SALT LAKE CITY, UT--(Marketwired - Jul 28, 2016) - The commercial real estate market in Utah is very strong at the mid-year mark, according to the second quarter Marketbeat Snapshot reports from Cushman & Wakefield/Commerce.
"Investment in Utah commercial real estate just broke yet another record," said Trigger Reital, market leader and managing director of the Cushman & Wakefield/Commerce Salt Lake City office. "For the first time in history, sales volume in Utah has surpassed $1 billion at the mid-year point. This strong momentum is reflected in strong industrial and retail sectors and in the case of the office market, vacancy dropped to 9.5 percent, which is the first time in more than a decade that it has fallen to below the 10 percent mark. This is particularly notable given that seven million square feet have been added to the market over the past decade."
Office Market Reports
According to the report, Salt Lake's office market tightened significantly, although increasing sublease availability offset some reductions in vacancy. Direct vacancy dropped 1.0 percentage point year-over-year to 9.5 percent; marking the first time in over a decade it fell below 10.0 percent. In the Salt Lake City CBD, vacancy is expected to tick up once 111 Main adds 440,452 square feet to the downtown market later this year; however, this increase will be short-lived as tenants are slated to fill and backfill available space quickly. Salt Lake's suburban markets remained strong with an overall vacancy rate of 10.7 percent. Northern Utah County continued its strong development with nearly 700,000 square feet of Class A office space completed during the second quarter alone, with another 500,000 square feet planned for completion later in 2016. Looking forward, asking rents will see a steady increase throughout the market, year-end absorption will finish above historical averages and new supply will surpass 1 million square feet by year-end for the first time in eight years. Full report: http://www.comre.com/uploads/reports/p1ao4e33of1vv01rqn1v4v1i7l1cmq3.pdf
Investment Market Report
Utah's investment market is on course to set a new investment sales record for the third straight year. Investment sales are up 12 percent year-over-year and for the first time in the history of the state, investment sales volume has surpassed $1 billion at the mid-year point. Cap rates have also set a new mid-year record of 6.38 percent; a year-over-year drop of 94 basis points. While the number of transactions is about in line with 2015 figures, the average deal size increased 8 percent. Utah's market fundamentals are among the strongest in the nation, and investors are finding that local returns tend to outperform other markets. Full report: http://www.comre.com/uploads/reports/p1aomun8nh7raii2hqv10euc173.pdf
Industrial Market Reports
Overall industrial vacancy dropped to 7.0 percent, and the overall average asking rate rose to $0.45 NNN per month. Leasing activity increased to more than two million square feet, year-to-date. Completed transactions in excess of 20,000 square feet more than doubled compared with first quarter 2016. Additionally, annual absorption surpassed 1 million square feet, more than twice 2015's mid-year total. Approximately 2.2 million square feet of industrial product is currently under construction in Salt Lake County with 2 million square feet scheduled to finish by year-end. Looking forward, new inventory is expected to drive absorption beyond 2 million square feet and asking rates are likely to see increases with continued demand. Finally, leasing activity is on track to surpass 4 million square feet for the third year in a row. Full report: http://www.comre.com/uploads/reports/p1aomuvgqbml25931kk21cas1gno3.pdf
Retail market Reports
The retail market is solid, experiencing a drop in vacancy to 5.5 percent. Absorption surpassed 200,000 square feet (SF) year-to-date, a 24 percent increase over mid-year 2015. Central submarkets are performing particularly well, accounting for more than 80 percent of positive absorption activity year-to-date. More than 100,000 square feet of construction was completed during the second quarter, all within the Central West and Southwest submarkets. Meanwhile, Downtown development progressed at Regent Street where a row of restaurants and shops are planned to accompany the soon-to-be-completed George S. and Dolores Doré Eccles Theater. Additionally, The Gateway is moving forward with extensive redevelopment plans. Looking forward, vacancy rates are expected to stay well below historical averages and absorption and leasing activity will maintain healthy levels throughout 2016 and into 2017. Full report: http://www.comre.com/uploads/reports/p1aop5qssvqnjo0nq21c1217gs3.pdf
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About Cushman & Wakefield/Commerce
Cushman & Wakefield/Commerce operates the Cushman & Wakefield business in Idaho, Nevada, Utah and Washington. 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 52 million sq. ft. of retail, industrial, and office assets, have transaction revenues of more than $2 billion, and employ more than 750 professionals. Learn more at www.comre.com.
About Cushman & Wakefield
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.