Utah recovery solid in '04

Fewer empty office buildings and a large drop in industrial vacancies signaled a solid economic recovery in 2004, according to a new report.

Office vacancies in Salt Lake County, excluding sublease space, fell for the third consecutive year in 2004 to 15.25 percent, down from 16.69 percent a year earlier, according to Salt Lake-based Commerce CRG.

But perhaps the biggest news was a more than two percentage-point drop in Salt Lake County's industrial vacancy rate, ending the year at 8.49 percent compared to a 2003 rate of 10.50 percent.

"That decline is a reflection of what has gone on in the last year in Utah's job market," said James Wood, director of the University of Utah's Bureau of Economic and Business Research. "We have 3,100 more people employed in manufacturing this November (2004) than we did last November (2003). That's quite significant."

Industrial space includes warehousing, manufacturing and distribution businesses — critical areas that have witnessed massive layoffs in recent years. Salt Lake County's industrial space amounts to 98.2 million square feet, nearly twice the combined square footage of retail and office space.

Bill Martin, co-managing partner of Commerce CRG, said 2.5 million square feet of industrial space was absorbed in 2004, the second-highest level in eight years.

The retail sector was the only area posting higher vacancy rates in 2004, at 7.97 percent, up from 7.33 percent a year earlier.

Four mega-retail projects are scheduled for construction in 2005, each 75 acres to 100 acres large. They include The District at South Jordan, Pebble Creek in Sandy, Rose Creek Crossing in Riverton and West Bountiful Crossing.

Martin said he was optimistic about Gov. Jon Huntsman Jr.'s announcement Wednesday that he would bring the state's economic development division under the governor's office.

"He's going to work real hard to try to attract quality tenants from outside the state of Utah," Martin said. "There are lots of companies looking at Utah but haven't landed. I think they will this year."

A separate report by NAI Utah said the state's commercial real estate investment climate is healthy in all areas.

"Nationwide, the demand for investment real estate has gone up significantly over the past few years," the NAI report said. "The California investment market has been so competitive that many investors are now looking to Utah in order to obtain higher returns."

"The good news is I think we are now going into a job recovery," Martin said. "That, combined with the optimism in the marketplace, has created a situation where tenants will take additional space."

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