June 5, 2014

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Northern Utah Regional Report

June 5, 2014

IRELAND: There are about 26,000 employees out of Hill Air Force Base. But the big push that we’ve had over the last year is the P4 program we’ve created with Hill Air Force Base. It’s a public-private partnership where we’re reaching out to the community through Hill Air Force Base and utilizing like assets and combining them. One of the examples is the UTA program. We’re working to enable people to use our great transportation system by allowing UTA to now get onto the base.

The F-35 program is another huge piece that we’ve been able to really solidify. We’ll be getting three squadrons of F-35s starting in ‘15. Some of you have already seen F-35s in the air. Those are some of the first ones that we’ve repaired at the depot, which is another huge contract for Hill. These are the pieces that are going to solidify Hill and make it very viable to stay here in Utah and not worry about the BRACs when they come around.

How is the real estate industry faring?

UDY: I focus on industrial supply chain and logistics. In Davis and Weber counties, vacancies are going down and lease rates are going up. We’ll see within the next couple of years a big boom in the e-commerce industry—we’re working with a couple groups that are looking into Davis County that would be taking down about 80,000 square feet. A lot of those manufacturers are bringing their distribution in house, so they’re needing a bigger facility to accommodate not only manufacturing but their fulfillment.

On a local scale, housing permits are up this year. So suppliers for the housing industry—HVAC companies or tile companies or granite shops—are getting a lot more confidence within this market. So they’re out leasing up space. They’re realizing that rates aren’t going down and vacancy’s going up, and they’re leasing up space when it’s available.

Absorption is right around 600,000 square feet within Davis and Weber counties. Salt Lake County is running out of dirt because of the mountains to the east and the lake to the west. So we’re going to start seeing a trickle effect into Davis and Weber. If there are opportunities for growth, that needs to be right off I-15 and one of those exits there.       

How about office space?

FALK: We’re seeing a lot of new construction. We finally have a new product, which we haven’t seen for the last six or seven years, specifically in south Davis County between Marketplace 2, Legacy Crossing and Station Park. Pluralsight, for example, is bringing on almost close to 300,000 square feet of new space. Pluralsight is one of the up and comers in the tech world, and we were able to keep them in Davis County. They looked outside of Utah, they looked in Utah County. But they picked Station Park, and soon they will finish one of the nicest, newest, most progressive tech spaces in the United States.

In the Ogden market, we haven’t seen any new construction recently. There is talk of a couple of new buildings. But the exciting thing in Ogden, specifically downtown, is that the two newer buildings that attract some of those groups have very minimal vacancy, less than 10 percent, which is well below the market vacancy.

      

WOOD: We’re right in the middle of a paradigm shift where we’re seeing credibility given to Northern Utah. We’ve always competed well with companies out of state coming into Davis and Weber counties, where we haven’t always done so well with our neighbors south of Davis County. With projects like Station Park and the Junction, we’re finally getting people coming north, which is a big deal in overcoming that mental barrier. People were always comfortable going south, but not everybody’s been comfortable going north.

When the recession started, investment was primarily focused on trophy assets in primary cities. And then as things started to progress, we started to see more investment in secondary markets such as Utah. In the last year we’ve seen a real return of the high-net-worth individual investors buying commercial real estate in secondary markets, and a lot of that’s been focused here in Davis and Weber counties.       

TROTTIER: CenterCal Properties is the owner and developer of Station Park. It has been one of those once-in-a-lifetime projects for a developer to come into a community where we’ve been fully embraced and be able to create something that’s really a gathering place for the community. It developed much more quickly in light of the economy than we ever imagined. And today we sit at over 93 percent leased. We have all but one of our buildings under construction. That last building is out for bid; it has a 120-room hotel on top of an additional 30,000 square feet of retail.

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