SALT LAKE CITY — After months of steady economic growth in various economic sectors, the Beehive State is poised to continue the upward trend — at least into next year, analysts believe.
Speaking Wednesday to an audience of commercial real estate professionals at the Grand America Hotel for the CBRE 2019 Market Forecast, Darin Mellott, CBRE director of Americas Research, said Salt Lake City's economic position is "relatively positive" compared to other regional metropolitan areas. He pointed to strong employment and high demand in the real estate market among the reasons for optimism in the coming months.
Mellott noted, however, the lack of qualified job candidates is creating concern in the local employment sector.
"We're not producing enough people out of our universities to supply the (demand)," he said. "We're going to be increasingly more dependent on our ability to attract talent into the state."
He said some of Utah's economic development efforts aimed at attracting companies to the state should be shifted to attract talented workers to fill the openings created by those firms.
"We need to make sure people understand that Utah is a great place to live, work and play," Mellott said. The same challenges the Wasatch Front is facing are the same challenges seen elsewhere, he said.
CBRE is a Los Angeles-based commercial real estate and investment firm with offices worldwide, including downtown Salt Lake City.
For the past few years, Utah has been among the states with the lowest jobless rates in the nation. While that continues to be the case, lack of qualified talent could create a problem for employers seeking to grow their companies and the state's overall economy, he said.
CBRE chairman of Americas Research and senior economic adviser Spencer Levy suggested that creating diverse, hip areas near universities could help cities like Salt Lake develop a new perception that will retain smart, talented young Utahns and help attract a new population of innovators and qualified candidates to the Beehive State.
"Double down on the major universities and the quality of your talent and jobs will come, and the virtuous cycle will be created for local businesses as well," he said.
One of the other topics of discussion was the planned development of an inland port to be located in Salt Lake City's northwest quadrant. Once completed, the project would "no doubt be a positive for the economy," Mellott said.
"It would certainly be a positive for real estate markets, jobs and a lot of other (sectors)," he said.
Levy noted that while global shipping volume on water is much greater than on land, the value of products shipped via air is exponentially higher, which would bode well for a proposed inland port in a metro area like Salt Lake City, which is undertaking a multibillion-dollar expansion of its international airport and has railroad access.
"By putting an inland port here in Salt Lake City, you're going to bring more value-add goods here," he said. "While the rail element is important, the airplane component is much more important."
"Having direct flights between your market and markets that you want to be associated with is enormously important for the flow of money and the flow of talent," he added.
Mellott said there will be "no silver bullet" to provide all the answers for the area's economic concerns, but the essential elements are present to help its leaders achieve their broader goals for economic growth and long-term sustainability.
While the general tenor of the discussion was upbeat, Levy cautioned those in attendance that economies typically run in cycles and a slowdown is expected after years of continuous prosperity.
"We've been predicting that the next recession is two years away for the last five years," he said. "The economy has outperformed from a resiliency standpoint that has surprised most economists in the world."
He noted that recently there have been "objective signs of risk," including rising interest rates and inflation on a macroeconomic level, along with declining rent growth in the office real estate and multifamily sectors on the micro level.
"At the same time, we're seeing outsized growth in the economy overall," Levy said. "This is going to be the first year since the (global financial crisis) that we've grown by over 3 percent."1 comment on this story
He added that increased demand in commercial real estate has put the industry in a position of strength heading into the upcoming year, particularly in Utah. While Mellott noted that the state could be impacted if the U.S. economy falters sometime in the next year, he said he is still upbeat about the coming 12-month period.
"I'm very confident in this market's ability to rebound," he said. "There are plenty of reasons be optimistic over the short term, and I'm very bullish on the resilience of this market."