Bozeman Multifamily Vacancy 2023 | Development Pipeline Update

Bozeman Multifamily Vacancy 2023 | Development Pipeline Update

Read on for up to date information on Bozeman Multifamily Vacancy 2023. Bozeman, Montana, is set to experience a significant increase in available apartment units in the near future. This follows years of constrained multifamily housing inventory in the region. The development pipeline indicates that multifamily vacancy is likely to rise by several percentage points in Gallatin County. 

According to the Sterling Commercial Real Estate Advisors’ principal broker, Ryan Springer, rising vacancy can be a double-edged sword. He cautions that the increase in vacancy can have a negative impact on new development. 

“When multifamily vacancy goes up, that usually means rental rates stop rising,” says Springer. “While that’s good news in the short-term for Bozeman’s housing crisis, that means developers are less likely to build apartment complexes because project financing often relies on projected rent growth.” He notes that this dynamic can lead to a slowdown in apartment development, which ultimately results in declining vacancy. “And then, we’re right back in the position we were a few years ago with sub 1% apartment vacancy,” Springer says. 

Bozeman Multifamily Vacancy 2023 | Future Projections

Springer notes that SterlingCRE releases vacancy and pipeline data to support a more steady cycle of housing availability. Local market data can inform development decisions, encouraging a steady supply of apartments to the region.  

As of Q1 2023, the SterlingCRE research team reports that Bozeman multifamily vacancy is 3.78%. That is up nearly 2% over this same time last year. Sara Townsley, SterlingCRE Research Director, says the development pipeline is full, which indicates that vacancy will likely keep climbing. 

“Bozeman will see at least 5% multifamily vacancy this year – likely to happen as soon as the next quarter if the hundreds of new units under construction are completed. With this we will enter into a vacancy range which is generally accepted as a healthy market,” says Springer. “What’s still to be seen is how high vacancy will climb this year and how fast these new units will be absorbed. I know our research team is carefully tracking absorption as Bozeman is operating under these new commercial real estate conditions.” 

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