Apartment market nears bottom

(Hendricks & Partners) There are some indications that the negative job cycle in Utah is about to end. Although people are still losing jobs in Utah, and unemployment insurance claims are still running high, the state is reporting that the number of Utah job postings are beginning to see an upturn. This indicates we are just on the bottom of the curve. If this trend continues, expect job losses to begin to taper off soon. Local economists are cautiously predicting job growth sometime in the second half of 2010.

Market Update We get calls every day from an increasing number of potential buyers looking for Utah properties. Some are looking for distressed properties. Unlike Phoenix and Las Vegas, Salt Lake City and surrounding areas are  not experiencing undue market stress. However, apartment vacancies are up across all Utah counties. Cache County in the north is fairing the best.

Vacancy: Salt Lake County has overall vacancy approaching 8.5 percent, the highest in seven years. Some submarkets are better than others. Washington County in the far south has been hit the hardest where vacancy is approximately 20 percent. So far the state has lost nearly 52,600 jobs.

Concessions: Average concessions in Salt Lake County is approximately onehalf month. One major owner of B-class properties is driving toward zero concessions by lowering rents. No concessions avoids tenants that gobble up free rent and then skip.

Rents: Average rent in Salt Lake County is down almost 4 percent since the peak in 3rd Quarter 2008. With two prior years back-to-back rent growth approaching 10 percent, we are still ahead of the game.

Briefs
✦National Security Agency will build a 1- million-square-foot ($1.9 billion) data center at Utah’s Camp Williams in northern Utah county. The NSA plans to capitalize on Utah’s educated workforce with second language skills. This will result in about 4,000 construction jobs and 100’s of permanent, higher paying jobs.

✦Utah ranked 5th in the nation for best state for business - CNBC.

✦Construction began this week on the light rail line from the Salt Lake International airport to downtown.

✦Microsoft opened its new Lehi facility. The facility will house 100 top software engineers who will be in charge of the next generation of user friendly operating systems from Microsoft.

✦Home values dropped 11.6 percent from the 2Q 2008 to the 2Q 2009.

✦Zions Bank 2Q forecast is predicting are bound in the Utah economy approximately one year from now.

✦Utah is poised for strong economic recovery according to IBM chief economist Phillip Swan who addressed the Utah Technology Council. The council tracks Utah’s core industries of health, biomedical and technology.

✦Qwest is adding 200 jobs to its Salt Lake City and North Logan customer service centers.

-- James Wadsworth and Greg Barratt