"How about them Salt Lake office buildings!"

Paraphrasing Utah Jazz voice Hot Rod Hundley, that's the way Coldwell Banker's John D. Longaker on Thursday characterized downtown Salt Lake City's absorption of 334,000 square feet of office space last year - an impressive 300 percent increase that dropped the vacancy rate to 19.3 percent.One of several speakers at Coldwell Banker Commercial Real Estate Services' annual real estate forecast luncheon, Longaker, office specialist for the local Coldwell Banker office, said the clamor for office space downtown can be attributed to pent-up demand and a feeling by corporate decision-makers that the downtown market bottomed out in 1988 and rental rates were as good as they'll ever get.

Despite the success downtown, Longaker said suburban office buildings performed way below expectations, absorbing only 181,000 square feet and leaving a 24.1 percent vacancy rate.

"Realistically," Longaker told the gathering at the University Park Hotel, "with our vacancy rates still exceeding the national averages by three percentage points, lease rates will not climb back quickly. Since very few new buildings are coming on line in '89, absorptions will far exceed completions, and vacancy rates will continue their downward trend."

He said this could put some upward pressure on effective lease rates at the end of 1989 or shortly thereafter.

Tenants will continue to sign leases in quality buildings in the most desirable locations with the most credible owners, said Longaker, adding that local landlords should continue to see "fallout" from businesses locating in California that are "fed up" with the explosive growth in that state.

"State government should find a way to exploit this resource as they attempt to deliver on campaign promises of economic development," he said.

Longaker predicted office absorption this year will fall to about 400,000 square feet valleywide, with downtown taking the larger share. He said several new buildings will start construction during the year, all with a successful pre-leasing program or a "rock-solid developer and lender."

Speaking on the residential market, Mark Handy said 1988 will be remembered as the year the real estate market rebounded as the number and size of sales increased steadily with December closings 46 percent ahead of the previous year.

But new construction starts were way down, said Handy, off nearly 25 percent from 1987. One bright spot, however, were starts on properties valued at more than $175,000, which increased more than they have in eight years.

Despite the current inventory of homes being down 12 percent from a year ago, Handy said buyers continue to enjoy a large selection. Sellers this year will again face stiff competition from bank and corporate-owned housing, particularly HUD and VA homes in the $40,000 to $80,000 range.

Park City enjoyed one of its most active markets since the 1970s last year, said Handy. "Realistic" prices have returned to Park City, he said, and there is more construction of single-family homes there now than in the past five years. Inventory in that segment, he said, has been seriously depleted in Park City.

Overall, said Handy, look to 1989 for a continued plentiful supply of affordable homes "competing for informed, cautious and patient buyers." He said construction should show a slight increase this year as home values remain constant with "light appreciation" in "preferred" areas. He predicts a four percent increase in sales.

Rad Dye, speaking on the industrial real estate market, said there were more large increments of space leased or sold last year than in the past three years combined. The bad news for building owners, he said, is that lease rates were at the same level as 10 years ago.

While building sales to users were strong in '88, prices per square foot were below reproduction costs in most cases as buyers got "exceptional deals." There was virtually no speculative building of industrial space last year.

Dye predicted a slow upward trend to a healthier industrial real estate market in 1989 with no dramatic increase in the next 12 months.