SALT LAKE CITY—Demand for class-A space in Salt Lake City is not confined to the office and industrial sectors—the retail sector is clamoring for this space as well, according to CBRE. The market experienced steady demand in the first quarter of 2014, with particularly strong demand for class-A product.
As GlobeSt.com reported earlier, the office and industrial sectors in this market all exhibited stable performance during Q1 and are expected to gain momentum going forward, and the demand for high-quality space is high, according to CBRE. In the office sector, as companies work to recruit and retain Millennials, demand for newer class-A space has increased. Meanwhile, the supply of high-quality industrial space has been limited because speculative construction has been low, and those spec buildings that are in the pipeline have been sold to owner-users or leased to a single tenant early in the development phase.
Salt Lake's retail activity in class-B and –C product was primarily driven by local tenants during Q1, CBRE reports. Due to the limited supply of class-A space, many retailers are waiting for new product to come to market as opposed to leasing second-generation space. This is evident in current preleasing levels, often occurring before a project has broken ground.
In order to keep up with the demand for new space, completed construction during the year is expected to be significant, says CBRE. A total of 440,672 square feet of retail space is currently under construction, and new construction expected to break ground in 2014 includes Oquirrh Mountain Marketplace and Costco at Harvest Village. The majority of construction activity is concentrated in the southern section of Salt Lake County.
According to JR Moore, a retail specialist and VP with CBRE, “In an effort to keep demand strong and to lure online consumers, retailers are striving to create destination shopping experiences. This can be seen in Salt Lake with the City Creek and Gateway malls, as well as Station Park in Farmington. Each includes amenities focused on entertainment, in addition to the shopping provided. As new construction occurs, this focus will continue to take center stage.”
As in other markets across the country, food-oriented tenants led retail leasing activity here in the first quarter. Restaurant tenants either coming in to the Utah market or expanding include Zaxby's, Popeye, Mooyah, Beans and Brews, Which Wich and Taco Bell.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
