The Greater Salt Lake Area Multifamily Market
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THE GREATER SALT LAKE AREA MULTIFAMILY MARKET THE MOST COMPREHENSIVE MULTIFAMILY REPORT | 2019 REVIEW + 2020 OUTLOOK PREFACE TABLE OF CBRE is pleased to release the 2020 Greater Salt Lake Area Multifamily Market Report, the most current and comprehensive CONTENTS multifamily data available for the Salt Lake Area/Wasatch Front market. Produced by Eli Mills and Patrick Bodnar of CBRE, this report has been assembled to empower the decision making of multifamily professionals active in the Utah market. This report has been prepared with current data sourced from a survey of over half the multifamily market (60,000+ units) along the Wasatch Front Area inclusive of Salt Lake, Utah, Davis and Weber Counties. Minimum reporting requirements were identified for each city and county by class, type and size. Data contributions and validations to this publication were made by: • CBRE Research • Utah Department of Economics • CBRE Econometric Advisors • University of Utah Bureau of Economics and Business Research • Yardi Matrix • Construction Monitor • Axiometrics • CoStar • Western States Multifamily Whatever your multifamily needs may be, please reach out to us. CBRE has the most comprehensive data on the market and can provide information on a macro or micro level based on class, city, submarket, zip code, location, age, size, proximity to rail stops, and many other variations. CBRE consistently leads the market, with national multifamily investment sales totaling over $33.3 billion in 2019 (Source: Real Capital Analytics). As the leader in multifamily sales every year since 2001, the exposure of CBRE is second-to-none. With 65 locations and over 300 multifamily professionals, including direct lending services, CBRE’s unparalleled multifamily platform has a competitive presence in Utah and an enhanced investment reach into the multifamily space, providing our clients with the greatest market exposure available. We welcome your inquiries into the Utah multifamily market and encourage you to contact us with any questions. Eli Mills Patrick Bodnar Eli Mills Patrick Bodnar Institutional Properties Institutional Properties Senior Vice President Vice President For a market analysis on your property Hardware Station, recently or more information contact: completed, is one of Downtown Diane Aubry Colton Butterfield Annie Avila Ashley Mills Eli Mills Patrick Bodnar Salt Lake City’s most luxurious and distinct apartment communities. Client Services Multifamily Market Client Services Client Services Senior Vice President Vice President Team Lead Researcher Coordinator Coordinator +1 801 869 8029 +1 801 869 8053 [email protected] [email protected] GREATER 20 SALT LAKE AREA MULTIFAMILY REPORT 20 EXECUTIVE SUMMARY For the third year in a row, the Greater Salt Lake Area has realized HEADLINES TO KNOW CBRE total multifamily sales in excess of $1 billion dollars and demand for multifamily assets has never been greater. Investor interest is fueled by SALT LAKE CITY strong economic fundamentals, better yield spreads, and a lower overall RENT MULTIFAMILY basis compared to neighboring states. Job growth was 3.3% in 2019 and is the principal reason for the significant in-migration realized—not $1,185/MO. 5.6% YOY just last year, but for the previous four years. 2019 finished with an 46% estimated in-migration number of 25,192. Unemployment remains low VACANCY SALES #1 MARKETSHARE at 2.3% (December 2019), the lowest in the state’s history, and Utah IN THE added 51,454 jobs over the past year. VOLUME 2019 MARKET 2X THE VOLUME OF THE NEAREST COMPETITOR 4.0% $1.26B Looking into the first quarter of 2020, the new year is starting off strong NO CHANGE with well over $600 million under contract or coming to market. Strong YEAR-OVER-YEAR fundamentals will keep the attention of those seeking to purchase multifamily assets and will continue to entice new entrants into the PIPELINE LARGEST TRANSACTIONS 3 YEARS RUNNING market. The Greater Salt Lake Area multifamily market has a very bright 2019 DELIVERIES future. It is a vibrant, economic climate encouraging growth. People 5,028 UNITS continue to come for the many opportunities. Salt Lake’s transportation infrastructure—including the new Salt Lake International Airport, expanding commuter and light rail, rapid transit bus, and improved freeways and roads—conveniently allows people to move throughout LOOKING FORWARD the market. Now more than ever, apartment properties are connected to the entire community, providing an unparalleled lifestyle. With these SALES CAP RATES attributes and many others, the multifamily sector in Utah will continue to deliver predictable and profitable returns in 2020. INCREASE IN SLIGHT TOTAL VOLUME COMPRESSION TRANSACTION DIVERSITY* DEAL SIZE # OF DEALS SALES VOLUME PIPELINE 4TH WEST FAIRSTONE AT RIVERVIEW PARK AT 2020 EXPECTED DEMAND APARTMENTS & ALPINE MEADOWS CITY CENTER <$10 Million 63 $193,458,024 DELIVERIES ABSORBING 6,296 UNITS SUPPLY 493 UNITS 714 UNITS 330 UNITS $10-25 Million 27 $434,590,212 STATE RECORD RENT CONCESSIONS FOR: HIGHEST HIGHEST PRICE PER PSF EVER +$25 Million 10 $628,900,000 STRONG TEMPORARY - SALES PRICE UNIT FOR PAID FOR GROWTH INCREASE - PRICE PER UNIT MID- 90’S SUBURBAN DOWNTOWN - PRICE PSF PRODUCT PRODUCT Total 100 $1,256,948,236 RECORD-SETTING EXPERIENCE Source: CBRE, Inc. *Multifamily Transactions. © 2020 CBRE, Inc. 4 © 2020 CBRE, Inc. 5 GREATER 20 SALT LAKE AREA MULTIFAMILY REPORT 20 GREATER SALT LAKE AREA INDUSTRIAL SUBMARKET SNAPSHOT OFFICE SUBMARKET SNAPSHOT The Greater Salt Lake Area, also known as the Wasatch Front, consists of four counties—Salt Lake, Utah, Davis and Weber. Salt Lake City is in the center of the Wasatch Front immediately accessible to commuter rail, light rail and the Salt Lake International Airport, which is just 10 minutes * * from downtown by car and 15 minutes via light rail. Approximately 2.5 million people (80% of Utah’s population) live within this four-county area. $0.50 NNN/MO 3.4% 7.23M SF $23.79 FSG 10.8% 3.68M SF AVG. ASKING VACANCY UNDER AVG. ASKING VACANCY UNDER THE WASATCH FRONT UTAH ACCOLADES LEASE RATE RATE CONSTRUCTION LEASE RATE RATE CONSTRUCTION COMPANY SQUARE FOOTAGE SUBMARKET COMPANY SQUARE FOOTAGE SUBMARKET ECONOMY Blackstone 1,556,138 SF California Ave. Submarket Northrup Grumman 250,000 SF Davis County INTERS TATE WEBER Amazon 1,300,000 SF West Jordan Submarket Divvy Pay 150,000 SF Draper Submarket 15 COUNTY STATE FOR ECONOMIC OUTLOOK AWS 531,932 SF Airport Submarket Weave 150,000 SF Utah County North Submarket OGDEN #1 11 YEARS RUNNING (ALEC) Source: CBRE Research, 2019. *Trend arrows indicate year-over-year change. Source: CBRE Research, 2019. *Trend arrows indicate year-over-year change. LAY TON STATE FOR JOB GROWTH IN 2019 2019 was another banner year across the Salt Lake industrial market. An abundance of incoming supply (over 3.6 msf) reaffirms a strong GREAT INTERS TATE SALT 84 #1 (3.3% | U.S. 1.4%) Over 4 million square feet (msf) of construction was completed in confidence in the marketplace. Tech and financial service firms are LAKE DAVIS COUNTY 2019, short of 2018’s all-time record of 4.7 msf. A record-breaking driving forces. Although positive net absorption was down in 2019, 7.2 msf remains under construction, much of that speculative space. record-high construction exists with 62% being pre-leased, the majority INTERS TATE 80 Vacancy was 3.4% at the close of 2019. Total lease activity for 2019 of which is in the Downtown CBD. SALT LAKE CITY was 6.5 msf with Amazon leasing 2.1 msf, accounting for 32% of the UTAH IS NATURE’S year’s total lease activity. RENT AFFORDABILITY ACROSS WESTERN MARKETS INTERS TATE 80 SALT LAKE PLAYGROUND COUNTY Over the last five years Salt Lake City’s distribution employment has Part of Salt Lake’s growth story is that of investors searching for yield HOME TO: MASSIVE grown by 2.5%, while manufacturing employment has grown by 2.6%. in untapped secondary markets that offer the ability to grow rents. The Industrial employment is projected to grow by 1,500 jobs during the affordability quotient —coupled with the influx of high-paying jobs— INTERS TATE 15 MAJOR 15 AIRPORT 2019-2024 period. increases the interest of investors to this market. REDESIGN SKI RESORTS UTAH 5 NATIONAL WESTERN MARKET RENT TO INCOME RATIO COMPARISON COUNTY $4.1 BILLION PARKS RETAIL SUBMARKET SNAPSHOT UTAH PROVO $7,000 70% LAKE Avg Monthly Wages Avg Monthly Rent % of Income to Rent 7 NATIONAL * $6,500 INTERS TATE PUBLIC TRANSIT MONUMENTS 15 REACHES $6,000 60% 5 NATIONAL $17.95 NNN 6.8% 177,568 SF $5,500 $6,237 FORESTS AVG. ASKING VACANCY NEW $6,218 51% 75% LEASE RATE RATE CONSTRUCTION $5,000 49% 50% 43 STATE OF THE $4,500 $5,326 COMPANY SQUARE FOOTAGE SUBMARKET LIFESTYLE FRAMEWORK PARKS POPULATION $4,871 Target 94,000 SF Central West Quadrant $4,000 40% 2019 POPULATION GROWTH RATE COMPARISON 34% $4,311 $3,500 $4,237 EoS Fitness 52,810 SF Central West Quadrant 31% 31% 32% 28% $3,844 GREATER SALT LAKE DEMOGRAPHICS EoS Fitness 47,000 SF Central West Quadrant $3,000 30% POPULATION Source: CBRE Research, 2019. *Trend arrows indicate year-over-year change. $2,500 $3,192 GROWTH RATE 3.2 LOWEST MEDIAN $2,000 20% 1.7% 2019’s leasing remained strong, with food and fitness being the most $2,585 MILLION 31.4 YRS AGE IN NATION active industries, accounting for 14% and 25% of total lease activity, $1,500 U.S. $1,915 PEOPLE NATIONAL MEDIAN: 38.2 respectively. A number of big box spaces were filled resulting in vacancy $1,000 10% POPULATION $1,583 $1,448 decreasing 40 basis points (bps) year-over-year to 6.8%. Re-purposing $500 $1,223 GROWTH RATE $1,193 0.7% or redevelopment of retail centers continues to abound.