Article

Commercial Real Estate

May 6, 2013

There’s an interesting workforce opportunity in Tooele County. As the military winds down its operations there, there’s a captive, well-trained workforce that would love to stay put and not be part of the big red snake driving into Salt Lake every day.

GRIFFIN: On the other end of the commuter spectrum, in Park City, what we have seen lately are a lot of smaller office tenants who are incubator style. They are looking at Park City because it’s the only way they can recruit the young Millennial talent—because of the lifestyle. They know they have to pay more in rent and more in salary, but they can put them on a mountain bike and put them on skis and pull talent from the bigger companies based on lifestyle. That’s a recurring theme we hear over and over with our office rep.

SHIELDS: Having been doing this forever, unfortunately, we see these eras where Salt Lake is on the darling list and off the darling list. But for the first time in my career, who we are is different. We are a city that the main office is going to and not the satellite office that they open in the good times and close in the bad times. And the kind of people who are coming are very different. There are a number of reasons for that. But it’s like the city has changed and all the sudden we have crossed some line in the sand; we had always been a B city and now we are turning into an A city.

Let’s go north and maybe start with Ogden. Jake, can you talk about Business Depot Ogden and some of your other ventures?

BOYER: The BDO project, a former military location, really withstood the tough downturn. Last year we did a build-to-suit for Super Home Depot in that project, and it was about a four-month turnaround from the time we started construction to getting them into the building. It’s a call center for them.

We built three new industrial buildings in that project last year—and we have seven new build-to-suit opportunities we are working on right now in the BDO. So that’s been a terrific project. It’s where Hershey has their main location, as well as a lot of large companies like Elkay, Scott USA and Rossignal. A lot of outdoor product companies have converged in BDO.

We are also, in downtown Ogden, finally seeing a little momentum pick up in terms of office leasing with the junction project that we’ve got there. We are working on some deals that would take our office building to 100 percent leased at this point. So that’s moving in the right direction. It’s been slow, but things are going well.

 

Any other thoughts from more of a statewide perspective on where things are going?

BOYER: We are cautiously optimistic about the direction that things are headed. We are pretty bullish on the future of downtown. Actually, we are picking up a permit today to commence construction on a building on First South and Second East, which will be the 101 Tower. It’s a seven-story, 146,000-square-foot building, and we have a good lead tenant on that building.

That’s the former Questar parking lot.

BOYER: Correct. And in December, we acquired the former Questar building, which we are going to rename the 102 Tower. It’s a 210,000-square-foot building, not occupied at all. We are going to completely remodel the building and are currently negotiating with a lot of tenants about possibly occupying there.

The great thing about that is we were able to acquire five acres right on State Street, which enables us to do a future building. We are negotiating with Cowboy Partners to do a residential project on Second East. So there’s some good momentum in downtown, which we are excited about.

How about Provo? Provo has done some interesting things in the last little while.

ANDERSON: We see a lot of job growth, more job growth in Utah County than statewide, which of course is higher than the national average. We see a lot of the downtown, several large blocks being redeveloped—a couple immediately and a couple on the drawing board.

The new temple down there has been a magnet for activity, residential activity, coming downtown, which hasn’t really happened there for a long time. And the NuSkin redevelopment, as well as the county convention center, a 140,000-square-foot convention center that opened a little over a year ago. So a lot is happening down there. The class A office market is really strong. You can’t find space really very well in class A.

FUGAL: Primarily it’s Provo Riverbottoms. The East Bay has a very high vacancy.

Let’s turn our attention to St. George. Anybody have thoughts?

GRIFFIN: They pulled about 1,400 permits in 2012 for new construction, most of which are built or underway. They are in the middle of a lot grab right now. The beginning of last year you could pick up an average residential lot for $30,000 to $35,000. You are up to $70,000 and $90,000 for the same lot today.

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