Utah Commercial Real Estate Projected to Face Significant Declines

Jan 09, 2009 by KCPW

(KCPW News) Utah's largest commercial real estate agency reports that vacancy rates for retail and office space in Salt Lake County increased two percent in 2008. Commerce CRG Agent John Owens says Utah's commercial market lags about a year behind national trends, and will face more vacancy in the coming year.

"I think Utah's market historically has, has not gone as high as the general market, nor does it go as low. We are hoping that that continues to be the case. We certainly have a problem, bit it's a problem that is probably more manageable than Las Vegas, Phoenix, markets, but we clearly are going to have some struggles here in the next 12 to 18 months," Owens said.

Owens says strip malls without an anchor store have been the hardest hit, with vacancy rates of more than 15 percent. He says high-end developments have also experienced greater vacancy, and City Creek will most likely face challenges filling retail spots, even with its anchor stores secured. Developments in Sugarhouse and the Cottonwood Mall have delayed construction, which Owens says is actually good for the market, which wouldn't be able to absorb the extra retail space.

Commerce CRG Agent Mike Richmond says the slowing growth of companies has caused office space landlords to offer tenant improvement allowances and other concessions to companies that sign leases. But although growth has slowed, he says national companies are still inquiring about Utah.

"On the positive side we're still about 90 cents on the dollar compared to the national cost of doing business and so a lot of companies that might want to be cutting costs that are located on the west coast or the east coast, Utah now provides the lower cost alternative to doing business. So I think with the troubles in the national economy I think its going to push some companies to take a good hard look at perhaps moving their companies to Utah," Richmond said.

Click here for a link to Commerce CRG's complete year-end report.

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