Finding top-flight office or retail space in the Salt Lake Valley is becoming increasingly difficult, and it seems the same can be said for class B and C space as well.
The most recent figures show the vacancy rates for class C space dropped 6.1 percent from the third quarter of 2006 to the same period in 2007, while class B vacancies have increased slightly.
"Within the last year some class C has been updated and renovated like the Walker Center," said Eric Smith, office specialist with CB Richard Ellis. "With the renovations that have been done, (the Walker Center) is now a class B building."
Smith describes class A space as new, high-end property. Class B is defined as a step below class A with fewer amenities and needing updating. Class C is older buildings that have had little maintenance and need high-level updating.
He said because the local economy is strong, tenants are picky about the space they are leasing and occupying.
"Along Main Street, the product that you see empty is the single-level, older retail space," Smith said. "Those buildings because of their age, because (property owners) haven't been fixing them up, and because of a lack of parking have remained vacant."
Increases in some vacancy rates can be attributed to the relocation of major central business district tenants like Fidelity Investments to The Gateway and the loss of some space due to the City Creek Plaza downtown redevelopment project.
"Some of the vacancy is just because (space) hasn't been filled by a new tenant yet," Smith said. "There are tenants who are looking to back-fill that class A space having signed leases or letters of intent, but until it gets occupied it shows up as vacant space."
CB Richard Ellis reports retail vacancies for the northeast area of the valley, which includes downtown Salt Lake City, was 5.1 percent in the second quarter of 2007 slightly lower than the 5.2 percent for the first quarter of this year.
Though commercial vacancies in the central business district are becoming less common, the city is still fighting a battle to lure more people to the downtown retail areas during non-business hours. Analysts say because few people live downtown as in other big cities, it is harder to attract retailers to fill available vacant storefronts.
"Our downtown isn't a 24-hour downtown yet. (Salt Lake City doesn't) have the residential component, but it's coming," said Mike Richmond, associate broker with Commerce CRG. "We're actually adding quite a few new residential units to downtown."Smith said he expects the City Creek project to have a positive impact on the overall retail and commercial space situation downtown.
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