According to the latest market stats, Salt Lake County’s office real estate sector has seen a strong surge of activity during third quarter of 2015. There is normally a lull in leasing during this time of the year, which has not been the case.
For current and historic market reports see http://www.comre.com/research.
“Leasing activity has remained very strong through Q3 of this year, pushing absorption through the end of the year and into 2016 as tenants take occupancy in their leased spaces,” Trigger Reital, Utah Market Leader at Cushman & Wakefield | Commerce, said. “There has been a sense of urgency for tenants to get deals done and be proactive in their search for new expansion space.”
As a consequence of this under-anticipated surge, new construction is currently lagging behind absorption rates. Larger office space is being snatched up rapidly, making it difficult for many clients to find spaces that meet their needs. Once these high demand spaces are found by a client, they are often one of numerous interested parties, making competition all the more tight.
Utah’s Ideal Business Climate
Economic conditions in Utah are still ideal with a relatively low cost of living, a highly educated and young population, a business-friendly climate, and well developed infrastructure such as Trax and Front Runner. This is allowing existing tenants to expand more than they would be able to elsewhere and makes Utah more attractive to tenants outside of the state.
Fort Union is one of the most competitive geographic areas in the Salt Lake valley with tenants vying to expand into any available spaces. This is a result of its central location, ample retail opportunities and close proximity to highly dense residential areas.
Transit Oriented Developments
“The importance of Transit Oriented Developments (TODs) is an ever-growing trend and the population of Salt Lake has followed suit in seeing the benefits of utilizing such a commodity,” Reital said. “In recent years, we have seen when a TOD is built, tenants come flocking in droves. View 72 in Midvale, Utah is a perfect example. This 85 acre development is now complete.”
One of the many major transactions in third quarter was a 65,000 square foot lease signed by Marriott. They will occupy space in View 8, a building in View 72 in the next year. Another significant TOD transaction was a 61,594 square foot lease signed by Prosper Marketplace at Thanksgiving Station 4, located in Lehi, Utah. Prosper Marketplace is a San Francisco based tenant looking to Utah to open a secondary office.
Cushman & Wakefield | Commerce currently reports that there are 1,763,922 square feet under construction in the Salt Lake County office market with a year-to-date net absorption just north of 907,000 square feet. Direct vacancy is at 10.1 percent with an overall vacancy of 11.5 percent. Total leasing activity in Q3 was just over 1.1 million square feet, the highest level achieved in the Salt Lake market. Total inventory to date is currently 33,601,891 square feet.