Investors should turn their attention to the burgeoning apartment market in Utah County due to the pace of growth in rents and demand, according to Kip Paul, executive director of investment sales for Cushman & Wakefield.
The composite average rental rate in the county amounted to $1,142 for all types of units, up by 7.9% from 2016 and 13% higher than rents in Salt Lake County.
Cushman & Wakefield released its Utah County Apartment market report, which showed that more people relocating to the region drive rents upward. Supply seems to be struggling to keep up with the demand, while the vacancy rate stayed relatively low.
Paul said that the county’s vacancy rate currently stands at 4%. For prospective tenants, this could mean a continuous increase in rental rates in the future, as landlords have the luxury of raising their rates. On the other hand, cash-strapped developers should take advantage of the situation. A multifamily FHA loan, for instance, helps them realize their project from planning to construction.
Utah County used to be an affordable market with lesser quality properties that maintained low rental rates. But the development of newer and modern projects changed this, according to Paul. Younger Americans primarily influence the high rates, as they are willing to pay a premium for leasing units.
Employment growth in the county serves as another reason for the market’s growth. Technology companies have been setting up their businesses in Lehi and Point of the Mountain. As such, these regions attract quality professionals who likely have the money to spend on high rents. Paul expects the building boom in Utah County to continue until 2019.
Real estate investors and developers should find ways to build more apartments to meet the increasing demand, as the current trend indicates no signs of slowing down anytime soon.