The apartment market in Salt Lake County can best be described as phenomenally strong and solid. —Kip Paul
SALT LAKE CITY — Nate Bench recently signed a lease for a rental unit in a converted single-family property near the University of Utah, where he will be completing his final year of undergraduate studies in mining engineering.
The process of finding a suitable rental unit was relatively quick, Bench said, considering the high demand. But he and his fiancee chose affordability, convenience and location over some other desired amenities.
“If you’re looking for the ideal apartment, it’s a lot of money (and) you’ll definitely pay a higher premium,” Bench said. “But if you’re willing to make sacrifices, you can (find a place).”
While Bench was able to find a place in relatively short order, Sugar House resident Mike Sanders, 47, took a year to find the ideal urban oasis. For years, he had been an owner of century-old home in the 9th and 9th neighborhood.
But he said the upkeep was too much work and not enough fun.
"There aren't enough hours in the day to take care of a 100-year old house," Sanders explained. "For me, renting works. I tried owning. I'm a single guy, and it just ate me alive."
So he made the transition to a two-bedroom, 2.5-bath townhouse replete with a two-car garage and a private outdoor patio.
"In my own way, this is my own slice of Manhattan," Sanders said of his new city digs. "It's got that type of city feel."
According to a new report, demand for apartments in Salt Lake County is at a decadelong high. The overall countywide vacancy rate for residential rental housing registered at 3 percent — the lowest in 13 years.
The report also noted that the amount renters pay for apartments has increased 2 percent this year compared with 2013, while the number of rental units rose by 1.1 percent last year.
Released by commercial real estate firm Cushman & Wakefield Commerce, the 2014 Apartment Market study was conducted and authored by James Wood, director of the Bureau of Economic and Business Research at the University of Utah.
“The apartment market in Salt Lake County can best be described as phenomenally strong and solid,” said Kip Paul, executive director of Investment Sales for Cushman & Wakefield Commerce.
Since 2009, the vacancy rate has decreased from 7.2 percent to its current level of just 3 percent.
The study showed the overall average rental rate for all types of apartment units at $865. Renters looking for a two-bedroom, two-bath unit are paying $983, the report stated.
The annual demand for new apartment units in Salt Lake County is estimated at 3,000 units per year, a 2.5 percent increase over last year, Wood wrote. Between 2000 and 2010, the local rental market added 20,659 units, he said.
For the upcoming year, the forecast calls for market conditions for apartment owners to continue to be favorable, with vacancy rates remaining under 5 percent.
Wood said planned projects for 2014 will not destabilize the market. However, more than 6,000 units proposed over the next two years likely will test the depth of the high-end market, particularly in Salt Lake City, he said.
Rental rates will increase 3 percent or more as demand continues to rise from both institutional and private investors, Wood added.
The American Community Survey showed that for 2012, the total occupied rental inventory in the county registered at 117,700 units. Wood said the “shadow market," such as owner-marketed homes, condominiums and townhouses, continues to play a role in satisfying rental demand.
Between 2010 and 2012, the occupied rental inventory increased by 5,500 units, even though only 3,800 new units were built. The difference of 1,700 units was accounted for by the shadow market, he explained.
The occupied rental inventory in 2013 was estimated at 119,500 units, Wood added.
While most people choose larger rental complexes, the study showed that demand in the shadow market is also increasing.
In finding their apartment, Bench and his fiancee compromised on a few wish-list items such as a full kitchen and in-unit laundry to land a well-priced two-bedroom, one-bath place with off-street parking in a convenient east-side location that was not too far from downtown.
“The price was a huge consideration,” Bench said.
They were well below the $809 average price for a two-bedroom, one-bath unit in Salt Lake County. For a couple planning an October wedding, staying on budget was a high priority, he said.
The high demand for rentals in the so-called shadow market has been prevalent for the past several years, according to Joy Tholen, owner and principal broker for Deseret Sage Properties in Midvale.
Tholen's company manages about 75 shadow market units across the valley. The current vacancy rate is around 5 percent, she said, and demand has been consistently high for years.
“I don’t have any that have been vacant for any length of time,” Tholen said.
Because of the high demand, rental rates have risen as well, she noted. Despite the increasing cost, people seem inclined to shell out a bit more money for a safe, decent place to live, Tholen said.
“People who are looking for nice, clean places are willing to pay (the higher) rents if the place is well cared for,” she said.
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