Like a swimmer in the Great Salt Lake, Salt Lake City’s retail market had little difficulty staying afloat in the challenging economic environment of the past few years. With so much growth in the area, including a strong residential market, the retail sector in Utah’s capital city is positioned well as the economy continues to rebound. Overall retail vacancy in Salt Lake County is 6.41 percent with regional malls posting the lowest vacancy figure (2.77 percent) among the different property types.

“The Salt Lake retail market proved just how resilient it is by adding approximately 700,000 square feet to its retail base last year while reducing overall vacancy from 7 percent in 2002 to 6.41 percent in 2003, confirming that it is a vibrant and strong market for retailers and developers,” says Chris Monson, retail and investment specialist for NAI Utah Commercial Real Estate.

Retail developers are building more multi-tenant pads in shopping centers in and around Salt Lake City, a setup aimed at smaller shop tenants instead of the traditional single-tenant pad users such as banks and fast-food restaurants. Low lending rates have contributed to this trend, making it easier for traditional tenants to buy land and build their own pads rather than rely on developers to build-to-suit for them. Also, the investment market is loaded with buyers willing to pay record low cap rates for that type of multi-tenant product. Lastly, “super-box anchor tenants are almost always free-standing with building depths five times greater than small shop tenants, making in-line shop design sometimes inefficient,” says Monson.

Jordan Landing, the 1.4 million-square-foot shopping center in Salt Lake County, has made its presence felt in Salt Lake’s retail market as will the new 739,000-square-foot Meadows regional shopping center project, being jointly developed by Woodbury Corporation and Westfield Properties, in northern Utah County. Kohl’s entry into the market will likely spur the construction of several other new anchored centers in the four-county metro area. Finally, the completion of the new interchange at I-15 and 11400 South, by the Southtowne Mall, will create additional opportunities for community power centers. Plans for a Wal-Mart Supercenter and Sam’s Club have already been announced for the area.

Wal-Mart continues to expand in Salt Lake City, putting a stop to the expansion plans of most other grocery chains, such as Albertsons. “Utah is a non-union state with most communities welcoming Wal-Mart with open arms and little resistance as compared with other states,” says Monson. “Except for Smith’s, most other grocers are waiting it out the next 18 months or more until Wal-Mart has filled in most of its store expansion plans.”

Most retail development is taking place in the high growth residential areas of Salt Lake City. The southwest metro communities of South Jordan, Riverton, Bluffdale and Herriman make for prime locations for new community shopping centers, says Monson. South of the Salt Lake City metro area, the northern Utah County communities of American Fork, Highland, Cedar Hills, Lehi, Saratoga Springs and Eagle Mountain also offer many retail opportunities, as indicated by the Meadows project. In the burgeoning area of West Davis County, north of Salt Lake City, retailers are taking advantage of new market growth between the established regional trade areas of Ogden and Layton.

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