Salt Lake City’s Multifamily Demand Now the Weakest in Over Three Years
Weak demand is weighing on the performance in Utah's Salt Lake City multifamily sector. While net absorption was positive in the third quarter at 449 units, this was the weakest posting since the early portion of 2022, according to a market report from CBRE.
In fact, just two submarkets had positive demand in the third quarter: Downtown Salt Lake City/University (303 units) and Ogden/Weber County (302). In other words, if one of these markets did not reel in a strong performance — the full category might have been negative.
On the bright side, net absorption remains solid year-to-date — at a positive 3,241 units.
But still, the weak performance appeared to weigh in on multiple other core fundamentals. For one, rents continued their downward trend, averaging $1,538 per unit. That's down 2.2 percent year-over-year and 0.8 percent from the previous three months.
"This represented the fifth consecutive quarter of annual rent decline, driven by softer demand and slower leasing activity," CBRE said.
"With fewer units in the pipeline, pricing is expected to stabilize and support rent growth in the mid term."
Occupancy, meanwhile, was a little more mixed. The 94.7 percent rate was down 30 basis points quarter-over-quarter, but shot up a full percentage point year-over-year. The improvement year-over-year is reflective of the slowing down of deliveries, which hit 818 units in the third quarter, a plunge of 44.4 percent year-over-year. Still, though, occupancy is down from the 97.9 percent figure posted in early 2022.
Source: GlobeSt/ALM