Salt Lake City area multifamily market strong despite economic uncertainty
The Salt Lake City area multifamily real estate market continues to show strong sales and further cap rate compression despite recent economic challenges. Those are among the finding of CBRE Commercial Real Estate’s semi-annual “Greater Salt Lake Area Multifamily Market Report” released last week. Encompassing data from 2020 with a 2021 forecast, the report offers detailed insight into the multifamily market along the Wasatch Front.
Utah’s strong market fundamentals have allowed the state to quickly recover from the uncertainties 2020 presented. End-of-year sales volume hit $1.63 billion, the fourth year in a row that sales achieved levels in excess of $1 billion. Vacancy rates also increased slightly from 4.3 percent at mid-year to 4.5 percent by year-end. Also of note, Salt Lake County experienced a 28 percent increase in year-over-year absorption, indicating the strength and resiliency of the market.
“Some have voiced concerns about our market potentially overbuilding multifamily product in the past few years, but activity indicates a well-balanced market,” said Patrick Bodnar, first vice president at CBRE. “Demand has continued to meet the increasing supply of units. Many people continue to migrate to Salt Lake for work opportunities in addition to seeking an amazing and affordable quality of life.”
“Utah was recently ranked as the No. 1 economy in the nation by 24/7 Wall Street, and the strong performance of the Salt Lake multifamily segment is evidence of this market’s adaptability and resiliency during challenging times,” said Eli Mills, CBRE senior vice president.
The report said that demand has continued to meet the increasing supply of units. At the current rate of absorption, demand will outpace supply in 2021. It also said that cap rates are extremely aggressive and have seen continued compression. Rent growth has slowed and currently sits at 1.4 percent year-over-year, with vacancy only up slightly, according to the report. The report also predicted a record number of new property deliveries in 2021.