A major downtown project first announced in May 2004 will finally get under way this year, adding almost a half-million square feet of office space to the heart of Salt Lake City.

Hamilton Partners is expected to announce today that it has completed negotiations with Wasatch Real Estate Partners to build a 21-story office tower at 222 S. Main. Groundbreaking is scheduled for autumn 2006, with completion targeted for the first quarter of 2008, the companies said.

The $100 million project will include 450,000 square feet of office space, with street-front retail on the ground floor. According to a joint statement released by the companies, Wasatch will provide leasing and construction services and expertise, as well as "contributing significantly to the project financing."

Frank Matheson, president of Wasatch Real Estate Partners, declined to comment ahead of today's formal announcement. Wasatch Real Estate Partners oversees leasing for Logan-based Wasatch Property Management, whose portfolio also includes the Wells Fargo Center, the Ken Garff Building and the Chase Tower in downtown Salt Lake City.

"Right now, vacancy in Class A office space is under 4 percent in the central business district, the lowest vacancy rate in almost a decade," Matheson said in a prepared statement. "Available blocks of space over 20,000 square feet are nonexistent. We have encountered high demand for this premium space and will be making announcements regarding anchor tenants in the new building imminently."

Wasatch Property Management's other downtown office buildings are more than 90 percent filled, said John A. Dahlstrom Jr., the company's executive vice president and general counsel.

Illinois-based Hamilton first announced its intention to build the complex two years ago but "needed a partner to make the project a reality," according to the statement. With Wasatch on board, Hamilton says it has such a partner. "All systems are go," Bruce Bingham, a partner at Hamilton Partners, said in a prepared statement. "With the expertise and financing that Wasatch brings to the table, this partnership will bring the 222 Building to fruition just as demand for Class A office space has reached a new high-water mark."

Bob Farrington, executive director of the Downtown Alliance, applauded the deal and said the timing couldn't be better. Well, almost couldn't be better.

"I think the only regret is that it's not an announcement that they've finished construction," Farrington said. "The latest data on vacancy rates downtown has Class A office space at almost historic low levels, at about 3.5 percent. For people who are looking for that blue-chip property, a lot of them are just out of luck."

The commercial real estate market has rebounded since its slump during the dot-com implosion, such that "blue chip" space — either for lease or sublease — is in scarce supply in the city center and even in the suburbs, Farrington said.

"There's nothing really coming online. This will be the next big project," Farrington said. "The timing is great, the location is terrific, and there are two great companies that will be the developers. So, they seem to have everything working in their favor."

Officials from the Wasatch companies and Hamilton Partners are expected to be present at an announcement event at noon today at the Wells Fargo Center, along with city, community and business leaders.

---

E-mail: jnii@desnews.com