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Salt Lake City—The commercial real estate market in Salt Lake City is continuing the year with strong numbers, particularly in rental rates and the high level of new space under construction, according to the latest office market statistics from Cushman & Wakefield | Commerce.
“We are seeing exceptional levels of positive absorption and new construction in the Salt Lake City commercial real estate market,” said Jeff Rossi of the Salt Lake City Office. “In years past, we guided our clients to the best value. While value is still of great importance, we are now guiding our clients toward flexibility and availability due to the tightening of the market. There are more cranes dotting the skyline than we have seen in the suburban market, and with the strength of the local economy, there is no sign of slowing in 2015.”
For a more detailed look at the market statistics, see the infographic at http://bit.ly/1KQi6vW.
Chris Kirk added that “the data highlights several elements trending positively: an increase in the volume of tenants that will be entering or expanding in the market, the increase of rental rates, a continued decline in the vacancy of existing buildings and the rising rate of construction in the valley.”
Strong tenant demand is driving vacancy down in the Salt Lake market as tenants are pushing to expand and control space as they continue to grow. As a result of this ongoing challenge to find significant blocks of available space, rental rates are on the rise. Trending above its historical average, the overall asking rental lease rate across the Salt Lake Valley increased by 3.9% with the strongest growth occurring in the Southeast submarket where rates increased by 5.9%.
The quantity of class A office buildings under construction is pushing historic levels, and the numbers will continue to build over the next six to twelve months. This year, Cushman & Wakefield | Commerce expects just over one million square feet of new construction to be completed in Salt Lake with additional product added as the year continues, with more than a million square feet to be delivered in 2016 as well. Just as exciting is the growth in North Utah County, where the City of Lehi will see 400,000 sf of new construction delivered in 2015 and at least a million sf is anticipated to be under construction by year-end. These positive numbers are fueled by substantial growth with in-state companies as well as organizations that are relocating to Utah in search of access to Utah’s highly productive labor, young and family-oriented workforce.
The CBD is adding another class A tower, 111 Main, to the skyline, with delivery anticipated in Q1 2017. While zero preleasing was finalized when the building began construction in Q3 2014, it is anticipated that the building will be completely preleased by the end of the year. Several developers are clamoring to be the next under construction in the CBD, and we anticipate seeing another building going vertical within the next year.