August 6, 2013

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Report Shows Low Industrial Vacancy

Press Release

August 6, 2013

Salt Lake City — Newmark Grubb Acres, a commercial real estate broker, has released its 2013 midyear report identifying significant happenings and current trends, and forecasting market activity for the remainder of the year. In 2013, key indicators continue to influence Utah’s commercial real estate market.

Utah continues to receive top recognitions to add to its list of economic accolades. Forbes magazine ranked Utah the no. 1 Best State for Business and Careers for the third straight year; CNBC ranked Utah no. 5 For the Best State for Doing Business in 2013; Forbes magazine listed Salt Lake City as no. 10 in Best Cities for Business; and Salt Lake City ranked among America’s 15 Hottest American Cities of the Future according to Business Insider.

Utah’s economy continues to outperform the nation, and remains one of the most fundamentally sound economies in the nation. The Wasatch Front commercial real estate market generally mirrors that of the nation, but with a more optimistic outlook.


The Salt Lake industrial market continues to outperform most of its national counterparts. Considered the economic equivalent of full employment, the Salt Lake industrial market shows vacancy sitting at just 5.16 percent. This market shows:

  • Continued low vacancy.
  • At $.40, overall lease rates are at the highest they have been in the last 4½ years.
  • The market for property sales was suppressed by a lack of supply. The number of sales dropped 19.4 percent, yet the square footage sold increased 76.6 percent.


The first half of 2013 is reflecting a stronger office market than anticipated. Utah’s strong economy and growing tech sector have attracted companies and employees from out of state. The technology corridor, which is home to companies such as Adobe, Ebay, FireEye and Microsoft, has accounted for approximately 30 percent of the jobs created in Utah in the last year.

  • Companies are hiring again and feeling strong about future growth.
  • Lease rates have increased slightly to an overall average of $20.09, up from $19.56 from last year and the number of leases being done has increased in almost every submarket.
  • The increased activity in the office sector along the Wasatch Front is a welcome sight compared to numbers reported over the last five years.


Overall, Utah boasts a robust and growing retail market. The increase in vacancy is a sign of an adjusting market. Landlord, tenants, buyers and sellers remain confident that the retail commercial real estate industry will remain strong.

  • The vacancy rate is showing slight signs of increase after 2012’s drop of 1 percent.
  • Despite low interest rates, investment sales have decreased due to lack of motivated sellers.
  • Mid-year transaction volume has dropped 11 percent compared to Mid-year 2012.
  • Lowest number of lease transactions since 2009.



The first six months of this year indicate confidence in commercial real estate as an alternative to other investment vehicles. NGAcres tracked total transaction volume of $747,890,188, compared to $533,572,635 for the second half of 2012 – a 35 percent increase. Building square footage that changed hands increased 63 percent to 9,102,601.

This level of activity was last reached pre-recession in 2007. This increased activity is due to confidence in our Utah business climate, a continuing low interest rate environment and poor yields available in alternative investments. Some of the strongest indicators in the investment market include:

  • Sold square feet was at its highest level in at least 5½ years.
  • Industrial and Multi-Family saw the largest increases at 246 percent and 127 percent respectively.
  • The number of Industrial investments experienced the largest increase of 30.7 percent from the second half 2012 to the first half 2013.


The Salt Lake land market made a significant turnaround this year. Most of the distressed properties have been sold and bargain sales are hard to find. There is strong demand for land of all types, primarily residential and multifamily land throughout the Wasatch

Front. With limited supply and growing demand, developers have returned to the market.

Industrial land values have remained strong due to a strong industrial market and limited supply.

Office land sales are at a frenzied pace compared to the previous five years, with strong activity in the Utah tech corridor (an area along I-15 extending from Sandy to Lehi in Utah County). Demand is such that developers are breaking ground ahead of tenant commitments in order to be prepared to meet the expected demand.

Utah and the Wasatch Front in particular should see a robust land market for years to come. Investors and developers have returned to the market, and acquisition of all property types is competitive. Utah’s population growth, sound economy and business climate will continue to drive new development. Energy is picking up for speculative land purchases as investors search for opportunities in our real estate market.

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