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The Greater Salt Lake City multifamily market has continued to strengthen during 2012. Vacancy rates have steadily improved, dropping from 5.3 percent in January 2012 down to 4.2 percent in the third quarter of 2012.
With the market vacancy tightening, average rent growth was 3.6 percent from mid-year 2011 to mid-year 2012. The average rent per unit is now at an all-time high of $802 per unit — eclipsing the average rental price of $771 per unit in early 2008.
Many factors contributed to the positive rent growth and the contraction of vacancy rates, but the most significant were strong job growth and population growth. Utah’s job growth currently ranks fourth in the country at 2.6 percent, adding more than 32,000 jobs over the past 12 months. Utah’s job market is strengthening as the state’s unemployment rate dropped to 6 percent in June 2012, the lowest it has been since March 2009, according to the Utah Department of Workforce Services.
The state also has the third fastest-growing population in the nation with nearly 2 percent annual growth. Utah also has the youngest median age in the country at 29.2 years, and the largest average house-hold size of 3.1 persons. These two factors help feed the rental market. The state’s population is projected to reach 5.2 million by 2040.
There are currently 3,215 units under construction and more than 5,200 units proposed to begin construction in the next 18 months in Salt Lake County. Most of the new supply is being built in or around transit-oriented developments along the new UTA TRAX mass transit light rail. UTA is also working on several new TRAX extensions that will connect the existing TRAX lines to the Salt Lake International Airport, Sugarhouse and Draper.
Multifamily construction is also being driven by the new $2-billion dollar City Creek redevelopment project that was recently completed. City Creek encompasses 23 acres over three city blocks in the heart of Salt Lake City. It comes as no surprise, then, that 2,132 units of the 3,215 units currently under construction in Salt Lake County are under construction within a 5-mile radius of Downtown. More units will be completed in Downtown in the next 18 months than the prior 10 years combined.
— Jed Millburn, managing principal, ARA Utah