Salt Lake County real estate market looks good for 2005

Fewer empty office buildings, more retail centers and increasing lease rates are in the forecast for the state's real estate market in 2005, according to professionals at Thursday's Utah Commercial Real Estate Symposium.

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.

The forecast this year calls for continued positive absorption and rising office space lease rates.

The Triad Center purchase by The Church of Jesus Christ of Latter-day Saints likely will force existing tenants to fill empty space in other downtown Salt Lake locations, according to Eric Smith, vice president of office properties for CB Richard Ellis.

"Absorption downtown will also increase, especially in Class A space, as the tenants who have leased space in The Gateway III building move into their finished premises," Smith said. "Moreover, the lack of new building construction downtown will cause tenants to locate and expand into existing space."

Overall, Smith said, Salt Lake's office market will continue its recovery from a three-year decline that began in 2001.

On the retail front, the driving trend this year will continue to be a move from traditional indoor malls to open-air centers like The Gateway.

"The 'de-malling' of retail centers has been popular for several years and will continue to gain momentum this year and next," said David Winnie, associate broker of retail development for Salt Lake-based InterNet Properties Inc. "The lifestyle format will impact every form of retail, from neighborhood to power centers spurred by the popularity of pedestrian-friendly spaces."

Expansion of big-box retailers like Home Depot, Costco, Target, Wal-Mart and Sam's Club will continue in 2005, speakers said.

On the investment front, apartment buildings will continue to be the No. 1 choice for investors, according to Michael Howard of Commerce CRG. Industrial investments also will gain momentum as demand picks up later this year, he said.

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