Green Shoots Emerge for Salt Lake City Market

By Alex Girda, Associate Editor

Salt Lake City’s real estate market showed strong signs of a comeback in  2011 after several tough years, and 2012 shows additional, if modest potential. The office vacancy rate last year dropped from 17.1 percent to 15.3, with absorption reaching a healthy 652,000 square feet , a CBRE Group Inc.  report recently pointed out. That means 2011 doubled 2010’s absorption. Construction has also recorded an uptick, with 481,000 square feet of office space currently in the pipeline, nearly 300,000 square feet of it pre-leased. Projects include the Gateway 6 building in Salt Lake City and the Interchange office building in Draper.

Though CBRE projects that the pace of absorption is unlikely to keep up through 2012, the year ended with a significant volume of deals . A recent press release from the NAI WEST realty company confirms the fact that commercial real estate in Utah  had a fairly solid record in  December. NAI WEST, to name one local firm, closed multiple deals in the office, industrial and retail sectors. NAI WEST arranged a 15,000 square-foot  office lease at Thanksgiving Point, and represented  owner Valley Green Holdings in a 8,259-square -foot lease at Draper Corporate Park.  Highlights of industrial transactions include representing the owner in a 120,000-square-foot lease at Decker Lake Business Center in Salt Lake City, as well as a 114,364-square-foot lease of a former big-box retail building in Midvale.

Also on the horizon this year is an event that is expected to have a major long-term impact on the Salt Lake City real estate market. A March 22 opening is scheduled for City Creek Center, the 700,000-square-foot retail anchor of the $1.5 billion City Creek project. The 23-acre redevelopment will also encompass office and residential components on its three-block footprint.  The retail component is a partnership between the Taubman Co., the project’s developer and owner, and the real estate affiliate of Church of Jesus Christ of Latter-Day Saints, which is leading the overall redevelopment program. As the Deseret News reported, City Creek Center is the only new regional mall scheduled to open this year in the U.S., according to the International Council of Shopping Centers.