Summer Symposium: The Multi-Family Housing Market
Wed, 08/26/2009 - 16:15
Holladay on Ninth Apartments is an exceptional apartment community of 83 apartment units located in Murray. The growth rate for the multi-family housing market was negative 2 percent along the Wasatch Front during the first half of 2009, according to Jed Millburn of Apartment Realty Advisors. Photo courtesy Apartment Realty Advisors.
By Ken Holman
Overland Group Inc, President
Editor’s note: This article is the fourth in a five part series highlighting the five markets discussed at the 2009 Summer Symposium: Mid-Year Real Estate Economic Update. Watch for the final article on the single-family residential market.
At the 2009 Summer Symposium, Jed Millburn, managing principal of Apartment Realty Advisors in Salt Lake City, said the multi-family housing market in Salt Lake saw a negative 2 percent rent growth in the first six months of 2009.
Providing a mid-year real estate economic update, featured speakers at the “Bottoms up?” symposium discussed market conditions for single family residential, multi-family residential, office, industrial and retail, mainly in Salt Lake and Utah counties.
Millburn pointed out that new apartment development is significant along the Wasatch Front, which will impact rent growth and vacancy rates in the near future.
Renters are looking for value, allowing Class B and C properties to lead the market, he said. The Shadow Market, for sale condos and townhomes which have been leased to renters, is drying up, allowing the apartment sector to more easily absorb the new apartment supply. High population growth and low unemployment rates have helped Salt Lake cope with current market conditions, Millburn said.
“We actually are doing relatively well compared to the rest of the nation if you look at our vacancy rate, 7.8 percent, which although that is up from the past, it is still single digits, which is a good thing,” said Millburn.
In summary, vacancy rates on the East side, 7.9 percent, are higher than rates on the West side, 7.7 percent. Studio- and one-bedroom units are leading the multifamily market with 5.6 percent and 6.4 percent vacancy, respectively. The more affordable Class B and Class C rental properties are leading the market. Salt Lake County has 3,417 apartment units under construction, and approximately half of those have been leased, Millburn said.
Millburn indicated that investor demand for Wasatch Front apartment product is moderate. Many buyers are cautious, but some are willing to transact for the right prices, he said. The most common buyers are those for private capital, pension fund advisors or institutional capital and REIT.
Not a lot of growth is predicted for the rest of 2009. But Millburn thinks there may be some growth in 2010. And he suspects vacancy rates will be near 8 percent.
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