Despite having about 18% of the county’s population, Salt Lake City accounts for almost half of the authorized apartment projects.
And while it seems impossible that all of these new buildings in the city center will be full, the vacancy rate in the thousands of newly built rental units remains historically low.
“Really, over the last two or three years, I expected vacancy rates to go up,” said Jim Wood, director of research and science at the Kem C. Gardner Policy Institute. “This year I was shocked. Project after project there was no unit available for immediate occupancy.
“In 20 years of this investigation, I have never seen anything like it,” he added.
Wood provided an update on the outlook for the state of residential construction in the capital and Salt Lake County to City Council this week.
His message? The area remains thousands of units short of a healthy balance after more than a decade of underconstruction, but things would be even worse if not for the creeping and continuing boom of large, clustered apartment projects in Salt Lake City.
“The apartment market plays a very important role as a component of our offering,” Wood said. “What Salt Lake City has had in terms of development, I would hate to think what the market would be like if we didn’t have the business that we have in Salt Lake City. And especially downtown.
Wood counted 34,544 permits for new apartments issued in Salt Lake County between 2010 and 2021. Of those, 16,200 — 46.9% — were issued in Salt Lake City.
Many of them are concentrated between 700 East and 600 West, North Temple and 700 South.
According to our informal tally, builders have added or are adding space for over 10,000 new residents in this general area.
Apartment units authorized from 2010 to 2021
- Salt Lake City: 16,200 (46.9%)
- Sand: 3,319 (9.6%)
- West Jordan: 2,106 (6.1%)
- Murray: 2,076 (6%)
- South Jordan: 1,992 (5.8%)
- West Valley Town: 1,869 (5.4%)
- Draper: 1,650 (4.8%)
- Total: 34,544
Source: Gardner Policy Institute
Among the units proposed or under construction, the share of the capital is even higher.
More than 60% of the 9,698 apartments that Wood’s team counted as proposed or recently under construction are located in Salt Lake City.
This should come as no surprise to anyone who lives in Salt Lake City.
Several skyline-changing projects have recently been launched or are planned for this year, adding a whole new type of housing that did not previously exist in the city: luxury skyscrapers.
Other infill projects have filled the voids along city streets. Sugar House quickly transformed into a walkable urban neighborhood. Central 9th acted as a playbook for how a neighborhood can fit in missing middle housing behind century-old homes.
Find out more about the vacancy rate
If Wood had good news for the council, it was buried by the bad: Despite the rush for new supply, downtown rents rose while vacancy rates remained low.
It costs significantly more to rent an apartment in downtown Salt Lake City than elsewhere in the county, according to a Cushman & Wakefield report cited in the study.
It now costs $1,345 per month to rent a downtown studio (37% more than in suburban Salt Lake County). Both bedrooms can cost $2,000 a month (73% more than in the suburbs).
It’s easy to find examples of luxury projects opening up and offering much higher rents, but it’s clear that despite beating the rest of the Valley in terms of supply of new apartments, the houses have a premium.
Monthly Rental in Downtown Salt Lake City
Source: Gardner Policy Institute and Cushman & Wakefield
The near term promises low vacancy rates as the market seeks a balance between years of underconstruction to manage natural population growth and a pandemic that has displaced high-wage workers across the country.
“You’ll hear that number there of something like 45,000 units that we’re short on,” Wood said, referring to reports that demand for homes in the state exceeds supply by that amount. “That doesn’t mean we have 45,000 homeless people. This means that we have no vacancies.
“We’ve driven vacancy rates down to the lowest level we have data for,” Wood said.
But things could start to change from 2024, after thousands more homes come on the market.
Wood’s report indicates that the downtown market could experience a vacancy rate of up to 8%. A higher vacancy rate could ease upward pressure on vacancy rates, which could remain tight as first-time home buyers are shut out of the local market due to unprecedented demand and low stock to sell.
The suburbs – where policies typically prevent builders from keeping up with supply – will have a vacancy rate of 3.7%.
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