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Under Construction

A Robust Economy Spurs Development Across the State of Utah

By By John Coon

Every revolution needs a starting point. For downtown Salt Lake City, that point of origin is the brand-new City Creek Center.

Long before it officially opened for business in March, the $1.5 billion mixed-use development was being hailed as unique, unprecedented and revolutionary. Those words only scratch the surface in describing the impact it will leave on the downtown area.

A walkable community, City Creek features a healthy mix of world-class office space, upscale retailers, and pristine apartments and condominiums. A 30,000-square-foot retractable glass roof can cover the retail galleria on bad weather days, and a sky bridge spans Main Street to connect both blocks. Walking paths crisscross through each block, where both shoppers and residents can enjoy seeing an array of unique fountains and a recreated section of the historic City Creek.

“The entire City Creek project is revolutionary in terms of the way it’s transforming Salt Lake City,” says Linda Wardell, General Manager of the City Creek Center. “What it’s doing for our city is giving our residents a more walkable town.”

It will also introduce multiple new businesses to the State of Utah. National chains Nordstrom and Macy’s will each have a store anchoring the center, but at least two dozen companies will enter the Beehive State for the first time. These upscale retailers—which include such notables as Tiffany & Co. and Michael Kors—will account for a third of the tenants occupying storefronts at City Creek.

This is just the start of new companies from all sectors setting up shop along the Wasatch Front and throughout Utah. The City Creek Center has thrown open the doors for unparalleled growth in the commercial real estate and residential real estate sectors.

“City Creek is really going to be a game changer for the central business district of Salt Lake City,” says Mark Bouchard, Managing Partner for CB Richard Ellis. “Having a project like that, and the type of people it will draw to the downtown area, will do nothing but make us a better market overall. Our ability to do that during a time of slowdown on the national level speaks to the overall strength of our State and our economy here at a local level.”

A Targeted Growth Spurt

One factor that has allowed Utah to see economic growth while other states are struggling is a commitment to building transit-oriented communities. A quick tour through the Salt Lake Valley yields evidence of this trend everywhere. From the eBay campus in Draper to Daybreak in South Jordan, creating walkable communities is on the mind of city planners throughout the Wasatch Front.

Many of these developments incorporate TRAX light rail lines or the FrontRunner commuter rail line. The Utah Transit Authority (UTA) has partnered with developers in five different locations to bring some of these developments to life by offering land around transit hubs.

“Transportation at its core is one of the most important factors in the State,” says Christina Oliver, UTA’s Department Manager for transit-oriented development. “Just over 80 percent of our population lives within 100 miles of the Wasatch Front. Without an adequate and accessible transportation system, we would be immobilized. Economic development would be stymied in this region generally.”

It makes sense for UTA to take an active role in bringing walkable communities to life. A development built around a transit station will spur usage of mass transit much more than a sprawling parking lot. For the cities where these developments take root, it offers an infusion of dollars from new businesses setting up shop and new residents buying homes or condominiums.

Managing growth in a responsible way is the challenge facing community leaders along the Wasatch Front. Utah’s distinctive geography gives it an unparalleled natural beauty. It also limits cities and towns from spreading out unchecked in all directions.

Envision Utah has potentially solved this problem with a “3 percent development strategy” to manage urban growth. The principle behind this strategy is that one-third of all future commercial and residential developments along the Wasatch Front should be concentrated upon 3 percent of the available land.

As part of this 3 percent strategy, Envision Utah wants to focus growth and economic centers along major transportation corridors. That means targeting growth around transit stations and creating major mixed-use developments throughout the region. These developments would represent a step forward in redeveloping and revitalizing declining neighborhoods while preserving open space throughout the mixed-use development.

“The 3 percent strategy encourages targeted investment to create exceptional places for working and living while maximizing efficiency and keeping the cost of living in check,” says Christie Oostema, Deputy Planning Director for Envision Utah. “It encourages growth in commercial real estate, residential and retail development in locations where significant public investment in our transportation system has already occurred or is planned.”

Benefits of this plan are numerous. It will mean improved air quality as a result of reduced traffic congestion, and the preservation of open space and a reduction in water usage. This means a vibrant, walkable community where residents have gathering places for community events and more choices for where they live, work, shop and play. It also means savings of billions of dollars for cities in Utah and the State of Utah itself.

Managing urban growth in this manner increases the quality of life for the residents involved and convinces companies outside the state to take a chance on investing in Utah. That is one reason why commercial real estate sales are booming here at a time when they are lagging in many other places.

“In some respects, the expansion of office and retail markets in other cities is a very good thing,” Bouchard says. “It lightens the travel distances and the uses of our roads. It creates more of a community setting where you don’t always have to drive great distances for services. As we grow and develop as a State, it’s just the natural order of things that occur.”

All the Right Pieces

The region encompassing southern Salt Lake County and northern Utah County is poised to be an epicenter for commercial real estate growth over the next decade.

Plans are underway for the National Security Agency to build a massive new data center at Camp Williams. Ground broke on the site in January, and the construction phase is expected to add up to 10,000 new jobs to the local economy.

Further south in Lehi, Adobe is expanding its operations in Utah with a new technology campus currently under construction. The new Adobe campus is expected to create 1,000 new jobs in Utah following the initial expansion phase, with capacity to add 600 more jobs through later expansion. It is projected to create more than $1.6 billion in new State wages and more than $134 billion in new State revenue over the next 20 years.

The ease of doing business in the Beehive State convinced the technology giant to set up shop here—and it didn’t hurt that Adobe is eligible to receive tax-based post-performance incentives from Lehi and the State of Utah that are worth nearly $60 million over a 20-year period.

When Adobe announced its expansion plans in 2010, the company cited Utah’s vibrant communities, skilled talent base and business-friendly environment as the major factors in its decision. This business-friendly attitude puts Utah over the top when combined with other advantages the State offers in the areas of geography, education and transportation.

“The climate here is good,” says Stephen Bogden, Managing Director and Principal Broker for Coldwell Banker Commercial. “The employment here is good. The distribution here is good. Access in and out is good. The State works hard for businesses.”

Southern Utah has similarly experienced an influx of new companies expanding into the State. Litehouse Foods, a food manufacturer based in Idaho, chose to build a new facility in Hurricane after deciding it needed a southwestern location to gain greater access to regional markets. The town offered a convenient location near Interstate 15 and room to grow—factors that persuaded Litehouse Foods to choose Hurricane over similar sites under consideration in California, Arizona and Nevada.

“We’re positioned pretty well there,” says Jim Frank, President and CEO of Litehouse Foods. “That’s actually a benefit of the site we selected in Hurricane. It has us positioned for future growth and expansion right in that facility and on that parcel of land. We’re ready to keep expanding for some time before we reach capacity in that area.”

The boom is also being felt in Northern Utah. Janicki Industries built a 100,000-square-foot, $19.5 million manufacturing facility near Hill Air Force Base in Layton in 2011. The Sedro-Woolley, Wash.-based firm is manufacturing components for the F-35 Joint Strike Fighter using two proprietary Janicki five-axis mills, with a third coming online in late summer. The large-scale, high-precision mills have produced more than 250 parts for the F-35 program since the Utah plant’s opening in August 2011.

These developments are not done on an island. What benefits an individual town or city benefits the entire State as it pushes forward to establish itself as a leader in national and international business.

“You can’t look at it on a city-by-city scope anymore,” Oliver says. “We don’t work that way. It’s just not feasible. For older cities, it’s almost unsustainable in the revenue stream. It needs to be a different perspective and that perspective is: we are a community, let’s build as a community.”