We started tracking multifamily occupancy rates for Salt Lake City in 2013, and starting this year we have been tracking rents as well. Overall market conditions have been favorable for multifamily for some time now. Unemployment is well below the national average, even briefly dipping below 3% at the end of 2015.
Currently we are tracking 384 conventional properties (i.e. non- student, senior or income restricted) with over 57,000 units. We have divided the market into 16 major submarkets, ranging from the Central Valley West with over 13,000 units to St. George/Washington County with just under 600 units.
Over the last 3 months the Greater Salt Lake area absorbed over 1200 units even while adding several hundred new units to the market. Consequently, average occupancy ticked up 0.2% in the last 3 months from 93.3% to 93.5%. Central Valley East and Orem both had occupancy jump over 5% so far in 2016. New Construction drove down occupancy in several submarkets (West Valley, Draper/Sandy and Layton) even though absorption was positive. On an annual basis the market has absorbed 2800 net rented units in the last 12 months.
Overall the metro area has an average rent of $967 per unit and $1.11 per square foot, which is an increase of 2.3% per unit and 2.4% per square foot from 3 months ago. West Downtown and the Layton area saw prices increase significantly in the first part of the year.
The Class B price tiered properties accounted for nearly all the absorption in the last 3 months. Competition has seen prices drop more than 1% in the top tier properties, yet the other price classes saw nice increases in average rents in the last quarter.
In new construction, we are currently monitoring 45 projects with just about 7,200 units. Most of these are already under construction with about 4,000 already in some phase of lease-up. While in the short-term it may be difficult to absorb the new lease-up units on the market, compared to other markets in the country this is actually a conservative amount of product in the pipeline.
For the rest of 2016 we may see prices dip some more as competition heats up for the new units, but overall the Salt Lake City area should see modest to hearty rent gains for 2016. Next year should see even better gains unless a splurge of new projects immediately breaks ground.
For more information on Salt Lake City, or any of the other markets that ALN Apartment Data currently tracks, please visit www.alndata.com. Contact us at Sales@alndata.com or call 800-643-6416 and dial extension 3 to speak about the services we provide and how we can benefit your business.