lt Lake Salt Lake City had a late cycle growth spurt. Office in particular as seen a surge of activity from the arrival of tech companies and the emergence of the Silicon Slopes scene. Then, the pandemic hit, threatening to derail the market's potential. While no city in the US is immune from the impacts of the coronavirus, Salt Lake City is actually well prepared to rebound quickly, according to Tim Helgeson of KBS.
"Every market in the country, including Salt Lake City, has been impacted by COVID-19 in some way. How each market recovers will depend on its individual strengths and how nimble office owners and tenants are in adapting to the necessary changes that lie ahead," Helgeson, asset manager and SVP at KBS, tells GlobeSt.com. "Because we are dealing with an unprecedented economic situation, the actual trajectory of any market has yet to be determined, and it may take some time for the office sector to fully recover. However, Salt Lake City is well positioned to rebound."
If the first quarter performance was any indication, the impacts in Salt Lake City could be less intense than in other markets. "Market research shows that in the first quarter of 2020, the Salt Lake City-Provo office market absorbed nearly 200,000 square feet of space, and the nearly 3 million square feet of incoming supply indicates strong confidence in the region," says Helgeson. "Another indication of market strength, office asking rates held steady between Q4 2019 and Q1 2020. While vacancy did increase by 90 basis points between these two quarters, much of that figure can be attributed to new deliveries and rising availability of sublease space."
KBS has been an active player in the Salt Lake City office market. It has accumulated a portfolio of class-A office assets, including 222 Main, Parkside Tower, Millrock Park and the Salt Lake Hardware Building. "We made investments in this region because of its status as a growth market with excellent fundamentals, such as declining vacancy rates and increasing interest from blue-chip tenants," says Helgeson. "From KBS' perspective as one of the largest investors in premier office properties throughout the country, we look at each market and property individually and determine our strategy on a case-by-case basis. Salt Lake City area has been a high-performing market for some time."
The investment firm hasn't stopped acquisition activity because of the pandemic, and it continues to see opportunity in the market. "We also completed the sale of Hardware Apartments in May 2020, at the highest total sale price and highest price per unit ever achieved in Utah," says Helgeson. "We believe this signifies that there is still demand in the region despite the current environment. We built this 453-unit class-A apartment community as a ground up development adjacent to our Hardware Village office asset."
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Kelsi Maree Borland
