August 21, 2014

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Article

Apartment Vacancy Rate at Lowest in 13 Years

Press Release

August 21, 2014


Cushman & Wakefield | Commerce has released its annual apartment market report, which shows that the apartment vacancy rate is at its lowest in13 years. The study was conducted and authored by James Wood, the Director of the Bureau of Economic and Business Research at the University of Utah.

“The Apartment Market in Salt Lake County can best be described as phenomenally strong and solid,” said Kip Paul, executive director of investment sales for Cushman & Wakefield | Commerce.

Rental rates have increased by nearly 2.0 percent over the past year. The combined average rental rate for all types of units is $865. The average rental rate for a two bedroom, two bath unit is $983.

The highlights of this year’s study include:

  • 3 percent vacancy rate valley-wide; lowest vacancy rate in 13 years.
  • Rent growth of 2 percent over prior year.
  • Number of rental units increased by 1.1 percent in 2013 with only 800 permits issued year-to-date, 2014.
  • 32 percent of apartment communities offered specials or concessions, usually discounting first month’s rent or reduction in deposit, which is similar to 2013.
  • The current level of new construction does not pose a threat to the market.
  • Transaction volume is down, compared to 2013, due only to lack of willing sellers.
  • Annual demand for new apartment units in Salt Lake County is estimated to be 3,000 units per year, a 2.5 percent increase.
  • 20,659 units have been added between 2000 and 2010.

The forecast for the upcoming year includes:

  • Market conditions for apartment owners will continue to be favorable.
  • Vacancy rates will remain under 5 percent.
  • Planned projects for 2014 will not destabilize the market; however, more than 6,000 units proposed over the next 2 years will likely test the depth of the high-end market, particularly in Salt Lake City.
  • Rental rates will increase 3 percent or more.
  • Demand continues to increase from both institutional and private investors. 
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