September 1, 2011

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Utah County Report

Utah Business Staff

September 1, 2011

One of the greatest challenges moving forward is a lack of new speculative product to accommodate these large companies. And that’s really tied to financing. As much as lenders say they’re open for business, I have not really seen underwriting loosen up in a way that would really help foster new speculative construction to meet demand.

FOTHERINGHAM: A 100,000-square-foot building that’s been available for years is now under contract. And I only found out about it because there were two other people who were interested in that same building. We had to say to them, “It’s gone.”

FUGAL: Lease rates have stabilized to some degree, although companies are still able to take advantage of very generous concessions. There’s still a lot of free rent being given to new tenants in order to incentivize them to relocate and grow. There are other enhancements, such as tenant improvement allowances and moving allowances, that helped give companies the motivation to really look at their options.

ALDER: I grew up in Salt Lake Valley and saw what happened as the Research Park at the University of Utah was developed and others have blossomed. With the advent of Adobe, IM Flash and NSA, we begin to create an image of technology-based business. And with all of these startups that come out of BYU, it seems really important from a visionary standpoint to look at a campus-style research park. I know there’s a feasibility study underway right now.

Research parks in proximity to universities are key. The University of Utah has been blessed by Fort Douglas. BYU is far away from most places. Provo City has developed an industrial park, and if part of that were to become a research park, it would be five minutes from the campus.

BYU is not going to get engaged in a research park. That’s just not part of what BYU will do. But it would sure be nice as a community to have that as a vision.

FUGAL: You identified the greatest challenge for a lot of other technology transfer oriented opportunities, and that’s early-stage venture capital. That’s one thing our market has struggled with.

ALDER: We have visits from Salt Lake, and it’s just a courtesy. They don’t come back. They keep missing deals. They miss big deals and regret it. But they’re not willing to open an office or spend more time. And I’m not sure why.

Some have said the way we package our deals, the valuations that we place on early-stage companies are too exorbitant. There are all kinds of excuses. But that’s a critical factor.

Let’s shift gears and talk about the workforce. Are companies finding the kind of people they need?

GARFIELD: Speaking for the hotel, it seems like we always have positions open and we’re always looking to hire people. As far as the industry itself, tourism is vibrant. It’s growing. And because of that, there is a need for staffing.

In the service industry, we don’t pay as much as the technology sectors, so we tend to lean on those maybe not as well educated or going through school and getting ready for a career. We need employees. When we talk about unemployment—I hear everybody’s looking to hire people. And I don’t know why we have such a high unemployment because we’re looking for people all the time.

WESTERLUND: In our industry, fortunately there are a lot of people that are experienced in all aspects, whether that’s manufacturing, logistics or just day-to-day running of the company.

A comment was made earlier about how the educated and skilled workforce actually has a fairly low unemployment, and we’ve found that. When we’ve looked for people with a little more experience, maybe that executive level, it’s taken us a lot longer than we anticipated, given the unemployment rate.

WILLIAMS: I don’t want to sound negative, but the great growth of these companies that are building their new facilities and can offer programmers money—that hasn’t been seen in this area for a few years. They can come in and sweep up all the senior programmers, even junior programmers, with greater wages. And then they’re done with them after the project’s over.

As a small company, that’s tough on some of our people because they get head hunted heavily. And if you can make twice as much money, it’s pretty tempting. And then a year later, they’re unemployed.

ESFARJANI: Our job categories are for people with an advanced understanding of mechanical and electrical. Very unique skills—folks that can work with complicated equipment. We have not been as successful, I must say, to recruit talent as much as I’d like to. It’s not a win for my company. It’s not a win for Utah. To overcome that, we need to do a better job in partnership with universities that do have this talent, to help them understand our critical needs.

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