Hines To Convert Salt Lake City Office Tower to Apartments

Hines is expanding into office-to-apartment conversions with its acquisition of the 24-story South Temple Tower in Salt Lake City, which the Houston-based global real estate firm plans to transform into a 255-unit luxury multifamily.

Construction will begin early next year. The acquisition was brokered by Newmark; Hines did not disclose the seller or the terms of the transaction.

The residential tower will feature a range of apartment sizes and types, including studios and one- and two-bedroom units, with a suite of residential amenities to be designed by architecture and design form Hickok Cole. The South Temple Tower offers unobstructed views of the city skyline, the state capitol and the Wasatch Mountains.

Hines will strip the building to its core and shell, remove all of the existing offices and restructure the building to create an efficient residential floor plan.

Hines said it conducted an extensive analysis of the South Temple Tower before the acquisition to ensure the building was suitable for conversion, evaluating the building’s walkability, natural light, the shape of the building and the number of potential apartment units.

Hines is planning to reduce the embodied carbon in the construction materials that will be used for the adaptive reuse of the building, including limitations on the use of concrete. Energy-efficient mechanical systems also will be deployed to reduce the building’s operational carbon emissions.

The building’s location in Salt Lake City taps into a tight housing market with rents that have risen 20% YOY in Q1 2022, but still affordable in comparison to the US national average.

“Downtown Salt Lake City is experiencing immense growth, with Utah having the second-highest population growth in the country over the last decade and there’s an undersupply of housing,” said Dusty Harris, senior managing director of Hines, in a statement.

More than 14,000 new multifamily units were in construction during Q1, most of them being built in the urban center. Despite the influx of new inventory, Salt Lake City’s demand is likely to continue to keep outpacing supply.

According to a recent report from Yardi Matrix, Salt Lake City’s reputation for affordability is fueling in-migration from more expensive West Coast markets.

“Low inventory pushed some renters toward single-family communities, which have seen record rent growth,” the report said, noting that average occupancy rates in Salt Lake City have been as high as 97% in Q1 2022.