. This article was originally published in the March 2025 issue of Western Real Estate Business.