Few office vacancies in Dixie

ST. GEORGE — Home prices may have cooled off in Utah's Dixie, but the market for office, retail and industrial space grew in 2006, according to a year-end report released by Commerce CRG.

"Washington County is finally coming into its own; I think we're on everybody's radar now," said Mike Hillis of Commerce CRG, who commutes between offices in Las Vegas and St. George. "The retail and industrial segment has shown strong growth, and that's a good sign. It's really the tip of the iceberg. Several major retailers will be announced within the next six months."

The Commerce CRG report and others like it will be presented today at the Washington County Economic Summit, a yearly event that attracts standing-room-only crowds to the Dixie Center. More than 850 people registered for the sold-out event that highlights the economic news of the previous year and shares expert projections for the upcoming months.

The commercial real estate market is one category that remained strong in 2006, according to the report, which cites low vacancy rates across the board.

Retail growth in Washington County included several national chains including Kohl's, Sportsman's Warehouse, Olive Garden, Iggy's Sports Grill and second locations for Home Depot and Staples. Vacancy rates were at a low 3.5 percent, according to the report.

Among the major retailers announcing plans to expand into Washington County are Roberts Arts & Crafts, Chico's, Coldwater Creek and a Borders bookstore.

"There is somewhat of a lag or delay between residential growth and retailers recognizing the need to be in an area," said Hillis. "Washington County has kind of been behind the curve."

Office vacancy rates ended the year at 7.5 percent, with new construction poised to add 97,000 square feet to the market.

And just over a half-million square feet of industrial space is under construction in Washington County, with another 400,000 square feet in the planning stages. Vacancy rates are hovering at 3 percent, the report noted. Lease rates are also expected to increase in 2007 because of higher land costs.

Multifamily rental projects with at least 10 units under one management reported an extremely low vacancy rate of 2 percent. Rental rates remain competitive, according to the report, with a one-bedroom, one-bath unit renting from $450 to $725 per month.

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E-mail: nperkins@desnews.com