MULTIFAMILY: SALT LAKE MULTIFAMILY SECTOR IS ON THE REBOUND.

• Author: Bodnar, Patrick

IF EVER THERE WAS A MARKET ready to take on a global pandemic, it's Utah, hands down! Since 2015, Utah posted an annualized GDP growth rate through Q1 2020 of 3.4 percent, the second highest in the nation. The national average was 1.9 percent over the same time period. Utah's five-year annualized employment growth rate through June 2020 was 2.4 percent, the highest in the country.

Over the course of 2020, Utah has maintained the lowest unemployment rate in the country, sitting at 3.6 percent at the time this article was written. These stats provide a peek behind the curtain of the critical fundamentals that have driven the multifamily sector in the right direction, allowing this sector to navigate the market challenges experienced in 2020. As a result, no real distress of any multifamily assets has been experienced in the market.

Investors looking to purchase multifamily assets continue to keep the greater Salt Lake market--from Ogden to Provo--at the top of their lists. This market maintains a pro-business environment and is operationally friendly because of fair rental laws and supportive legislation. The essential elements supporting a thriving business environment are still intact: pro-development mindset, universities, trades schools and community colleges, a growing tech sector, health care, construction, minimal regulatory interference, and a steady supply of talent. All these business-promoting elements are here to stay.

Population growth has skyrocketed over recent years as a result of Utah's internal growth rate and sustained in-migration. Although job growth has slowed, much of the workforce continues to choose Salt Lake City, as evidenced by employees relocating here during the pandemic. Utah experiences higher returns than most other competing markets in the west and has a long runway for growth. These factors are very compelling and have investors making their claims in Utah.

SALES VOLUME/TRANSACTIONS

Since 2017, Salt Lake has consistently posted annual multifamily sales well above $1 billion. The year 2020 stayed the course with a total sales volume of $1.23 million. Delivering a strong sales volume year-over-year sends a message to the investor community that Salt Lake is a market to build scale and to maintain liquidity. This is especially critical as many new investors have come to participate in the market.

There was a total of 40 multifamily transactions totaling just over $1 billion for properties comprising 50 units or greater. This represents approximately 6,263 units sold. Smaller market apartment sales (50 to 99 units) contributed 18 sales of approximately $179 million and the large market (100 units and greater) realized 22 sales for a total volume of $1,052...