Cushman & Wakefield/Commerce Research Shows Record Breaking Numbers and Positive Trends in Utah’s Commercial Real Estate Market
SALT LAKE CITY, Feb. 11, 2016 –Cushman & Wakefield/Commerce released its 2015 year-end market review which shows an exceptional overall year for commercial real estate in the State of Utah. With a new record set for total annual investment sales and the addition of 48,400 jobs, Utah’s unemployment rate stands at 3.5 percent, a full 1.5 percentage points below the national average.
“There is a reason Forbes has named Utah as the ‘#1 Best State for Business,’ ‘Top Labor Markets’ and ‘America’s Next Boom Towns, America’s Cities of the Future,’” said Trigger Reital, managing director and market leader of Cushman & Wakefield/Commerce’s Salt Lake City office. “Commercial real estate in Utah is solid and has proven yet again why Utah is consistently recognized nationally for its pro-business environment.”
Utah Office Markets
- The Salt Lake office market ended 2015 strong with net leasing absorption near 976,127 square feet, just shy of peak year 2007.
- As the State of Utah outperformed the nation in both job growth and unemployment, Utah County outperformed the State of Utah. Job Growth of 5.2 percent allowed unemployment to decline to just 2.7 percent, and as a result, Utah County was ranked by Forbes as the number one labor market in the U.S. The area known as Silicon Slopes was the most active area for office product in the state and a total of 1.1 million square feet of new construction is expected to be delivered in 2016.
- Although struggling for years with a high vacancy rate, Weber County started to see an improvement in 2015 as the overall vacancy rate dropped from 19.3 percent to 17.9 percent.
- As several new projects were underway, the office market in Davis County saw steady growth over the past year. Vacancy rates dropped from 17.9 percent to 16.3 percent,.
- Washington County’s market showed steady improvement throughout the year, as year-end vacancy dropped below 8.5 percent for the first time since 2007. Washington County was recognized in Money Magazine’s 2015 “Best Places to Retire.” Job growth increased to 2.2 percent over the year exceeding the national average of 1.9 percent. The desire for quality real estate continued to increase in 2015 as 72,156 square feet of office space was absorbed.
- The Summit County commercial real estate market ended the year strong with all sectors reporting less than 5 percent vacancy. The office market continued to tighten as the overall vacancy rate dropped by 2.3 percentage points on a year-over-year basis to just 2.9 percent.
Utah Industrial Markets
- Overall, 2015 was another strong year for the industrial market in Salt Lake County with total investment sales reaching $194 million across 29 properties. Although the National ISM Manufacturing Index fell below 50 in December, warehousing and distribution needs continued to expand as e-commerce sales increase of 15.1 percent. With nearly 2 million square feet expected to be completed in 2016, absorption should remain above the 5-year average
- The Utah County industrial market continued to move in a positive direction with tight supply and strong demand. Over the past year, 433,773 square feet of space was absorbed with 320,165 square feet of that absorption occurring in the Utah County North submarket. This positive absorption dropped the overall vacancy rate by 0.6 percentage points to 5.2 percent.
- The Weber County industrial market continued to stand out as the areas strongest segment. Vacancy rates fell from 5.4 percent to 3.5 percent, with more than 1,000,000 square feet leased in 2015.
- With a vacancy rate of 3.4 percent, lease rates and sales prices increased as Davis County’s industrial market had another strong year.
- The industrial sector in Washington County experienced strong activity in both leasing and sales. The industrial market dropped to a low vacancy of just over 2 percent. The lack of new construction coupled with an extremely tight vacancy rate led to increased rental rates and an acute shortage of lease space and existing buildings for sale in the market.
- Available industrial space in the Summit County industrial market remained at 4.5 percent. With anticipation of several industrial buildings planned for 2016, the demand for space is expected to be accommodated.
Utah Retail Markets
- The Salt Lake County retail market overall vacancy rate dropped by 0.4 percentage points on a year-over-year basis to end at 5.8 percent. The growth in the retail sector allowed Salt Lake County to have another strong year as core retail sales increased by 3.6 percent.
- The Utah County retail market remained strong as the overall vacancy rate declined by 0.9 percentage points to just 4.9 percent. A total of 432,055 square feet of positive absorption occurred in the market with Utah County South and Orem leading the way at 165,963 square feet and 162,537 square feet respectively.
- Retail market lease rates remained steady in Weber County while vacancy rates declined in all property types to 12.5 percent.
- The retail market in Davis County continued to improve throughout year, as vacancy rates declined by 1.4 percentage points on a year-end-basis to end the year at 9.6 percent. It is anticipated that the retail market will continue to expand with the announcement of two major developments in Layton and Bountiful.
- 2015 was a strong year for Washington County retail with 99,000 square feet of new construction space added to the market and vacancy at 5 percent. The retail market will continue to attract attention with two developments under construction and an expected decrease in vacancy rates and increase in lease rates.
- Although retail space availability is minimal near Park City proper, vacancy dropped 1.5 percentage points to 4.3 percent on a year-over-year basis.
Utah Investment Market
- 2015 was a record-setting year for investment sales, with nearly $1.9 billion in total volume, just edging above the $1.8 billion record set in 2014. Compared to other states, investing in Utah continued to be of interest as the state was yet again recognized for its low costs and educated workforce.
You can access the entire 2015 Utah Year-End Market Review HERE.
About Cushman & Wakefield/Commerce
Cushman & Wakefield/Commerce, headquartered in Salt Lake City, Utah is an independently owned and operated member of the Cushman & Wakefield Alliance, with offices throughout Utah, Nevada, Washington and Idaho. The firm partners with its sister company, Cushman & Wakefield/NorthMarq to provide innovative commercial real estate solutions to occupier and investor clients, offering transaction services, capital markets services, occupier and investor services, and real estate advisory.
Together the firms manage more than 52 million square feet of retail, industrial, and office assets, have annual revenues of more than $100 million, and employ more than 750 professionals. Learn more at www.comre.com, and www.cushwakenm.com. Cushman & Wakefield/Commerce and Cushman & Wakefield/NorthMarq are part of the Cushman & Wakefield platform.
About Cushman & Wakefield
The successful merger of Cushman & Wakefield and DTZ closed September 1, 2015. The firm now operates under the iconic Cushman & Wakefield brand and has a new visual identity and logo that position the firm for the future and reflect its trusted global legacy and wider history. The new Cushman & Wakefield is led by Chairman & Chief Executive Officer Brett White and Global President Tod Lickerman. The company is majority owned by an investor group led by TPG, PAG, and OTPP.
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.