Fewer apartments empty in Salt Lake-Ogden

Improved job growth and a slowdown in the construction of rental housing led to fewer empty apartment units in the Salt Lake City-Ogden region in 2004.

According to a report by Hendricks & Partners, the apartment vacancy rate for the 12 months ended Dec. 31, 2004, fell to 6.4 percent, down from 7.1 percent in 2003.

Salt Lake's apartment vacancy rate ranks as one of the lowest in the West. Boise had an 8.4 percent vacancy rate. Colorado Springs ended 2004 at 13.1 percent. Denver was at 10 percent, and Phoenix reported an 8.8 percent vacancy rate.

Despite declining vacancies, average rents remained flat in 2004 at $648, compared to $648 in 2003. Rents had previously declined in 2003 and 2002.

New apartment construction, the report noted, slowed to 940 units in 2004, the lowest level in several years. Apartment absorption closed the year positive by 2,031 units, its best performance in four years. In 2003, net move-ins totaled 1,796 units.

The forecast for 2005 and 2006 noted apartment leasing activity would increase, predicting 2,500 net move-ins for each year.

"Fewer than 3,000 apartment units are in the construction pipeline for the greater Salt Lake area for the next several years," the report said. "Local experts believe that the homebuying demand has been largely satisfied among the current tenant base, leaving little room for vacancy rates to move anywhere but lower."

In addition, the report said, higher adjustable rate mortgages could squeeze homeowners past the affordability level, leaving many homeowners renters once again.

Utah's foreclosure rate was 1.4 percent in the fourth quarter of 2004, according to the Mortgage Bankers Association. Only 14 other states posted higher foreclosure rates than Utah for the quarter.

The report added that employment gains would cause vacancy rates to fall further. Major announced new employment expansions include the addition of 600 jobs to Verizon's West Valley City call center. In addition, KraftMaid Cabinetry will initially employ 600 in West Jordan in 2006, rising by another 700 positions through 2011.

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