With little office space being added and an improving national economy propelling job growth, demand is slowly catching up with supply.

In fact, the most expensive office space, "class A," which costs anywhere from $18 to $28 a square foot, is showing the strongest demand and the lowest vacancy rates.

Local developers like Jake Boyer, a partner of Salt Lake-based The Boyer Co., said buildings like Two Gateway, an 85,000-square-foot complex at The Gateway shopping center, are running at full occupancy. Two Gateway leases at $22 to $24 a square foot.

The vacancy rate is just 12 percent at One Gateway, an office building offering 158,000 square feet and a lease rate of $20 to $22 a square foot.

The strong leasing of those two buildings prompted The Boyer Co. to begin construction last year on a third office complex, which should be ready in June, Boyer said.

"We've seen a real uptick in the leasing market," he said. "We've got quite a few deals that we're negotiating for that building. We're pretty confident that the majority of that building will get leased this year."

Boyer said there are other signs indicating an improving market, including tenants willing to renew leases early.

"We've renewed some pretty significant leases one or two years early," Boyer said. "I think they sense a shift in the market a little bit to the landlord side."

That shift may be attributable to an improving economy. The U.S. Labor Department reported last week that a total of 513,000 new jobs were added across the country in the first quarter.

Mark Knold, senior economist for the Utah Department of Workforce Services, said Utah appears to be ahead of the national trend in job growth. He anticipates 1.5 percent to 2 percent annualized job gains in 2004.

"We've been slowly starting adding jobs since last July. January and February were pretty good months," Knold said. "The national numbers started to show life here in the beginning of this year, whereas Utah started showing life the end of last summer."

Another shift in Salt Lake's office market is the drive toward suburbanization. Outlying offices like the Cottonwood Corporate Center, in the central east part of the valley, are witnessing lower vacancy rates than downtown Salt Lake City.

"People want to work and recreate as close to home as possible," Roberts said.

Martin estimates about 146 potential tenants are now looking for more than 2 million square feet of office space in the Salt Lake area. The list, of which 75 tenants are named, includes Ceredian, a software company in search of 30,000 to 35,000 square feet; World Savings Bank, 3,500 square feet; and Alamode, a technology company looking for 5,000 square feet.

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E-mail: danderton@desnews.com