Complacency, Homelessness Could Slow Downtown Growth, Say Commercial Real Estate Experts
Salt Lake City—With all its amenities, restaurants, historic landmarks, beautiful views and comparatively low traffic, is there anything that could retard the growth of commercial real estate in downtown Salt Lake City? It’s hard to say, but overall complacency and the homelessness issue could certainly be problems, according to some of the participants of the annual Utah Business commercial real estate roundtable.
More than 15 commercial real estate industry veterans attended the roundtable in downtown Salt Lake on a sunny Tuesday morning, offering their opinions on interest rate hikes and the economy, forecasting the next year in commercial real estate, and identifying tech disruptors to the industry. With commercial real estate in Utah coming off a banner year in 2016, identifying challenges and not letting up on innovation is something the state and industry must be vigilant about, said Bruce Bingham, partner at Hamilton Partners.
“There are few, if any places, to have been in the last 15 years than Utah,” said Bingham. “I think the biggest problem Utah has is complacency. We think we’re great, and we are. But, so what? We’ve got to come up with the next idea, with the next concept, with the next improvement.”
One area that certainly could use some innovation and improvement? Tackling the homelessness problem in downtown Salt Lake City, which Bingham referred to as “a big problem.”
“It affects retail functions,” he said. “City Creek deals with it all the time.”
As more people look to live in downtown apartments, affordable housing has become a real problem, said John Dahlstrom, EVP and general counsel of Wasatch Properties. “There’s not enough affordable apartments downtown. The fact that more people want to live in an apartment kind of environment has driven up the price of all the apartments,” he said. “That’s contributing to the homeless problem.”
With apartment projects like 4th West (one of the most highly-amenitized projects in the valley, according to Bingham) and Downtown 360 going up, an influx of younger residents may help bridge the vitality of downtown Salt Lake City into the west side, said Karin Fife, president of CREW Utah. That, along with the dispersion of the homelessness services, could really revitalize the area.
“I think when we start filling up those apartments and start getting those Millennials into the space, it will automatically bump [the homeless population] over and dissipate some of that, which we’re really looking forward to,” she said.
“We’re involved in that Downtown 360 project, right across from Pioneer Park. We were scared to death underwriting that deal,” said Eric Woodley, partner at Woodley Real Estate. “We’re pretty bullish on it now. The homeless issue in that park, and that whole surrounding area, has been a major concern of ours.”
Fife indicated that, with CREW’s Rio Grande offices being right at the thick of the homeless population, she has a first-row seat to all the goings-on, both with the gnarly issues that come with the population and the city’s response to it.
“Right now, [the homeless] congregate all in one spot, where there isn’t [a way for] the facilities or the services for them to be able to reach them. They’re congregating right there. It is affecting our business,” she said. “That being said, there’s a lot being done in the city regarding that area… Already, [the city has] involved all the business-owners down there in Rio Grande. There’s already a huge difference now.”
With plans underway to change the way services help the homeless, targeting root causes of homelessness and dispersing the population, many downtown businesses are looking forward to planning for a different sort of future.
“I think the marketplace has generally received very positively the plans that have been put forth in the past two or three months. Because there’s a plan!” said Greg Shields. “… People can feel like they can start to plan for the future in that particular area because there’s a plan out there. The dispersion of the homeless population, although nobody wants it in particular, is really important and a good plan that the burden is held across the board, amongst several cities, and not concentrated in one spot like it has been for many years.”
Still, with or without Salt Lake’s homelessness issues, Jim Balderson, managing director at Jones Lang LaSalle, says that the downtown area has the scales heavily weighted in its favor to attract tenants. Although JLL recently moved from the Gateway to 111 South Main Street, Balderson says the reasons were more for the increased access to amenities than to escape the homeless.
“Homelessness shouldn’t overshadow how great it is to live and work and be downtown,” he said. “It’s definitely a factor, and it sounds like there’s some institutions in place to help fix that problem, but hopefully that doesn’t overshadow the fact of how great it is to be downtown.”
The roundtable was moderated by Brandon Duke, vice president of KeyBank Real Estate Capital. Read the entire conversation in the May issue of Utah Business.