Bozeman’s Multifamily Market | Tight Competition For Tenants

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Casey Rose, CCIM

Bozeman’s Multifamily Market | Tight Competition For Tenants

Bozeman’s multifamily vacancy rate dropped to 5.64% in the 1st quarter of 2024 from 7.52% at the end of 2023.

Rents crept up by less than 1%. Landlords are putting in a big effort to fill units, offering everything from 2-months free rent to laptops to season long ski passes.


Vacancy


The vacancy rate currently stands at 5.64%, which is close to equilibrium. Renters looking for two bedroom units will find the most options. Those looking for studios or three-bedrooms will be more limited. Most of the available units (96%) are at communities built after 2010. Older communities typically offer lower rents and are staying leased up.


Rents


The average total rent has dropped by around 2.82% year over year in the Bozeman market. Rents have bumped up just under 1% since Q4 2023. Average rent does not include concessions, which are prevalent at Bozeman’s newer communities.


What to Watch For


There is a surge of single family rentals coming onto the market. A year ago, there were around 60 single family homes available for rent; currently there are over 150 on the market with an average rent of $3,009 per month. Single family rentals are not included in the multifamily vacancy rate.
Changes to Bozeman’s short term rental (aka AirBnB) policies restricts them to a limited number of districts. This has forced many owners to convert short-term rentals to long-term rentals. Rents for these homes are higher than similarly sized multifamily units. If homeowners drop rents, they could become new competition for multifamily communities.


Bozeman’s pipeline remains robust with 1,655 units under construction and 3,450 units in permitting and planning. In the first quarter, 206 units were absorbed. If the pace of absorption remains consistent, there is two years worth of supply currently being built. There is a four year supply between permitting and planning.


Shovel-ready sites with entitled plans have been coming to market in Bozeman. This could be a sign that some groups are giving up on their planned projects due to the slow down in rent growth and increasingly competitive market.

Matt Mellott
Matt Mellott, CCIM/SIOR

Bozeman’s Multifamily Market | Tight Competition For Tenants

Bozeman’s multifamily vacancy rate dropped to 5.64% in the 1st quarter of 2024 from 7.52% at the end of 2023.

Rents crept up by less than 1%. Landlords are putting in a big effort to fill units, offering everything from 2-months free rent to laptops to season long ski passes.


Vacancy


The vacancy rate currently stands at 5.64%, which is close to equilibrium. Renters looking for two bedroom units will find the most options. Those looking for studios or three-bedrooms will be more limited. Most of the available units (96%) are at communities built after 2010. Older communities typically offer lower rents and are staying leased up.


Rents


The average total rent has dropped by around 2.82% year over year in the Bozeman market. Rents have bumped up just under 1% since Q4 2023. Average rent does not include concessions, which are prevalent at Bozeman’s newer communities.


What to Watch For


There is a surge of single family rentals coming onto the market. A year ago, there were around 60 single family homes available for rent; currently there are over 150 on the market with an average rent of $3,009 per month. Single family rentals are not included in the multifamily vacancy rate.
Changes to Bozeman’s short term rental (aka AirBnB) policies restricts them to a limited number of districts. This has forced many owners to convert short-term rentals to long-term rentals. Rents for these homes are higher than similarly sized multifamily units. If homeowners drop rents, they could become new competition for multifamily communities.


Bozeman’s pipeline remains robust with 1,655 units under construction and 3,450 units in permitting and planning. In the first quarter, 206 units were absorbed. If the pace of absorption remains consistent, there is two years worth of supply currently being built. There is a four year supply between permitting and planning.


Shovel-ready sites with entitled plans have been coming to market in Bozeman. This could be a sign that some groups are giving up on their planned projects due to the slow down in rent growth and increasingly competitive market.