September 1, 2011

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Utah County Report

Utah Business Staff

September 1, 2011

WILLIAMS: BYU is the number one university in the nation for startups, licenses and patents per research dollar. So their output of these young, talented, aggressive, fearless people—the cost of living is still relatively low, so they can take some risks here. Whereas in other environments, it’s more difficult. We embrace it more here, to be an entrepreneur.

We house the BoomStartup group in our facility. There’s 15 companies, and they all believe they’ll be Fortune 100 companies one day. There’s just something that’s shared in this area that we believe we can start things. And we have the guts to do it.

ALDER: Three years ago we had nine startups. Last year we had 12. It’s not quite on that pace this year. But just like you just described, the fearless, young entrepreneurs that abound here are eager to find something that they can take on and do. And at the same time, the technology-based companies that are already here have created the atmosphere—and the infrastructure that was mentioned—that makes everybody dream that they can do it, too.

We have a couple of things we could do better. We still have trouble finding early-stage funding for these startup companies. All of our local venture funds have sort of become inactive right now. We need more activity in both the angel and investor area.

FUGAL: Our pro-business state government has been a big factor in that. If you compare Utah to California—we’ve already mentioned companies that are seriously looking at a relocation from California to Utah. Well, there’s a reason for that. Utah is business friendly. California is punitive to business people, especially the small business owner.

The environment here fosters entrepreneurialism. It rewards it. I have to believe that it has something to do with our pioneer heritage, too. We come from a risk-taking group of people. You look back at how truly visionary those people were. And it was because they had a tolerance for risk taking that was unique. I would hope that is carried through many generations and is manifested right now in the hearts of these companies that are really the lifeblood of Utah County.

Let’s talk about how we see the real estate market heading at this point. What has the deal flow been like? What are some of the trends?

ANDERSON: Utah County is a great place to be for commercial real estate. It’s certainly healthier than most places in the United States. We have seen a 20 percent pick up this year. It’s still not getting us back to 2007 levels, but it’s been pretty good. In particular, multi-family has been good, industrial has picked up and we’re back down to single digits on vacancy in industrial, which is a good place to be. Industrial usually picks up first. That’s the sector of the economy that drives the other ones.

There are some good construction projects. There’s another project that’ll be announced probably in a month or two that we just assembled plans for, and it will be a significant project. There’s a roughly 450,000-square-foot mall going in at the Point of Mountain across from Thanksgiving Point, an off-price mall.

The infrastructure is so important. This expansion of the freeway is a little bit of a hassle right now, but a year and a half from now, we’re going to have a great avenue for getting people around. We don’t have any spec office or retail right now. Those things are probably a couple years away. But we do have some health that’s building back, and we do have some user buildings.

FUGAL: You can’t miss all of the cranes on our skyline as you come over the Point of the Mountain from Salt Lake Valley at the site of the new Adobe facility under construction. It has 280,000 square feet in its first phase, which is coming online over the course of the next year. That will probably be followed quickly by additional expansion, from what we’re hearing.

The biggest dramatic shift we’ve observed the last few months has been dropping vacancy rates, especially pertaining to large blocks of space in north Utah County. If you’re a company looking for a full floor of office space from north Orem on I-15 to the Point of the Mountain, good luck.

That isn’t necessarily indicative of an overall recovery. Because there’s a lot of vacancy, there’s a lot of real estate signs all over the valley. But as far as large blocks of space for headquarters, the options are dwindling. The Broadmoor building is 100 percent leased to Security Metrics. At the Pleasant Grove interchange, those buildings are all 100 percent leased.

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