February 4, 2014

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Report Shows Strong 2013 for Commercial Real Estate Growth

Press Release

February 4, 2014

Summit County’s industrial market is comprised almost entirely of smaller buildings with incubator or mid-bay type space that primarily caters to local construction and service companies. The little remaining inventory from 2012 was mostly absorbed in 2013 as the vacancy rate dropped by 4.4 percentage points to the current rate of just 1.1 percent. Given this severe lack of supply, it appears likely that some speculative construction will begin to occur in 2014.


Retail Markets

Very little new construction was completed in 2013 with only pad space and additions to existing centers taking place. Despite little new construction, the market experienced 752,321 square feet of positive absorption. New construction will increase in 2014 and be more in line with long term averages as several grocers are expanding in the market. Average asking rates will see upward pressure, which will also be buoyed up by the new product on the market.

In Utah County, Lehi continued to see a dramatic amount of retail expansion through 2013 which is expected to continue for the foreseeable future. With the increase in new construction expected for 2014 and forward, vacancy rates will likely level off to compensate for the new space on the market.

Weber County retail vacancy rates have steadily declined over the past two years. Landlords have been aggressive in offering incentives such as free rent and tenant improvements to attract new tenants. Lease rates have been relatively flat but are inching back up as the market strengthens.

The Davis County retail market heated up as many new retailers moved into the area. More than two dozen retailers and restaurants opened their doors this past year. Overall lease rates are on the rise as renewed confidence and steady growth improve the retail sector.

In Washington County, the retail market was hit with several significant tenants giving back space. Anchored class A retail continues to outperform all other property classes and types with high demand yielding high rents and very little vacancy.

No other market in Utah, during 2013, experienced as strong of declines in vacancy rates as Summit County. Many signs of positive momentum continue for Summit County heading into 2014.

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