SALT LAKE CITY — Utah’s growing technology industry is prompting major development in the area known as ”Silicon Slopes.”
More than 500,000 square feet of commercial real estate property is currently under consideration for development along the I-15 corridor on the border of Salt Lake and Utah counties.
Currently home to high-profile technology firms like Adobe, eBay, IM Flash and Microsoft, the concentrated technology hub is quickly taking shape and bringing with it thousands of high-paying jobs and enhancing Utah’s reputation as a sought-after locale for high tech.
“This area is being turbo-charged by this growth in the tech sector,” said Darin Mellott, senior research analyst for commercial real estate firm CB Richard Ellis. The U.S. Chamber of Commerce last week ranked Utah as the fourth fastest growing state for technology jobs, he said.
“We’re seeing a manifestation of that in the real estate market in terms of lower vacancies, and — for the first time in a long time — a substantial amount of new construction,” Mellott said.
With the Silicon Slopes area market doing so well, the need for additional Class A commercial space is increasing rapidly, he said. There is currently about 800,000 square feet of commercial development, and “that amount could conceivably double in the next few years.”
Market-wide for the Salt Lake Valley, the commercial vacancy rate through the first quarter of 2012 for Class A and B space was around 15.5 percent, Mellot said, an improvement over 2011 first quarter figures of 17.3 percent.
But that pales in comparison to what's going on in the Thanksgiving Point area, which had a vacancy rate of 11.4 percent in first quarter of 2011, but was below 3 percent for the same period in 2012. The national average commercial vacancy rate is 17 percent.
Such demand suggests a need for additional office and retail space, said CBRE senior vice president Eli Mills. He said companies are choosing to locate in the Thanksgiving Point area because it is centrally located between Salt Lake County to the north and Utah County to the south.
“This area is ideally located between the two counties,” he explained. “You also have Brigham Young University, Utah Valley University and the University of Utah — 90,000-plus students to pull from.”
He said once an area begins to establish itself for something like high-tech, then momentum builds leading to more development and eventually more jobs, Mills said. Consider the tremendous growth in the San Jose area as the first regional tech center was developing, he said.
Job growth in the professional and business services sector grew nearly 9 percent nationally during the past 15 months, according to the U.S. Bureau of Labor Statistics. This sector creates demand for new office space — and eventually more jobs, he said.
Mills said the state should focus resources toward providing prospective high-tech employers with qualified applicants for the positions that would likely result from the economic growth.
“For the foreseeable future, we should be able to meet the demand for workers,” Mellot said. “Over the long term, leaders in Utah really have to consider this (issue of human capital).”