BOZEMAN — With apartment complexes rising all over Bozeman, it might seem like there’s no end to the city’s housing demand. But take a closer look, and you’ll see a surprising trend: some of those new units are sitting empty.

“I know I pay the most I’ve ever paid in rent here,” Amanda Ulrich says. Ulrich moved to Bozeman from Chicago just seven months ago. “I mean, growth and whatnot is always welcoming, but it changes the community,” she added.

WATCH: As Bozeman's Apartment Complexes Multiply, 1 in 8 Units Sit Empty

As she played with her two dogs, Boga and Winston, in the courtyard of her apartment complex, Ulrich said she’s already noticed empty units throughout her building.

“The long-term concern is you have all of these complexes built and then they are empty, which then they aren't cared for and they don't look nearly as nice and isn't brand new,” Ulrich says.

To better understand what’s happening behind the scenes, MTN News spoke with Casey Rose, a commercial real estate broker at Sterling CRE Advisors in Bozeman. Rose specializes in the city’s multifamily housing market, which refers to apartment buildings with five units or more.

“Our current vacancy rate is 12.5% within Bozeman city limits,” Rose said.

That may not sound alarming on its own, but in a small market like Bozeman, it’s a major shift. Rose explained that a healthy vacancy rate typically sits around 5%, a level he described as the “homeostasis” of the rental market.

“A lot of people wanted to move here, and because of that, we saw our vacancy rates go sub 2%, which is extremely rare,” Rose says.

That ultra-low vacancy rate during the pandemic led many developers to break ground on new multifamily projects. But real estate takes time, and those same projects are just now being completed and brought to market.

“There are still over 3,000 units in the planning pipeline. We would anticipate that a lot of those projects would not be moving forward due to the current vacancy rates,” Rose explained.

Rose says that Bozeman’s market is especially sensitive to changes like this. In larger cities like Los Angeles, it might take 50,000 units to swing the vacancy rate by five percent. In Bozeman? Just 300.

Much of the apartment development along 19th Avenue can also be attributed to its designation as an Opportunity Zone, a federal classification that offers tax advantages to developers.

As vacancy rates climb, landlords are offering incentives to fill units—things like a free month of rent or even a flat-screen TV.

“It brings down the effective rent over a 12-month period, but it is a way for developers to show the income and maximize the property’s value,” Rose said.

However, renters like Ulrich say those offers don’t always address the bigger issue.

“I think lowering rent costs would be a better move because that is such a short-term dangling a carrot,” she said.

According to Rose, Bozeman’s housing landscape has shifted over the past year, from a landlord’s market to a tenant’s market.