Ravell Call, Deseret News
SALT LAKE CITY — Salaries in Salt Lake County may rise only 1.9 percent next year as the area's economy slows and unemployment rises, the Salt Lake Chamber of Commerce said in its 2012 economic outlook.
Salt Lake employment growth rate will slow to 1.2 percent in 2012 from 2.3 percent this year, economists from the Salt Lake Chamber and CBRE Group Inc., a real estate services firm, reported. Growth rates in wages and salaries will also decline to 3.9 percent from 4.3 percent in 2011. Salt Lake County unemployment will rise 0.2 percent to 7.0 percent. The county's slower returns come as Utah's economy improves.
"In an environment where 2012 is still a recovery year, Salt Lake County will lag behind the state in terms of economic performance," said Natalie Gochnour, executive vice president and chief economist at the Salt Lake Chamber.
Gochnour said strong economic headwinds and an election year will cause uncertainty in the economy.
"We're essentially saying that where that is felt most acutely is the economic center of the state, and that is Salt Lake County," Gouchnour said.
In a worst-case downside scenario, growth in wages and salaries could fall as low as 1.9 percent, the group said. Even with slow county growth, the region is outperforming national averages. The report shows the U.S. unemployment jumping to 9.3 percent, a raise of two-tenths from 2011. Salt Lake's unemployment would remain 2 percent less than the national average.
The financial services sector in Salt Lake County will likely decline in the coming year due to the economic crisis, which will hurt the local economy, Gochnour said.
The slowing growth isn't keeping the county from being a strong economic force in the state. More than 590,000 employees work in Salt Lake County, according to Utah's department of workforce services.
That makes the county's workforce the largest in Utah.
"The Salt Lake metro area's economy is one of the most vibrant in the nation and maintains a tremendous amount of potential for the future," economists said in the report. "The keys to continuing this momentum lie in the hands of policy makers in both Europe and Washington D.C."
Projects including the National Security Agency's new data center in Bluffdale and the City Creek Center in downtown will add construction employment.
The condition of Salt Lake's real estate, specifically office, industrial and retail properties, is heavily swayed by macro-economic factors, said Darin Mellott, a research analyst with CBRE in Salt Lake City.
In 2012, 354,000 square feet of office space will be filled because of job growth, the report said. Because new space is entering the market, vacancy rates will level off at 15.7 percent in 2012 from 15.3 percent in 2011.
Industrial real estate doubled in 2011, jumping from 852,710 square feet in the first quarter of 2011 to more than 2 million so far this year. Nationally, construction contributed 5 million square feet to the industrial sector, meaning projects in Salt Lake County made up 40 percent of the total, according to the report.
"We have one of the lowest availability rates in industrial for the country and a sound economy," Mellot said. "That's making the Salt Lake market a very attractive place for developers to develop that kind of product."
Industrial real estate isn't the only sector bolstering Salt Lake's economy.
Major retailers, including ones at Salt Lake City's City Creek Center, could help raise Salt Lake's economy, Mellot said.
Retail sales rose to nearly 7 percent in 2011, a more than 3 percent point increase from last year.
Though the state's economy is much stronger than the national average, there are significant short-term challenges ahead, according to the report.
Housing sales have dropped 40 percent since 2006 and home values have also shrunk 20 percent from 2007 highs.
"Housing will only improve as existing inventories, including foreclosed homes, are worked out of the market and the broader economy improves," Chamber of Commerce and CBRE analysts said in the report.
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