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Utah’s commercial real estate market is attracting attention for its stability and the state’s pro-business environment, but future growth could be affected by national politics, infrastructure limitations and lower population growth, according to a group of experts at Utah Business magazine’s roundtable Wednesday morning.
While Class A properties have been doing better for a while, Class B and C properties are also finally seeing the upswing, said Greg Shields, president of Pentad Properties.
“We are attracting more national attention. From a performance perspective, Salt Lake City has been one of the better-performing markets in America over the last couple years. We’re getting a reputation for stability,” said Mark Bouchard, CBRE senior managing director.
The challenge that will continue into the future, he said, is that Utah is still a small state with a limited workforce, and big companies and major capital investors are looking not only at the stability the state offers, but also the limiting factor of the depth of the workforce.
Roundtable moderator Jeff Edwards, president and CEO of the Economic Development Corporation of Utah, said he shared Bouchard’s concern.
“We’ve been discovered and we’ve been discovered in a big way. One of my concerns is can we deliver,” Edwards said. “The worst case scenario would be if some company were to come here, put down roots and discover they couldn’t get what they were looking for, in the way of people, and left.”
Despite workforce worries, Bouchard said the state’s real estate dynamic is very sound.
Shields said, “For the first time in my career, who we are is different. We are a city that the main office is going to, not the satellite office.”
There have been a lot of new hotel rooms added in the last year and there are another 1,000 new hotel rooms planned in the downtown Salt Lake area, in addition to more rooms in the surrounding cities, Shields said.
Graig Griffin, CEO of KW Park City, said there is a possibility for another super luxury property in Park City, and the number of inquiries he’s had for hotel sites is more than they are able to deliver.
A convention hotel is still needed in the Salt Lake market, said Vasilios Priskos, president and broker and Internet Properties, Inc. The additional hotel rooms in Ogden and Salt Lake do not fill the need for a convention hotel, he said. “We need to decide if Salt Lake City wants to be a national player in the convention business or not,” Priskos said.
Other commercial spaces, particularly on the border between Utah and Salt Lake counties, are seeing very good occupancy rates again, said Brandon Fugal, Coldwell Banker Commercial executive vice president.
Andrew Bybee, general manager at Thanksgiving Park and Thanksgiving Station, said the opening of the Provo FrontRunner line has been incredibly beneficial, but there is still a freeway bottleneck around the Point of the Mountain that needs to get addressed to bring in more businesses.
The commercial real estate roundtable will appear in the May issue of Utah Business magazine.