Salt Lake office vacancies drop to lowest rate since '01

Salt Lake County's office vacancy rate fell to 11.25 percent in the third quarter — down from 15.75 percent during the same quarter a year ago and reaching the lowest vacancy rate in more than four years, according to a report released Friday by Commerce CRG.

New job growth and in-migration by national companies are helping to fill Salt Lake's 27.3 million square feet of office space, according to Chris Kirk, a Commerce CRG office specialist.

The last time Salt Lake's office vacancy rate was lower was during the second quarter of 2001, when the rate was 10.77 percent. The rates exclude sublease space vacancies, which in the third quarter of 2005 accounted for 1.11 percent of the total market square footage.

The Commerce CRG report noted three significant lease transactions in the third quarter. They were:

• IHC Health Services, which leased 77,518 square feet of office space in the 3Com building in West Valley City.

• Envirocare of Utah, 36,578 square feet at Rio Grande Plaza in downtown Salt Lake City.

• Berman & Savage, 16,587 square feet at 170 S. Main in downtown Salt Lake City.

"Things are very active right now," Kirk said, "particularly in the Class A, premier office space."

Through the first nine months of 2005, the report noted, roughly 360,000 square feet of office space has been added to the Salt Lake market. Another 140,000 square feet is expected to open by year-end.

In 2006, office-construction completions are expected to reach 1 million square feet and could possibly reach 1.6 million square feet.

The report also said that the vacancy rate for industrial space fell to 7.39 percent in the third quarter, down from 9.41 percent in the same period of 2004.

Small industrial space leases, under 5,000 square feet, and large leases, more than 50,000 square feet, have been two active sectors, according to Mike Farmer, associate broker at Commerce CRG.

Of the top 11 industrial parks, the Sorenson Technology Park in West Jordan showed the highest vacancy rate, at 15.03 percent. Commerce Park in West Valley City had no vacancy.

"The sales market," Farmer said, "the people buying buildings, has been very brisk as well."

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