WESTERN SNAPSHOT, SEPTEMBER 2009

Salt Lake City Industrial Market

1. MARKET MOVES

Reckitt Benckiser just broke ground on the 200-acre Phase I of Miller Sports Park Industrial Development with a $25 million, 650,000-square-foot distribution center. Another project to note is the planned groundbreaking by The Rockefeller Group on a 365,000-square-foot distribution center on its recent purchase of a 71-acre land parcel, which will serve as Salt Lake City’s Foreign Trade Zone site.

 2. MARKET MEASURES

At the end of the second quarter, the total industrial market square footage was more than 110.7 million with an available square footage of 7.6 million, creating a vacancy of 6.89 percent. Big box space in Salt Lake has a 7.29 percent vacancy rate, compared to 5.62 percent in second quarter 2008. Current lease rates are down 2.38 percent from second quarter 2008. The hardest hit industrial segment is in the 0 to 5,000-square-foot size increments, which experienced an 11.54 percent decrease in average rents from second quarter 2008.

The Salt Lake industrial market is down from the record years of 2007 and 2008, both in speculative development and leasing activity. Like most markets, vacancy rates climbed through second quarter of 2009, with approximately 1.5 million square feet of existing product coming back to the market. However, the Salt Lake industrial market is in a strong position in the West with third quarter projections strengthening.

3. THE MARK OF A MARKET

Utah is well located in the Intermountain West, with 1- to 2-day freeway access to all major cities in the western half of the country. Manufacturing and distribution centers have increased in volume, a marked steady growth in Utah during the past 20 years. Utah’s infrastructure is exceptional with extensive improvements to roadways, interstates and the Union Pacific Intermodal HUB stemming from the Olympics, with continuous construction projects. In addition, employee and overhead costs associated with industrial users are lower in Utah than in surrounding states.

— Greg Hunter and Nancy Edwards are industrial specialists at Commerce CRG in Salt Lake City.

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