Commercial Real Estate Trends in Utah
- Post by: Public
- on: 11-12-22
Among the various sectors of the real estate market in Utah Commercial Real Estate, office and industrial real estate have seen the most activity. The multi-family rental market has also experienced a 5% rise during the first quarter of 2018. Below-average unemployment rates have helped the real estate market in Utah.
Demand for industrial space
Several large warehouses leased in Salt Lake City in the past quarter. The majority of transactions involve industrial space between 50,000 and 100,000 square feet. This trend may continue as companies move their inventory during the holiday season. Smaller tenants might be able to capitalize if larger users unload their inventory during this period.
Overall, Salt Lake City's industrial market has been red hot. The vacancy rate fell to 3.0% in the second quarter. It was the lowest vacancy rate in a decade. This is due to new supply of 1.8 million sq. ft. The industrial development pipeline continues to be active.
Salt Lake City's industrial leasing activity in the second quarter reached 4.5 million square feet. The vacancy rate was nearly 2.0 percent, down from 2.6 percent in the first quarter. This is a testament to the strong leasing levels in the area.
The vacancy rate is expected to drop further as availability is limited. However, it is likely that companies will need to acquire additional inventory to deal with the next economic shock.
Multifamily rents grew by an average of 5.5% during the quarter
Despite a continued shortage of housing in the U.S., multifamily rents increased by an average of 5.5% in the second quarter of 2018. Compared to the same time period in 2016, year-over-year rent growth was at its highest point during the post-recession cycle.
The vacancy rate was 7.2%, a decrease of 3 basis points from one year ago. The rate of construction starts for multifamily was down from the 10-year average of 288,000 units per year from 2001 through 2010.
The rate of asking rents increased to $2,998 per month, up $17 from the month before. The average doorman rent decreased 2.33% from the previous month. The total market declined 1.63% for the month of November.
The largest rent increases occurred in the west, where rents climbed 22.4% in Phoenix and Las Vegas. In Albuquerque, the asking rent rose 21.9 percent. In addition, upscale lifestyle properties grew 5.8%, while the working class segment grew only 0.6%.
Office property market in Utah is most active in Salt Lake City
Currently, the Salt Lake City office property market is one of the most active in the United States. The Salt Lake metro area has a population of 1.19 million. The city is home to an educated workforce and a relatively low cost of doing business. The market is ripe with opportunities for real estate investors.
The Salt Lake City housing market is also booming. According to a recent report, the price of a home in Utah has increased 67% over the past five years. This has been caused by strong native population growth and business growth.
The Salt Lake metro area is well positioned to see sustained economic growth. The area has a high concentration of young, educated workers and a low cost of doing business. Moreover, the Wasatch Front business district is a core business district with 4.1 million square feet of office space under construction. This is far ahead of the national average of 2.3%.
Below-average unemployment rates are helping the real estate market
Several factors are working in Utah's favor, including the state's relatively low cost of living and a growing labor market. But, despite these positive trends, there's still a shortage of housing in the state. This shortage will only be alleviated by strong demand for homes, which will drive prices higher.
The Salt Lake City metropolitan area is one of the fastest-growing in the country. In the past five years, the population grew nine percent. And, a recent market report shows that construction levels are at an all-time high.
The unemployment rate in Utah is now at a two-decade low, and the long-term unemployment rate is just under one-half of a percent. The U-6 rate is a broad measure of the economy, incorporating discouraged workers and labor underutilization.
The White House hopes that the combination of factors will lead to more unemployed Americans finding new careers. In addition, Utah's population growth rate is among the highest in the country, with 18 percent of residents ages 25-34 having a bachelor's degree or more. In 2015, 50,000 jobs were created in the state.
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