Research & Forecast Report

SALT LAKE COUNTY | OFFICE

Mid-Year 2019

Office Snapshot Market Indicators

Relative to prior period Current Year Over Year
Downtown Salt Lake City is in the midst of an office market
revitalization. While some companies are repurposing old VACANCY 8.30%
industrial spaces into cool, modern offices, others are looking
to more nontraditional spaces. 95 South State Street is under YTD ABSORPTION 703,304 SF
construction and Phase 1 of INDUSTRY SLC is set to deliver
300,000 square feet of nontraditional/coworking office space CONSTRUCTION* 2,264,777 SF
in the Granary at the end of the summer, creating a fresh new
community and expanding the Salt Lake City urban core RENTAL RATE** $25.22 FS

Vacancy is down from 9.04 percent in the second quarter of *Change in under construction
**For existing product — does not include asking rents currently under construction
2018 to 8.30 percent currently, following a pattern of overall
decline over the last six years. Although leasing velocity has
slowed slightly this quarter, investor appetite has steadily
increased in the market.
Under Construction
New construction continues to be absorbed at record rates. 2,264,777 Total Square Feet
Large preleases that have occurred so far this year, like that of
0% 3%
Divvy and Ivanti, will only be marked as positive absorption
once they occupy the space. Construction increased from 25% Central Valley West
1,660,086 square feet last quarter to 2,264,777 square feet Draper
currently, and Draper and the Central Business District 29%
Sandy South Towne
account for more than one third of current construction
projects. As out-of-state businesses look to Utah as a viable South West Valley
option for relocation or expansion, Salt Lake County is seeing Sugarhouse
an increase in tech presence, especially in the downtown 11% West Valley/Lake Park
market where there’s a walkable and vibrant entertainment
CBD
community centered around business. 14% 13% Union Park
5%
Historical Vacancy Rates
By Class
13.60%
13.22%
13.14%

12.71%
12.43%

11.44%
11.19%

10.90%
10.32%

10.02%

9.91%
9.88%

9.88%
9.81%

9.81%

9.69%
9.04%
8.67%

8.64%
8.60%

8.30%
8.06%
7.60%
7.43%

7.40%
7.35%
7.27%

6.74%

2013 2014 2015 2016 2017 2018 2019

Class A Class B Class C Overall

1 Salt Lake County Research & Forecast Report | Mid-Year 2019 | Utah | Colliers International
Research & Forecast Report

SALT LAKE COUNTY | OFFICE

Mid-Year 2019

Lease Rate Activity

Available Class A space is limited, so many tenants are instead preleasing buildings that are under construction — where overall
asking lease rates have reached a much higher $33.65 full service. Existing Class A product saw a decrease in lease rates only because
the remaining Class A space on the market is being overlooked by tenants as they choose to lease ideal new construction. Overall
average asking lease rates have steadily increased over the last seven years and will continue as completed projects demand higher
rates.

Significant Transactions Lease Rates

Leasing/Sales Activity YTD 2019 Under Construction Averages

$45.00 $42.00 $42.00

Square Feet Submarket Tenant/Landlord Leased/Sold
$40.00
$33.65
Sandy South $35.00
250,000 Sterling Realty Sold $28.07 $29.24 $28.45
Towne $30.00
$25.00 $21.00
Central
152,716 Temkin Bridge Sold
Valley West $20.00
$15.00
151,330 Draper SWN Holdings Sold $10.00
$5.00
100,000 Draper Divvy Pre-leased $0.00

Sandy South
58,689 Deeproot Leased
Towne

Historical Lease Rates (FS)

By Class

$35.00
$29.52
$28.94
$27.36

$26.48

$25.65

$25.22
$24.81

$30.00
$24.55

$24.48
$23.66
$23.45

$23.19
$22.40

$22.21
$22.06
$21.05
$20.42

$20.34
$20.10

$25.00
$19.42
$18.71

$18.61

$17.98
$17.39
$17.37

$17.31
$15.54

$15.22

$20.00

$15.00

$10.00

$5.00

$0.00
2013 2014 2015 2016 2017 2018 2019

Class A Class B Class C Overall Linear (Overall)

2 Salt Lake County Research & Forecast Report | Mid-Year 2019 | Utah | Colliers International
 Research & Forecast Report

SALT LAKE COUNTY | OFFICE

Mid-Year 2019

Market View
By Submarket
SUBMARKET CLASS INVENTORY VACANCY RATE YTD ABS LEASE RATE
Airport/Intl A 0 0.00% 0 -
Airport/Intl B 868,350 5.52% 14,697 $22.44 Product Type
Airport/Intl C 615,150 10.26% 19,673 $20.95
TOTAL 1,483,500 7.48% 34,370 $21.76
CBD A 3,945,672 8.50% 119,021 $30.56 Class A: Most prestigious buildings competing
CBD B 3,664,009 17.20% (100,231) $33.35 for premier office users with rents above
CBD C 1,768,278 13.31% 97,998 $20.97
TOTAL 9,377,959 12.81% 116,788 $30.40
average for the area. High quality standards
Central Valley East A 0 N/A 0 - and finishes with state of the art systems and
Central Valley East B 1,252,319 5.27% 61,917 $19.86 exceptional accessibility.
Central Valley East C 656,458 7.44% (26,888) $15.26
TOTAL 1,908,777 6.02% 35,029 $18.01
Central Valley West A 934,555 6.09% 61,826 $27.87 Class B: Buildings with a wide range of users
Central Valley West B 743,146 7.43% (1,958) $20.35
Central Valley West C 376,454 10.58% 3,184 $14.35 with rents in the average range for the area.
TOTAL 2,054,155 7.40% 63,052 $21.54 Building finishes are good for the area and
Cottonwood A 2,198,733 10.50% 100,767 $30.67
Cottonwood B 95,190 11.04% 0 $25.25
systems are sufficient.
Cottonwood C 22,752 13.95% 0 $15.00
TOTAL 2,316,675 10.55% 100,767 $29.62 Class C: Buildings that compete for tenants
Draper A 1,962,487 1.30% (450) $21.86
Draper B 1,187,235 6.62% 28,549 $26.77 requiring functional space at rents below the
Draper C 310,035 0.46% 3,484 $21.95 area average.
TOTAL 3,459,757 3.05% 31,583 $25.42
Foothill A 0 N/A 0 -
Foothill B 219,230 3.68% 1,021 $20.50
Foothill C 155,883 N/A 5,282 -
TOTAL 375,113 2.15% 6,303 $20.50
Interchange A 0 N/A 0 -
Interchange B 0 N/A 0 -
Interchange C 488,237 0.25% 25,432 $13.00
TOTAL 488,237 0.25% 25,432 $13.00
Research Park A 404,005 0.00% 0 -
Research Park B 489,616 0.59% 12,727 $21.00
Research Park C 110,564 3.76% 394 $22.70
TOTAL 1,004,185 0.70% 13,121 $21.85 Market View Map
Periphery A 1,095,438 7.87% 52,671 $27.20
Periphery B 1,737,338 14.15% (40,476) $23.79 By Submarket
Periphery C 587,623 4.25% 17,299 $19.09
TOTAL 3,420,399 10.44% 29,494 $24.22
Sandy South Towne A 3,634,858 5.57% 111,237 $25.88 INTL CENTER
Sandy South Towne B 1,130,525 3.83% 71,149 $22.00
Sandy South Towne C 127,136 5.74% 23,761 $14.24 CBD
TOTAL 4,892,519 5.17% 206,147 $24.09 PERIPHERY RESEARCH PARK

South West Valley A 363,069 10.93% 24,900 $21.80

SUGAR
South West Valley B 50,812 0.00% 0 - HOUSE
FOOT
WEST VALLEY HILL
INTERCHANGE

South West Valley C 0 0.00% 0 - LAKE PARK

TOTAL 413,881 9.59% 24,900 $21.80
Sugarhouse A 183,641 0.00% 3,299 - CENTRAL
Sugarhouse B 330,026 14.42% 2,643 $23.22 VALLEY EAST
Sugarhouse C 283,057 12.16% (10,878) $21.08
TOTAL 796,724 10.29% (4,936) $21.95
UNION PARK
Union Park District A 285,652 8.95% 42,664 $26.53 CENTRAL VALLEY WEST
COTTON
Union Park District B 1,645,567 9.93% (5,020) $22.44
WOOD
Union Park District C 294,433 16.64% 20,322 $18.51
TOTAL 2,225,652 10.70% 57,966 $21.69
West Valley/Lake Park A 317,511 9.43% (17,485) $22.46
SANDY SOUTH
West Valley/Lake Park B 2,310,642 5.35% (12,599) $20.52 TOWNE
West Valley/Lake Park C 493,026 6.23% (6,628) $16.65
TOTAL 3,121,179 5.90% (36,712) $20.24 SOUTH VALLEY WEST
Overall Class A A 15,325,621 6.74% 498,450 $26.09
Overall Class B B 15,724,005 9.69% 32,419 $23.19
Overall Class C C 6,289,086 8.64% 172,435 $17.98 DRAPER
OVERALL 37,338,712 8.30% 703,304 $25.22

3 Salt Lake County Research & Forecast Report | Mid-Year 2019 | Utah | Colliers International
 Employment Growth
Salt Lake County’s job growth rate is consistently among the best
in the nation, up 2.4 percent year-over-year compared to 3.1
percent statewide and 1.8 percent nationally. That’s an increase
in 17,124 jobs, mostly in the trade/transportation/utilities
sector. Salt Lake County has the highest wages in the state, and
unemployment has essentially plateaued at a low of 2.8 percent
in Salt Lake County and 2.9 percent in Utah, compared to a
national average of 3.6 percent.
Population
Utah has a strong internal birth rate that increases the statewide
population year-over-year, but a steady increase in immigration
over the last several years is having more of an impact than ever
before. For the past several years, economic growth in Utah has
added between 40,000 and 60,000 people to the state each year,
with an annual population growth rate of 1.9 percent.

Source: Utah Department of Workforce Services Source: Utah Department of Workforce Services

FOR MORE INFORMATION CONTRIBUTORS

Megan Grangroth Kathy Sturzenegger Annastasia Kaessner Rusty Lugo

Office Research | Utah Communications Coordinator Associate Vice President
+1 801 453 6822 +1 801 947 8300 +1 801 441 5921 +1 801 947 8377
megan.grangroth@colliers.com kathy.sturzenegger@colliers.com annastasia.kaessner@colliers.com rusty.lugo@colliers.com

Colliers International | Utah

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