Salt Lake sees a drop in industrial vacancy

A surge of new manufacturing activity in the Salt Lake area dropped industrial vacancies to 9.97 percent for the three months ended March 31, down from 10.5 percent in the fourth quarter of 2003.

Greg Hunter, an industrial specialist with Colliers Commerce CRG, said the increased activity will lead to a ripple effect of creating better-paying jobs.

Industrial space includes warehousing, manufacturing and distribution businesses — critical areas that have experienced weakness in Utah and throughout the country. Salt Lake County's industrial space amounts to 97.7 million square feet, nearly twice the combined square footage of retail and office space.

"There are several manufacturing companies looking at our market, which is the first time we've seen manufacturing come back to our market for years," Hunter said. "It's exciting because they need hundreds of thousands of dollars to fit these buildings up to their use, which means labor, electrical, all of these disciplines, plus the equipment."

Of the 850,000 square feet of newly leased space in the first quarter, Hunter cited three significant lease transactions:

• Cabinetry by Karman leased 100,000 square feet of space at 1413 S. 3600 West.

• Sportsman's Warehouse leased the 122,000-square-foot Costco building at 7036 S. 185 West.

• MindsI leased 51,800 square feet of space at 3055 W. 2180 South.

"There is more leasing activity in the bigger spaces," said Bill Martin, managing partner of Colliers, "which has been the weak part of our market."

While the first quarter's industrial vacancy rates are up 0.72 percent compared to the same quarter in 2003, Hunter remains optimistic.

"The second quarter looks very strong," Hunter said. "We are seeing very strong indicators that this year will be substantially better than our two previous years."

His assessment mirrors unemployment numbers released this week by the Utah Department of Workforce Services, which showed 14,900 new jobs in March compared to the same period a year ago. Of the new jobs created, roughly 400 were manufacturing jobs, the first time in six years the sector added more year-over jobs than it lost.

James Wood, director of the University of Utah's Bureau of Economic and Business Research, said over time industrial and office space vacancy rates are driven by employment.

"With the improvement in the job market we're bound to see finally some improvement in both the office and industrial vacancy," Wood said.

Retail vacancy rose to 8.98 percent in the first quarter from 7.3 percent during the same quarter in 2003, still well below the double-digit vacancy rates of two years ago. Salt Lake County's overall office vacancy rate fell to 15.68 percent, excluding sublease space, from the 16.69 percent vacancy rate in the first quarter of 2003.

---

E-mail: danderton@desnews.com