From Deseret News archives:

Increasing vacancies: Demand for office space softens as economy sputters

Published: Thursday, July 3, 2008 12:03 a.m. MDT
 |  E-MAIL | PRINT | FONT + - 
After two years of strong growth, Salt Lake County's commercial real-estate market has been struck by the impact of the sputtering economy.

A report released this week by real-estate firm CB Richard Ellis showed that demand for office space softened in Salt Lake County during the first six months of 2008, compared with the same period a year ago.

The office vacancy rate for Salt Lake County increased to 13.5 percent for the six months of 2008, up 1.7 percent over the 2007 mid-year vacancy rate of 11.8 percent. The increase was also 1.5 percent higher than the 12 percent vacancy rate at year-end 2007.

"The modest increase in overall vacancy reflects some slowing in the Utah economy," said Zion's Bank chief economist Jeff Thredgold. "You've got the rise in energy prices, which are forcing many companies to cut costs wherever they can."

The state's economy is growing at about one third the pace it had been growing a year ago in terms of job growth, he said.

The CB Richard Ellis report said the county had 8,438 square feet of additional empty office space compared with the same period last year.

"That points to the fact that the economic conditions generally have people concerned," said Scott Wilmarth, senior vice president at CB Richard Ellis.

Story continues below
Nearly 1 million square feet of new office space is scheduled to be added to the Salt Lake market by the end of the year, which "is pushing vacancy rates slightly higher and may force landlords to offer concessions as the office market becomes more competitive," Wilmarth said.

Prospective tenants generally lean toward the "nicer, newer buildings," defined as "Class A" office space, and find that concessions make their relocation plans more attractive, he said.

"We still have low vacancy in Class A office buildings, only 7 percent," Wilmarth said. "The suburban market has about 14 percent vacancy for all classes, and a little over 10 percent as it relates to Class A."

He said the overall vacancy rate is still considered healthy, despite the slight rise.

"The concern right now is not that our vacancies are inordinately high, it's that our absorption has moderated to essentially flat," he said. "Companies are not as bullish on occupying more square footage than they had last year."

While overall leasing activity was soft, the report stated that leasing remained strong for premium Class A office space in areas that were outside of the downtown central business district. The suburban office market saw an increase in occupancy in Class A buildings of 197,710 square feet.

Recent comments

They said this would never happen in Utah!!! But then again they...

but... | July 3, 2008 at 8:17 p.m.

I predicted this months ago and got lots of flack. The commercial...

Commercial RE In the Tank | July 3, 2008 at 2:00 a.m.

Image

Office vacancies in Salt Lake County rose slightly in the first six months of 2008 due to the economic downturn.

Related content
previousnext

Latest comments

BYU prof a 'Top Global Thinker'

congratulations on bringing up a very tender subject.I often wondered what...

Prep swim rankings

I love the T Birds. You're going all the way this year. Simply the best....

I'm with you. Neither party truly serves the people or is looking out for...

Why is Y. ignoring spew of hatred?

Do some of you people know how dumb you sound? We have the self-righteous...

Expert paid $500K for Mitchell report

There are attorneys in Salt Lake City who bill $500 per hour. Those who feel...

less than a penny for a .22 bullet

Aggies shoot past Cougars

Until BYU wins a NCAA tourney game they have no room to talk trash in...

Utah court rules against coal plant

Too bad that at my home here in Richfield, unemployment is sky high, and we...

You know they might prosecute the hackers or the leakers, but the information...

Letters: Not all Muslims the same

You are an ignorant bigot. Using that kind of logic, there are 12 million...

Advertisements