Utah is in the early stages of a retail downturn, according to a year-end report from real estate brokerage firm Commerce CRG.

Vacancies of retail space in Salt Lake County increased at year's end by 1.9 percentage points in comparison to the end of 2007, with the closures of national and local retailers, the report said. Of the 36.5 million square feet of retail space available in the county, 8.3 percent is vacant, as opposed to year-end 2007, when 6.4 percent was vacant.

"If vacancy is going up, typically you're in a more challenging environment in retail," said Darrel Tate, retail specialist for Commerce CRG.

He noted closures of all locations of Linens N' Things, Mervyns, Harolds, Bally's Total Fitness and Steve & Barry's, as well as closures of some locations of Starbucks, Office Depot and Hollywood Video. Linens N'Things, Mervyns, Bally's Total Fitness and Steve & Barry's have all filed for bankruptcy protection since May.

Commerce CRG analyzes data every six months from an internal database and receives commercial real-estate data from most other large brokerage houses in Salt Lake County, Tate said.

The overall asking lease rates have declined from $21.18 per square foot to $20.95. But those numbers only reflect what landlords ask, not the rates that landlords ultimately negotiate with tenants. These days are a tenant's market, Tate said.

"If you're a retailer looking for space, if you're expanding into the market, any increase in vacancy is typically going to put you in a better position for negotiations," he said.

Meanwhile, several large mall renovations are proceeding, with the exception of the former Cottonwood Mall, which completed demolition in 2008. Construction in downtown Salt Lake City of the new City Creek Center and renovations of Trolley Square and Fashion Place Mall are ongoing. But Cottonwood Mall's owner, General Growth Properties Inc., has said construction is on hold until economic conditions improve.

General Growth, which also owns the Fashion Place Mall, is saddled with huge amounts of debt it took on during the real estate market's boom years when it aggressively bought up assets. Refinancing that debt has proved difficult amid a global credit crunch, and analysts are unsure whether the company's managers will be able to keep the company afloat as the recession drags on and U.S. retailers struggle.

Commerce CRG's report said that Salt Lake County retailers will continue to pull back in 2009, and fourth-quarter sales will impact many expansion plans. More retailers, both national chains and local businesses, will also likely close their doors in the coming year, the report said.

While many retailers are closing shop, grocers in Salt Lake County are expanding. National grocers such as Wal-Mart and Kroger, which owns Smith's Food & Drug, added new locations. Boise-based WinCo Foods Inc. has announced it is entering Utah, starting with a 90,000-square-foot store in the West Valley Pavilion at 2700 S. 5600 West.