CRE Snapshot: Market Conditions, Forecasts and More

A few weeks ago I attended the NAIOP Utah Commercial Real Estate Symposium at Vivint Home Solutions Arena. An event I presented at last year, sharing trends and forecasts for Salt Lake’s office market. Have to say, I was happy to be in the audience this year! For those that missed it, here are my top takeaways.  

·        â€œMaking sense of 2020, there’s a lot going on.” – Darin Mellot, CBRE.: The current low interest rate environment is driving capital into secondary markets, good news for Salt Lake City. Surprisingly, geopolitical events and economic cycles do not correlate. Elections will have long-lasting impacts, such as shifts in congressional majorities.

·        We will soon see office trade at $600 PSF.: “Lease rates being achieved at 95 South State are in the low $40s and assuming a 5% cap rate, which will get us to $600 PSF.” – Kip Paul, Cushman & Wakefield. Those of us specializing in Salt Lake City CBD (central business district) office properties have seen this on the horizon. It is an exciting and bold statement for our market. Another sign Salt Lake City continues to be highly sought after.

·        Don’t be afraid to repurpose. – “Rising land prices are making ground-up retail developments difficult to pencil.” – Stuart Thain, Colliers International. Adaptive reuse has not only benefited retailers, but other sectors such as office. Creativity in getting deals and developments to fruition is the name of the game.

·        â€œIndustrial is the new sexy.” – Kyle Roberts, Newmark Knight Frank.: Last year 4.1 MSF was delivered to market. The end of 2019 saw 7.6 MSF under construction, beating the high-mark of 5.9 MSF in 2017. “2019 was the year of the land grab and increased rents.” – Angela Eldredge, Price Real Estate.

·        The multifamily train is not slowing. – “Despite rising land and construction costs, developers are getting deals to fruition through creative means to meet pent-up demand.” – Lee Dial, Cowboy Partners. The Salt Lake area has around seven multifamily projects occurring that should come to market over the next few years.