CBRE has released its annual Salt Lake City Real Estate Market Outlook report. The publication highlights the local commercial real estate market’s performance during 2015 and provides insights into what can be expected in the coming year.
“2015 was an exceptional year in terms of commercial real estate,” stated Mark Bouchard, senior managing director. “All service lines saw strong levels of activity and increased business; absorption levels were positive throughout the year, and vacancy remained in the single digits, despite high levels of construction completions. These indicators suggest that demand is strong and will largely keep the market in balance in 2016.”
Some of the key findings highlighted in the report include:
Office, retail and industrial properties experienced some of the hightest levels of construction ever seen in the area during 2015.
· 2015 was record-setting for industrial completions, ending the year at 2.9 million square feet of new space.
· 2016 is on track to be the strongest year for office completions on record.
The consistently healthy fundamentals that characterize commercial real estate in Salt Lake City are drawing the attention of investors—both foreign and domestic.
· In dollar terms, $0.79 of every dollar spent purchasing investment properties in Utah during 2015 came from out of state.
· Looking forward, the flow of out-of-state dollars into Utah is expected to continue, driving demand for a variety of commercial real estate services.
· In 2016, the market will see a significant amount of investment (often from out-of-state owners) in improving/revamping new acquisitions (ie, Gateway Mall).
Consolidation of Commercial Real Estate Services
In order to both cut costs and unify image, many organizations are turning to single-point-of-contact firms, such as CBRE, to manage their properties and portfolios. This is driving demand for services such as project management, Global Workplace Solutions, and asset services.
How to use space (amenities, energy efficiency, etc.) is increasingly important to users.
· More than half of CBRE’s project management projects during 2015 were in-space amenity driven, meaning the focus of the build-out was integrating amenities into office space. This movement is expected to strengthen throughout 2016.
Bouchard concluded, “Though there is much in the broader economic picture that remains uncertain, Utah’s diverse economy is well positioned to continue growing throughout 2016. Mirroring this growth, commercial real estate in the local market is expected to experience another strong year. In-migration levels and population growth suggest there is still room for employment to continue to grow at an above-average rate for at least another year, supporting demand for office space across the valley, and fueling a strong 2016.”
Click here to download a copy of the 2016 Salt Lake City Real Estate Market Outlook