Utah apartment boom making history – and money

The state's healthy economy and steady population growth have combined with a national downturn in home ownership and shifts in preferences for mobility and urban living as a vast cohort of younger adults known as millennials form their own households. Up against rising prices on single-family houses, tighter lending rules and lagging incomes, many are opting to rent instead of buy, at least in the short term.

After a decade of adding an average of 1,223 new apartments annually, the greater Salt Lake City area could see up to eight times that many units come online in the next three years, according to EquiMark, which tracks the industry in Utah.

Nearly 4,839 apartments are under construction in Salt Lake County alone and work will start on an additional 6,484 units in the next 18 months. Together, those new dwellings amount to about 10 percent of Salt Lake County's existing inventory of 120,389 multifamily rental units.

Another 9,944 apartments are either planned or under construction across Davis, Utah and Weber counties, EquiMark said. Researchers documented 122 apartment projects being built or proposed across the four-county area, each with scores to hundreds of units apiece.

"We've never seen so much new construction in Salt Lake," said Sage Sawyer, a principal at EquiMark. The last boom even comparable was 30 years ago, he said, when apartment building accelerated as the U.S. came out of a global economic recession in the early 1980s.

In Salt Lake County, the new construction is focused in Salt Lake City's downtown, cities in the south end of the valley and along light-rail lines. Utah County's new projects, though centered on Provo and Orem, reach from American Fork to Payson.

In Weber County, apartments are mostly going up in Ogden and Pleasant View. Davis County has new projects in Layton, North Salt Lake, Centerville and Farmington.

Demand goes beyond millennials. At least eight new apartment complexes along the Wasatch Front will cater to seniors, with about 1,124 dwellings between them.

With the pace and breadth of new rental construction, EquiMark and others are warning that markets could be nearing a saturation point, where the number of new units starts to exceed would-be renters, creating downward pressure on rents. That said, even seasoned commercial analysts of Utah's apartment sector have seen recent predictions that the market would top out proved wrong.

"Some of these upscale, urban developments in Sugar House and downtown are getting two dollars per square foot in rent," said Pete Williams, a longtime expert in investment sales and development with Coldwell Banker Commercial. "I never thought I'd see that in my lifetime."

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Utah apartment boom making history - and money