Salt Lake City Office

by admin

What area is your expertise?
• Office leasing and sales in Salt Lake County

What trends do you see presently in office development in your area?
• The office market continues to show positive net absorption and a sustained demand for office product. Developers and the capital markets have not been over-zealous by creating a large supply of speculative office product. Most of the new office construction has had substantial pre-leasing activity.There is also a greater interest in creating a more green and sustainable office buildings.

Who are the active office developers in your area?
• DDRS, Boyer Company, Woodbury Corporation and Hamilton Partners

Please name one or two significant office developments in your area. What impact will these projects have on the market?
• The Gateway in the downtown area of Salt Lake City continues to have an impact on the office market. Large and notable companies such as Fidelity and Ernst and Young continue to locate in this mixed-use project. Tenants seek to have amenities such as restaurants, shopping, entertainment, condos, and light-rail transportation at their doorstep. This project will continue to be the “pace-setter” in office development and will be the development that will have little, if any, vacancy.

Where is the majority of development taking place? Why is this area doing well?
• The South end of the Salt Lake Valley along the Interstate 15 corridor is experiencing continuing increases in office demand. This area experiences growth due to new residential development. With a tight labor market of below 4 percent unemployment, Tenants want to retain their employees so their commutes lessen.

What area do you expect to be the next growth area?
• Northern Utah County will continue to grow due to land availability and the continued residential growth in Southern Salt Lake County.

What areas are doing well in terms of office leasing? Which areas are struggling with office leasing?
• Central Business District is very tight especially in Class “A” office space. Class “C” properties tend to have the largest vacancy in all regions. The northwest region by Salt Lake International Airport tends to lag behind the other regions.

Please give a measure of office vacancy rates. Please give a measure of available sublease space.
• Overall vacancy in Salt Lake County is about 11 percent and about 1 percent in sublease vacancy.

What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market?
• Few speculative office buildings will be built due to current interest rates and the underwriting of loans. With fewer new speculative office buildings, office space will continue to be absorbed. Salt Lake County Market should absorb around 800,000 to one million square feet by end of year.

What is the status of job growth/(un)employment rates and what bearing will it have on the office market?
•Job growth continues with new companies coming to the market and local companies expanding. The Utah jobless rate averaged 2.6 percent during 2007’s first 10 months after averaging 2.9 percent in 2006, among the lowest rates in the nation. One critical factor helping labor availability has been a high level of net immigration. A record 44,250 more people moved into Utah than out during the 12-month period ending in July 2007. This surge of new residents has been at high levels since 2005, providing needed workers.

Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand to absorb a great deal of office space? What areas will be affected?
• The financial sector continues to be strong. For example, Fidelity Investments continues to expand in Utah with another service center of approximately 50,000 square feet in Northern Utah County and their new occupancy of 230,000 square feet in Salt Lake City. The multi-level marketing companies with Utah’s entrepreneurial spirit continue to absorb large blocks of space. Back office requirements will remain strong due to lower costs in Utah.

Would you like to make any additional observations about the office market in your area?
• With a pro-business governor, Utah has been making great strides in recruiting new companies to come to Utah. The beauty and recreational aspects of Utah continue to attract both companies and employees to locate in Utah. The well-educated work force with strong research universities in the Greater Wasatch Front allows companies to remain on the cutting edge. Transportation is king. With more funding of public transportation to connect the four major counties in the Wasatch Front, employees will be able to commute easily to their jobs. The added bonus of funding for major expressways will only increase business and keep the local economy very healthy.

Submitted by Barbara Johnson, Office specialist with Salt Lake City-based NAI Utah Commercial Real Estate.

You may also like