The Salt Lake City office of real estate services and investment firm CBRE has released its second semi-annual Greater Salt Lake Area Multifamily Market Report highlighting market trends on rental, vacancy and cap rates. The report also contains the activity status on the current construction pipeline and sales volume details. Produced by multifamily investment specialists Patrick Bodnar and Eli Mills, the report details market performance from Salt Lake, Utah, Davis and Weber counties.
Multifamily fundamentals continue to reflect a tight rental market, the report says. Overall vacancy across the Wasatch Front ended the year at 3.3 percent — a 130 basis point drop since mid-year 2016. By comparison, historical vacancy rates average in the 4-to-6-percent range. Though there is much development planned or currently under construction, demand for units remains robust and multifamily product deliveries continue to fill up quickly, according to statistics in the report. At the end of March, 75 percent of all units delivered to the market from projects in the lease-up phase had already been leased.
“The state continues to have the highest population growth rate in the nation, doubling the national average,” said Bodnar. “Coupled with strong net in-migration of 24,000 people in 2016, apartments remain in high demand, justifying the elevated levels of development currently underway.”
For the seventh year in a row, average rental rates in all classes and locations have increased, climbing by 7 percent overall. Downtown average rental rates for Class A space have risen to an average of $1.70 per square foot. This has contributed to a tightening in the class B and C markets, as renters seek more affordable housing options. Vacancy in Class B assets is currently just 2.9 percent.
The report also finds that multifamily finance volume has also risen for seven consecutive years, increasing by 433 percent between 2009 and 2016. Multifamily remains a highly desirable investment product, it says.