Utah Multifamily Developers Weigh Whether to Break Ground

The Dirt Is Ready. The Decision Isn't.

As Building Salt Lake reported from Thursday's ULI Housing Summit, Corey Johnson of Wasatch Residential Group told a packed room something a lot of Utah owners are quietly thinking: "We own a lot of dirt, and it's all ready to go." The problem isn't entitlement, financing structure, or site control anymore. It's whether flat rent growth and renter concessions across Salt Lake City's multifamily market justify pulling the trigger on construction that's been shovel-ready for months.

That's a different kind of headwind than the one this market fought through 2022 and 2023. Labor costs have eased. What hasn't eased is the math on the revenue side. Johnson described one project that went forward, got redesigned three times, added a million dollars in architecture cost, and is now leasing at 18 units a month — a healthy pace. He described a second project that was supposed to start a year ago, got shelved instead, and through a year of subcontractor negotiation clawed $4 million out of total project cost. Even with that savings, he said it's still unclear whether it pencils. That's the environment right now: two nearly identical decisions, two very different outcomes, and no clean formula for which one you're in until you run the numbers.

Submarket Selection Is Doing the Work Cost Cuts Used to Do

Panelists were consistent on one point: broad-market timing calls matter less than picking the right half-mile. The Point, the 600-acre redevelopment of the old Draper prison site, is moving forward with a walkable Promenade district anchored by the 5,200-seat Mountain America Event Center, plus market-rate, senior, and luxury housing along it. Lance Bullen of Colmena Group noted the project is even carving out office space near a planned University of Utah hospital campus on roughly 50 acres — office use working specifically because it's tied to a healthcare anchor, not because the office market has recovered generally. The Point of the Mountain State Land Authority is closing out proposals on a 50-acre for-sale housing block this week, which tells you capital is still willing to commit at scale when the location story is strong enough.

Sugar House is the other name that came up repeatedly, and it's a useful case study in how political risk now sits alongside financial risk. Max Muller of Gardner Group spoke hours after the Salt Lake City Planning Commission rejected a variance on a proposed 16-story mixed-use tower in the Sugar House core. The project isn't dead, but the setback was real, and Muller's read on it was blunt: coming from Denver with a recognizable developer name didn't buy any goodwill with the city. Community sophistication around density and design has risen, and developers who assume brand recognition will smooth entitlement are finding otherwise.

A Reset That Some Are Calling Healthy

Not every voice on the panel was cautious. Alex Lowe of Lowe Property Group said his 2022 valuations sat 25 percent above where they price today, and rather than treat that as a loss to recover, he called the correction healthy — it forces more realistic underwriting and means whatever does get built has a real shot at performing. His argument: Utah's demand drivers — population growth, job formation, migration — never went away. The market was simply overbuilt for a couple of years, and supply is now working through that overhang. For owners sitting on land and investors weighing new positions, that's the more useful lens than waiting for a return to 2021 pricing.

This is the environment where advisory work earns its keep — running true go/no-go underwriting on shelved parcels, stress-testing submarket assumptions before committing capital, and reading entitlement risk in cities that have gotten more demanding. Team Utah Commercial (801-898-8810) works with owners and investors through exactly this kind of decision, where the difference between a project that pencils and one that doesn't often comes down to location specifics and timing rather than headline market conditions.

The Informal Poll Was the Most Honest Part

The panel closed with a lightning round that said more than any of the prepared remarks. Asked if Salt Lake will ever see a market like 2021 or 2022 again, three of four developers said no. Asked about building condos, three said yes — a signal that for-sale product is back on the table in a way it hasn't been in years. And on a Downtown high-rise, the answers ranged from yes to a conditional maybe, with Bullen's line landing hardest: he'd build one "if it's funded by other people's money." That's not cynicism so much as an honest read on where risk tolerance sits heading into next year — plenty of developers can see the deal, fewer are ready to be the one holding it.

Source: this analysis discusses reporting by buildingsaltlake.