State of Utah
Economic Trends
BEST STATE FOR ECONOMIC RECOVERY
(USNEWS)
#2
BEST STATE FOR OVERALL ECONOMY
( U.S. NEWS BEST STATE RANKING)
#2
BEST STATE FOR OVERALL HIGHER EDUCATION
#2
CITY POISED TO BE THE NEXT TECH MECCA (FORBES)
#1
LOWEST UNEMPLOYMENT RATES
2020 (US CENSUS)
#2
The Utah economy continues to prosper. Like the nation, the state’s decade-long economic expansion became the longest on record in 2019. Every major industrial sector expanded over the last year, adding 45,600 new jobs to the economy. The annual employment growth rate of 3.0 percent in 2019 was among the strongest in the nation.
Utah’s construction sector added 4,500 jobs and posted the state’s fastest pace of job growth in 2019. The boom in the multifamily sector drove a 10.9 percent increase in the value of all permit-authorized residential construction to $5.7 billion. The value of permit-authorized nonresidential construction grew 6.2 percent, the highest since 2016.
Low unemployment and rising wages for Utahns, along with an increase in travel and tourism activity, supported strong job growth of 4.1 percent in the state’s leisure and hospitality sector. Above-average snowfall and an extended 2018-2019 ski season led to a record $1.4 billion in skier spending. With increased marketing emphasis on places to visit in addition to the Mighty 5 national parks, Utah’s state parks hosted a record number of visitors in 2019.
2020 Economic Report to the Governor
salt lake County
Industrial Market Year End 2020
The Utah industrial market saw growth and has remained resilient throughout 2020. While all commercial real estate sectors have been impacted by the pandemic differently, the industrial sector showed no signs of slowing.
With just over eight million square feet of industrial space currently under construction and of that, 65 percent is preleased creating a new historic high of industrial construction in the market.
Average overall vacancy reached 4.13 percent which is a slight increase to last years 3.56 percent.
Retail Market Year End 2020
Salt Lake County
The Salt Lake County retail market experienced an anticipated increase in vacancy from 3.90 percent at this same time last year to a current rate of 5.69 percent. This rate still falls within a healthy rate for both tenants and landlords. With more available space to choose from, some retail tenants are taking advantage of these current conditions by strategically looking for opportunities.
A number of prominent national retailers announced store closings and bankruptcy in 2020 including Bed, Bath and Beyond, Lucky Brand, J. Crew, GNC, and Neiman Marcus. As these retailers have been closing their stores, absorption has decreased in the market.
Office Market Year End 2020
Salt Lake County
New construction and development has continued along the Wasatch Front relatively unabated, with both the completion and groundbreaking of numerous significant Class A office projects in both the downtown and suburban markets.
A number of large corporate occupiers have continued to maintain a remote working format, with expectations that a transition from work-from-home (WFH) to return to the office will occur in stages, and will vary depending on the industry and local COVID-19 metrics.
The Salt Lake County office market has remained relatively stable in spite of grappling with the impact of a global pandemic and the resulting remote working and social distancing measures. Most economists are predicting a potentially sharp recovery and return to work, albeit with revised expectations relative to employee density, new approaches to office environments and the configuration of workspace are expected.
The long-term impact on space utilization has yet to be fully realized or understood, as the discussion remains fluid, and surveys appear contradictory and anything but definitive.
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In Salt Lake County absorption rates fell year over year but still remained a positive 50,039 square feet. Smaller retailers accounted for most of the years leasing activity who offered drive-thu’s, delivery options and curbside pick-up options the consumers.
Expectations for retail sales to be positive throughout 2021 is expected as unemployment rates adjust back and consumers who might still be hesitant to travel choose to spend on local goods and services instead. As stores open back up consumers will return as they have missed the in-store experience. 2021 is the year that retailers anticipate to see how the market adjusts after such a unique year.
The overall increase is mainly due to over 6.2 million square feet of new industrial space delivered to the market in 2020.. Vacancy should stay low throughout 2021 but may increase slightly in spaces larger than 100,00 square feet as newly completed bulk distribution buildings are delivered. However, with an expansive road and rail infrastructure, a new airport, a new 850,000-square-foot UPS regional processing facility and a possible future inland port, Salt Lake is living up to its reputation as the “Crossroads of the West.”
Most of the positive absorption was caused by large tenants expanding or moving into the Utah market
Construction
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Utah
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Colliers | Utah
Salt Lake County
2020 Year End Report
Office | Retail | Industrial | Trends | Utah County
Leasing Heat Map
Colliers International | Utah
+1 801 947 8300
6440 S. Millrock Dr. STE 500
Salt Lake City, UT 84121 | United States
www.colliers.com
#1
BEST STATE PREPARED FOR CORONAVIRUS ECONOMIC UPHEAVAL
(USNEWS)
Utah
Economic Trends
BEST STATE FOR OVERALL ECONOMY
( U.S. NEWS BEST STATE RANKING)
#2
BEST STATE FOR OVERALL HIGHER EDUCATION
#2
CITY POISED TO BE THE NEXT TECH MECCA (FORBES)
#1
The Utah economy continues to prosper. Like the nation, the state’s decade-long economic expansion became the longest on record in 2019. Every major industrial sector expanded over the last year, adding 45,600 new jobs to the economy. The annual employment growth rate of 3.0 percent in 2019 was among the strongest in the nation.
Utah’s construction sector added 4,500 jobs and posted the state’s fastest pace of job growth in 2019. The boom in the multifamily sector drove a 10.9 percent increase in the value of all permit-authorized residential construction to $5.7 billion. The value of permit-authorized nonresidential construction grew 6.2 percent, the highest since 2016.
Low unemployment and rising wages for Utahns, along with an increase in travel and tourism activity, supported strong job growth of 4.1 percent in the state’s leisure and hospitality sector. Above-average snowfall and an extended 2018-2019 ski season led to a record $1.4 billion in skier spending. With increased marketing emphasis on places to visit in addition to the Mighty 5 national parks, Utah’s state parks hosted a record number of visitors in 2019.
2020 Economic Report to the Governor
Utah County
Industrial Market Year End 2020
At the end of the year, the vacancy rate came in at 1.47%, approximately .69 bps lower than that of 2019. Average asking rates for all building types stood at $0.59 PSF NNN, down $0.06 from this time last year.
Tenants in the market continue to face over a five-year challenge of securing functional industrial space in Utah County. With very little available space, tenants have only a few options to lease in the Utah County market.
E-commerce is outperforming most other sectors and has driven demand for warehouse/distribution space.
Retail Market Year End 2020
Utah County
In Utah County, the retail market seemed to pause slightly in March once COVID-19 was announced and temporary closures were placed on all non-essential businesses. By the third quarter of 2020, Utah County retailers were looking for new ways to stay open, stay safe, and adjust to the continued changes being placed on them.
Vacancy rates decreased by .46 percentage points to a current rate of 4.94 percent. This, along with continued positive absorption, shows that the Utah County retail market was able to withstand some of the pandemic's hardships. This was not the case with some national retailers who were already struggling to get additional foot-traffic.
Office Market Year End 2020
Utah County
Currently, 40.31 percent of the 937,977 square feet of office construction in Utah county is pre-leased. Much of the new construction continues to be located in the North submarket.
A number of large corporate occupiers have continued to maintain a remote working format, with expectations that a transition from work-from-home (WFH) to return to the office will occur in stages and will vary depending on the industry and local COVID-19 metrics. The Utah County office market is expected to eventually return to pre-pandemic conditions, although the timing and the trajectory of recovery is uncertain at present.
The Utah County office market did see short term impacts from the global pandemic. Office vacancy rates reached 12.56 percent year-end, compared to 9.48 percent at this same time last year.
Absorption rates continue to be net positive, with 378,956 square feet reported through end of year 2020. Absorption is more than half of what it was at year-end of 2019. Even though vacancy has increased and absorption rates have been on the decline, lease rates have remained surprisingly stable. Average asking lease rates in Utah County have increased from $22.20 Full Service in 2019 to a current rate of $23.05 Full Service, reflecting market momentum and increasing rates largely due to the introduction of new Class A inventory.
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Absorption rates dropped by over 40 percent from this same time last year but did remain a positive 126,380 square feet year-to-date.
A limited amount of new construction continues to be a trend for Utah County, with over 75 percent of the 107,499 square feet being built already preleased. Overall asking lease rates increased from $18.73 to $18.98 NNN year-over-year.
Expectations of lease rates to remain stable in 2021 is very likely, as landlords and tenants assess the outcome of the pent-up desire of customers wanting to enjoy the social aspects of retail.
Growth by contract manufacturing, packaging, and assembly operations have been a strong driver of market demands.
The year-to-date absorption also decreased from this same time last year but still recorded a positive 1,107,300,488 square feet compared to the previous year-end number of positive 1,401,851 square feet. The 2.4 million square feet of new construction cannot reach completion fast enough for most tenants looking to move and expand into the Utah County market.
Expectations that the Utah County industrial market will continue to experience strong activity is almost inevitable.
Construction
Lease Rates
VACANCY rates
Download
Report
Download
Report
Construction
VACANCY rates
Lease Rates
Construction
VACANCY rates
Lease Rates
Download Report
Leasing Heat Map
Salt Lake
County
Download
Report
Salt Lake
County
Leasing Heat Map
Salt Lake
County
Colliers | Utah
Utah County
2020 Year End report
Office | Retail | Industrial | Trends | Salt Lake County
Leasing Heat Map
Colliers International | Utah
+1 801 947 8300
6440 S. Millrock Dr. STE 500
Salt Lake City, UT 84121 | United States
www.colliers.com
#2
BEST STATE FOR BUSINESS IN 2018 (FORBES)
#2
BEST STATE FOR ECONOMIC RECOVERY
(USNEWS)
#1
BEST STATE PREPARED FOR CORONAVIRUS ECONOMIC UPHEAVAL
(USNEWS)