Now seems to be a good time to invest in more apartments in the Salt Lake metro area of Utah, as vacancy rates reached 2.6% in mid-2017, according to Cushman & Wakefield research.
Growing demand for multifamily properties serves as the main reason behind mostly unoccupied properties. Primary Residential Mortgage, Inc. noted that those interested in multifamily investments, yet struggle with financing, should consider options like an FHA 203k loan program.
Kip Paul, Cushman & Wakefield executive director of investment sales in Salt Lake, said that the current vacancy rate represented a historically lowest figure, after falling in the last eight years. A likelihood of oversupply appears to be non-existent at this point, particularly for mid-size apartments.
Buyers continue to find this market segment as an attractive option, according to Paul. Midsize apartment communities currently lead the market in Salt Lake County. With an average rental rate per square foot of $1.25 and a 2.2% vacancy rate, it’s evident that mid-sized properties serve as the bright spot in the apartment market. The research based its findings on 35 apartment communities in Salt Lake County that has a total of 6,546 individual units under construction.
Aside from possible rental price hikes, residents in new Salt Lake apartments should expect a higher cost of living, Paul said. A high demand for apartments may be a good thing for developers, yet it inadvertently skews affordable housing along the Wasatch Front.
The problem seems to be common in other parts of Utah as well. In Utah County, for instance, even college students also feel the impact of rising housing costs.
The pace of demand for apartment properties in Utah represents a good opportunity for investors. However, affordability continues to be a relevant concern for average families, due to increasing rents brought by growing demand.