MARKET SNAPSHOT: Private-Employment Sector Grows, Strengthening Rental Demand in Salt Lake City
Salt Lake City—Salt Lake City employment expanded 1.8 percent in the first three quarters of 2011, with nearly 11,000 jobs added to the marketplace, which equates to a 2.3 percent increase in private sector employment. Additionally, Marcus & Millichap projects that an additional 14,000 jobs will be added in 2012.
The unemployment rate was 6.2 percent as of October 2011, according to the U.S. Bureau of Labor Statistics.
As of the third quarter, overall vacancy had decreased 130 bps in 2011. During the same period, Class A vacancy dropped 220 bps, while Class B and C assets saw a 230-bp decline.
The Northwest Salt Lake/Airport and Murray submarkets had the lowest vacancy rates as of the end of the third quarter—3.2 percent and 3.9 percent, respectively. On the other end of the spectrum, Southwest Salt Lake City and West Jordan saw 6.5 percent and 8.2 percent vacancies, respectively. At the same time, South Salt Lake/Cottonwood and Southwest Salt Lake City each saw the greatest decline in vacancies year-over-year (220 bps).
Meanwhile, asking and effective rents increased 1.8 percent and 1.9 percent, respectively, year-to-date. The biggest increase was seen in Class A properties, where asking rents increased 2.3 percent during the first three quarters of the year.
The greatest increase in effective rents occurred in Central Salt Lake City (3.9 percent), West Valley City (3.6 percent) and West Jordan (3.1 percent).
Single-family home values continued to decline, with the median price falling to $189,800. At the same time, the number of single-family permits decreased 17 percent.
The number of multifamily permits, meanwhile, increased 56 percent during the same time period. Approximately 1,500 units were added to the metro from the third quarter of 2010 to the third quarter of 2011. According to Marcus & Millichap, 1,400 units are slated for delivery in 2012 and 2013, with an additional 2,700 units in the planning pipeline.
On the transaction front, velocity increased 5 percent year-over-year, with the median price of units sold being $76,700 per unit. Well-located Class B assets are trading at cap rates in the high-6 percent to about 8 percent range.