UTAH COUNTY – If you’ve looked for an apartment in Utah County recently, you may have noticed rental rates are on the rise.
“The current vacancy rate in Utah County is 4%. The result of that is you’ll see future additional rent increases,” said Kip Paul, executive director of investment sales for Cushman & Wakefield.
Paul released a new report on Utah County apartment trends.
“It’s coming of age and starting to have enough apartment units, something we need to study and pay attention to,” he said.
The average rental rate is about $1,100 a month. That’s a significant increase of almost 8% from last year, and 13% higher than Salt Lake County. Paul says the increase is driven by the newer, more modern projects.
“One of the interesting aspects there is that Utah County has historically been known as a frugal market,” he said. “They’ll accept a lesser quality to keep the rental rate down.”
That’s not the case anymore. Paul says younger people who are moving in from out of state are willing to pay the higher priced rental rates.
“Our job growth is a big factor of that,” Paul said. “With all the growth that’s in Lehi and Point of the Mountain, all of the tech companies that are locating there.”
This scenario puts a spotlight on the county’s need for more affordable housing, as rental prices are expected to increase 4 to 6%.
One option is tax-exempt bond development projects. Investors are given tax-free bonds. The trade-off, Paul says, is the developer rents apartments to people who make 60% of the average median income.
“You’re still gonna get a new modern apartment product, but it won’t be high-end like the class A with all the upper-end amenities and high-end cabinetry and counter tops,” he said.
The apartment boom in Utah County shows no sign of slowing down. Paul says in the next two years, plans are either underway or in the works to build 20 new apartment communities.