May 1, 2012

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Article

Trading Up

Companies are Finding Great Values in a Recovering Office Market

John Coon

May 1, 2012


A new chapter will begin for the MultiLing Corporation this summer when it fully moves into new office space in the Zions Bank Financial Center in downtown Provo. The move seems hardly worth the trouble on the surface: MultiLing is set to relocate approximately one block further north on University Avenue from where its current offices are located in the Wells Fargo building.

Distances can be deceiving. Although MultiLing will be within walking distance of its old offices, the new offices will be worlds apart in what they offer to the document translation company.

Two full floors of space will be available to MultiLing once it finishes moving to its new location. The current offices provide a single floor, and continued growth caused the company to simply run out of room. Since 2006, the number of MultiLing employees has increased by 125 percent.

“We’re growing as a business, so we also need to grow physically,” says Emmanuel Margetic, vice president of marketing for MultiLing. “We will need to hire more people as well. Since this building was offering a limited amount of space for our growth, we’ve pretty much maxed the growth potential that this building had to offer. So we decided to move to the Zions building.”

MultiLing is not alone among Utah companies in undergoing corporate relocation. An influx of commercial real estate development along the Wasatch Front coupled with lower costs associated with relocation have many companies packing up moving boxes and scouting out new office space in an effort to create more room to grow their business.

Golden Opportunities
Commercial real estate brokerage firm NAI West notes that key numbers are up across the board. A net 590,562 square feet of office space was absorbed in Salt Lake County during 2011, after two years of negative absorption rates, according to NAI West’s 2011 year-end report on the commercial market. The number of new leases rose 25 percent from 2010 levels to 339, and a total of 2,558,811 square feet is under lease—a 21 percent increase over the previous year.

Much of this had to do with lower costs associated with securing leases and moving into office space. The overall vacancy rate was 13.71 percent, a 1.5 percent decline from 2010. For Class A office space, the vacancy rate was at 8.72 percent. That represents a drop in seven points from where it was in 2007. Overall asking rates for available office space have dropped 7.3 percent over a three-year period, with Class A office space seeing the sharpest rate reduction.

“Tenants are going to quality locations and quality buildings,” says Jim Balderson, vice president for the NAI West office division. “Those are the properties that are doing well. As rates have weakened, the companies that are doing well are using this opportunity to get nicer space.”

Reduced costs through an incentive package helped seal the deal for MultiLing when it was scouting out new locations for its corporate headquarters. Moving a block will cost an estimated $1 million. As part of luring MultiLing there as an anchor tenant, the Zions Bank Financial Center agreed to pay a portion of the moving costs.

Corporate relocation for MultiLing has been in the planning stages for at least a year. The company works with several Fortune 100 companies, offering translation of patents and other legal documents into more than 50 different languages worldwide. Site selection was done by choosing a location that would offer the best value for the company with the least disruption to company operations.

Ultimately, MultiLing decided to stay in downtown Provo because development projects such as a new conference center, the Nu Skin Tower and the renovation of the Provo Tabernacle into a new LDS Temple have given the company optimism that it is the right place for them to do business.

“One of the primary factors (we considered) is we did want to stay in downtown Provo,” Margetic says. “We feel like there is a lot of opportunity here in downtown Provo as far as growth. With the way downtown is growing, we just really enjoy being a part of that. Obviously, the cost is always a factor. Granted, where we’re going is probably not the cheapest. But what we’re getting for the value is extremely high.”

Start of the Boom
Balderson identifies a number of factors that go into the decision to relocate. Some companies simply outgrow their existing space and want to move to a place that allows for continued growth and more operational efficiency. Other companies want to find a place that is better suited for recruiting the best talent into their workforce. A few companies look at a geographic shift as a chance to upgrade their image and quality.

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