Cushman | Wakefield | Commerce recently has published its most recent MarketBeat Snapshot for Salt Lake City detailing the state of the market for third quarter 2013. The Salt Lake City Market has shown strength throughout Q3 of 2013. Office vacancy rates have decreased and overall effective lease rates have remained strong or increased across market segments.
“In terms of commercial real estate investment, Utah is on pace to break the $1 billion mark for the first time since 2007,” said Michael Lawson, president and CEO of Cushman| Wakefield| Commerce. “We are seeing a flood of institutional money coming into the state, driving larger and higher quality transactions.”
Despite some concerns with the overall U.S. economy, Utah continues to perform well with an unemployment rate of just 4.7%. Trade, Transportation and Utilities led all categories with 10,500 new jobs added over the past year while Information jobs had the highest percentage growth at 12%. The Salt Lake Valley has enjoyed a 31% increase in tech employment over the past 10 years tracing to large scale expansion in the area by top Silicon Valley companies such as Adobe, Electronic Arts and Twitter.
SALT LAKE CITY OFFICE
The Salt Lake City Office market has shown great strength throughout Q3 with vacancy rates trending downward at a healthy rate. The office market has been able to successfully absorb space while seeing multiple construction projects emerge. Direct asking rates have dipped slightly by 1.7% from the same quarter in 2012.
Absorption continued to track well above its ten-year average of around 700,000 square feet with year-to-date absorption at 983,104, the highest level of positive absorption since 2007, the majority of which occurred in class A and B products. The CBD and Periphery market year-to-date absorption at 219,926 square feet representing over 22% of the total market, the highest level of positive absorption since 2010 in these submarkets.
Vacancy rates have continued to trend downward at a healthy rate from 14.8% in 3Q 2012 to 12% in 3Q 2013. Currently positive absorption will outpace construction and put downward pressure on vacancy rates; at 12%, direct vacancy rates are the lowest they have been since 2007. These rates are forecasted to continue to decline within the next 12 months.
Although direct full service average asking lease rates dipped by 1.7% from Q3 2013 to $20.05 per square foot per year, this was mainly attributable to high-end space leasing.
The total volume of investment dollar transactions within Utah has increased over the past year, even as the total number of transactions has decreased, as a result of more high valued assets being traded. Office sales have performed very well in Q3, comprising 62% of the total transactions and 40% of transactions on the year.
All full reports for all markets, as well as historical reports are available for download Here
Timing is impeccable for the introduction of the 111 Main Office Tower offering 440,000 square feet of Class A office space. As increased vacancy rates and positive absorption reflect fewer office space options, 111 Main will meet this demand and provide companies with a superior option with its innovative design, LEED Gold environmental standards, floor-to-ceiling glass, and location in the heart of one of the strongest business centers in the country. Pre-leasing opportunities are available on this exclusive downtown project.