The commercial construction picture in the Salt Lake area will remain strong through 1996, but lease rates and land prices will continue to climb and building sales prices and activity will be strong.
That picture comes from the Commercial Real Estate Market Review published by CB Commercial. Here are some of the highlights of the report:- Last year saw several record-breaking performances in various real estate market sectors, and they will be remembered for a long time. Last year, the Salt Lake area had nearly 6 million square feet of new industrial space, including new speculative construction and existing local company expansions.
- Even though large amounts of space were brought on line in 1995, vacancy rates remained at 2.1 percent, largely due to high demand.
- The total valuation of nonresidential or commercial development during 1995 increased 7 percent over 1994, which was 55 percent higher than 1993.
- Industrial lease rates were up 21 percent in 1995 and office lease rates have increased 20 percent in the past 18 months.
- "With over a dozen new office projects planned or under construction one would think that help is on the way. The truth is that most of the new space is already spoken for, pointing toward a continued trend of single-digit vacancies and increases in lease rates. All of this means higher prices for existing buildings and lower investment returns."
- The vibrant, new construction residential market has drawn out-of-state developers like crazy. In addition to the builders who develop their own inventory, there is activity created by local and out-of-state developers developing an inventory of lots to sell to builders.
- There currently is an inventory of more than 6,000 lots, which translates to an existing inventory of just over one year.
- The 1,550 apartment units developed in Salt Lake County in 1995 are much less than the 6,000 units that could be absorbed into the marketplace, even considering the additional units that are being planned.
- Utah's robust economy and healthy office market continue to spark national interest from site selection committees and real estate investors. Class A office vacancy rates in downtown Salt Lake City continue to decline and were only 1.8 percent at the end of 1995. Vacancy rates in Class A space in suburban areas was 3.1 percent.
- Even though there are suburban projects on the drawing board for 1.6 million square feet, the amount of development still isn't outpacing the demand.