The opening of One Utah Center downtown pushed up the available office space in the Salt Lake central business district by 3.36 percent over the past year, but overall available space declined in the wake of fewer vacancies in the area's periphery and in the suburbs.
According to a study issued this week by real estate firm Wallace Associates, available office space in the district rose to 17.58 percent in the second quarter 1991 over the same period last year. But valley-wide, office space was down 0.62 percent due to a 3.35 point decline (to 22.16 percent) in the downtown periphery and a 3.20 point decline (to 24.65 percent) in the suburbs."The good news for owners and builders is that the net amount of Class A and Class B office space absorbed during the first half of 1991 was 386,976 square feet, which was quite a bit more than the total for all of last year, which was 262,882," said Ray C. Unrath, office properties specialist for Wallace Associates Business Properties Group.
Unrath said new construction - particularly the completion of Broadway Centre at 300 South and State Street scheduled for later this year - is expected to keep office vacancies elevated in the area at least through 1992.
Wallace Associates divides available office space into "Class A" and "Class B." Class A space is defined as buildings constructed within the past 10 years, located in primary areas, generally over 40,000 square feet, with "high quality" tenants and finish.
Class B space is defined by Wallace as more than 10 years old, smaller than 40,000 square feet, located in "secondary" areas, having average quality finishes and offering lease rates 20-30 percent below Class A.
During the first six months of this year, 322,547 square feet of Class A space was absorbed, mostly in the central business district and primarily due to completion of One Utah Center and the sale of the building at 210 East South Temple, the old Makoff's store now converted to an office building.
A total of 64,429 square feet of Class B office space was absorbed durings the first half of 1991, said Wallace. A "surprising burst of activity" in the northwest sector helped increase absorption in the suburbs in the first half to a total of 143,000 square feet, according to the report.
Overall availability of Class A space decreased by almost 2 percent in the second quarter from a year earlier, said Unrath.
The Class B market was up 3 percent over the previous quarter.
In the periphery, availability of Class A space decreased nearly 4 percent over the past year. Class B space vacancy was at 10.37 percent at the end of the second quarter, about the same as a year earlier. The Wallace report says there is currently no speculative construction of office space under way in the periphery area.
In the suburbs, Class A space is holding constant in the 19-20 percent range while Class B space availability has declined 6.5 percent to just under 30 percent. If completed, proposed projects in the southeast sector will create a "steady stream" of new space in the suburbs, said Unrath.
Lease rates showed some changes during the past 12 months as the district replaced the periphery as the sector with the highest quoted lease rates for Class A space. The periphery continues to have the highest quoted rates for Class B space.
Unrath said downtown lease rates are under "downward pressure" due to the new buildings and suburban Class A projects continue to generate relatively high lease rates for their owners.