FEATURE ARTICLE, DECEMBER 2008

SIZING UP THE SLC
Commerce CRG experts give their perspectives on Salt Lake City’s commercial sectors in 2009.

• Investment

- The overall volume of investment property transactions will be down sharply from prior years, due mostly to fewer institutional buyers and more expensive financing costs.

- Prices for sellers will soften, and buyers will seek and obtain higher returns on real estate investments.

- The Salt Lake investment market and the city’s diverse economy will provide more stability for investors than many western markets.

— Brad Baldwin, commercial investment properties 

• Office

- First Class A building in downtown Salt Lake City in more than a decade to be completed in 2009. A response to the historically low Class A downtown vacancy rate of 3.9 percent, the 22-story, 450,000-square-foot building will be completed in the fourth quarter 2009.

- With the exception of downtown’s new high rise, new construction completions in 2009 will be less than half of the previous 10-year average.

- Negative job growth slows office market: Year-over-year job growth reached a record high of 54,000 jobs just 1 year ago and is now going to be negative in 2009. This will likely lead to negative absorption of office space, increased leasing concessions by landlords and attractive subleasing options for tenants.

— Mike Richmond, leasing and investment specialist

• Industrial

- Overall, lease rates were up 10 percent across the board over third quarter 2007.

- Activity levels are down slightly due to corporate indecision and lender uncertainty.

- Salt Lake has avoided any major tenants taking flight out of the market, which has been the pattern in previous downturns.

— Craig Kaminski, industrial specialist

• Retail

- General Growth’s planned redevelopment of Cottonwood Mall in Salt Lake City has been put on hold. Other regional mall redevelopments/expansions are moving forward including City Creek Center, Trolley Square, Valley Fair Mall and Fashion Place Mall.

- New retail construction (excluding regional malls) will post the lowest volume in 5 years. While in part due to the economic climate, new construction levels are more reflective of typical retail construction cycles. Focus in 2009 will be on occupancy versus new development. 

- Retail market in 2009 will be a tenant’s market after a number of years as a landlord’s market.

— Darrell Tate, retail and land specialist

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