From Deseret News archives:

Office space boom

Published: Friday, Oct. 5, 2007 12:02 a.m. MDT
 |  E-MAIL | PRINT | FONT + - 
The Salt Lake Valley is in the midst of an office space explosion fueled by near-historic commercial market growth rates. In order to keep up with current demand — based on current job growth and economic conditions — Salt Lake County needs to add one million new square feet of office space annually, according to a new quarterly update by real estate firm Commerce CRG.

The report, which tracks commercial real estate market trends for the three-month period from July 2007 through September 2007, also states that developers expect to reach 1.5 million new square feet by the end of the year.

Rich Nordlund , office real estate specialist with Commerce CRG, said this current high demand is in stark contrast to times past when the Salt Lake area was unable to attract new companies due to lack of available commercial space. He said now with developers building more class A commercial space, firms are lining up to fill it just as quickly as the facility is completed.

Another wrinkle: Much of the development and growth is concentrated in the southern part of the valley in cities such as Draper, Sandy, West and South Jordan, with over 500,000 square feet of office space to be completed by year's end.

Story continues below
"At River Park (corporate center in South Jordan), every time they put up a building it's basically leased by the time they open the doors," Nordlund said. "A lot of companies are wanting to be down in that area just because they can bring workers not only from Utah County to their place of business, but they can also recruit from south Salt Lake County."

Rental rates for top flight commercial space are also increasing at a solid pace along with the amount of space. The report states the average asking rents will jump more than 7 percent annually — a trend expected to continue well into next year. Despite those predictions, Nordlund said the Salt Lake area remains a relative bargain.

"As far as places like Denver and Phoenix, we're still lower than those particular places," he said.

Nordlund notes the central business district Class A market in downtown Salt Lake City had a slight increase in vacancy during the third quarter of 2007, but it was "artificial," resulting from the move of Fidelity Investments to The Gateway. That space is already booked with new tenants, he added.

The report indicates because firms are unable to find adequate existing space, the industrial real estate sector in the Salt Lake valley is currently experiencing what one analyst describes as a tight market. Greg Hunter, industrial real estate specialist with Commerce CRG, said a number of out-of-state manufacturing companies are looking to develop large industrial facilities (at least 50 acres) of their own but those properties are becoming harder to find. One exception to the lack of new space is the large industrial sector where 1.8 million square feet of new space has been added since the third quarter of 2006.

The report states that since the third quarter of last year, the industrial space vacancy rate has dropped to under five percent (6.83 percent in 2006 to 4.73 percent in 2007). Similar to the commercial sector, industrial rents are increasing as well, with average lease rates in small- to mid-industrial markets rising between 10 percent to 20 percent annually and is expected to continue into next year.


E-mail: jlee@desnews.com

Recent comments

Sounds like we need more construction slc, not the suburbs....

SLCforlife | Jan. 10, 2008 at 9:43 p.m.

Image
Deseret Morning News Graphic

Salt Lake skyscrapers tower over a rendering of a new 22-story office building in August. The valley is in the midst of an office space explosion.

Related content
previousnext

Latest comments

Hall reprimanded by MWC

Max Hall is not the only BYU affiliate who has harsh feelings against Utah....

I thought his speech was dynamic and "transparent," but like Senator McCain...

Witness: Mitchell wanted attention

The LDS church did not have a prior policy of reporting incest and child...

Obama orders 30,000-troop boost

Yepper's, you betcha, (as Sarah Palin would say), the same DNA is running in...

TCU dominates all-MWC honors

I'm with you, Big Time BYU fan. Well said.

Obama orders 30,000-troop boost

As a Republican, I fully agree with what President Obama has said. Declaring...

BYU says Hall incident resolved

Jorgensen repremanded last week, Hall this week. Wonder who will be next...

KSL is No. 1

I usually watch channel 5 but man all those commercials drive me crazy....

TCU dominates all-MWC honors

I thought Sylvester was an excellent linebacker the past two seasons. I...

Would it have been different if BYU had lost and Max had made such remarks?...

Advertisements