Driven by growing rental rates, low vacancies and aggressive pricing, the multifamily real estate industry continues its local steady growth of recent years, according to the Greater Salt Lake Area Multifamily Market Report release last week by commercial real estate firm CBRE.
The local market is on track to follow 2017’s banner performance, the report said. Multifamily sales volume is projected to be at or above $1 billion, illustrating the strong interest investors have in the state of Utah.
“Multifamily investment opportunities across the Wasatch Front continue to attract out-of-state investors, yielding greater returns than competing western markets,” said CBRE multifamily specialist Patrick Bodnar. “Utah’s strong economic fundamentals are sustaining consistent growth in the local multifamily market.”
Utah’s employment growth rate remains strong at 3.4 percent, with in-migration as a top driver for multifamily demand across the Wasatch Front, Bodnar said. Overall rent growth is up year-over-year at 5.3 percent with an average monthly rent of $1,101. This high demand is leading to a growing interest for high-rise residential in the downtown area, though no projects have been developed yet. Nearly 2,000 units were delivered along the Wasatch Front during the first half of 2018, with an additional 4,300 anticipated to deliver before year-end. Even with all this activity, vacancy remains tight at 3.9 percent.
The majority of new multifamily development is taking place in Salt Lake County, which houses approximately 64 percent of all active and planned construction. Lease-up velocity holds strong at 19 units per month, up from 17 units at the close of 2017. Of all units delivered during the previous 12 months, over 68 percent have been leased meaning local demand is currently keeping up with supply.
The CBRE report was prepared with current data sourced from a survey of over 60,000 units along the Wasatch Front. The report highlights local market trends on rental, vacancy and cap rates; the status of the current construction pipeline; transaction volume; and more. The report was produced by Bodnar and Eli Mills for CBRE. The full report is available on CBRE’s website.