Salt Lake City: Official Development News Thread - Part 3

[Future Mayor]

That actually doesn't surprise me. I've actually heard from several commercial brokers over the years that co-star doesn't produce very reliable data for the SL Market. So I am more apt to trust Commerce.

The report actually states that the total vacancy in the CBD is 20.7% in 2012, while the Class A in the CBD is at 14.6%

At 14.6% Class A vacancy rate downtown, that explains why the PAC tower is only proposed at 20 stories. 8-10% is consider full occupancy in the commercial office space realm. We also have to take into consideration that while 14% doesn't seem that big, 14% today is a much larger total square footage than 14% just a few years ago, with the addition of 222, the new Gateway building and the Boston, Newhouse and Deseret Bank building all coming back online as class A space, they have significantly increased the total square footage available.

It's not as if developers are just "afraid" to build something taller, it is simply about economics. Most commercial ventures, such as the PAC tower require a minimum percentage of pre-leased square footage, plus at least 10-20% of investor money before they can get financing on the building construction. A bank or commercial lender won't lend money on a project that isn't pre-leased to their set percentage requirement, it's not that the developer doesn't want to go taller, in the long run it would be more beneficial to them, it's simply that they are unable to get the required commitments in a specific time frame.

222 went up only because they had a pre lease agreement with Goldman. As one of my previous comments said, if the developers were able to lure a corporate headquarters or a regional headquarters to relocate to SLC, they could most likely increase the pre leased square footage and overall height.

That is why the Wells Fargo tower was built as tall as it was, when it was. It was a corporate headquarters, and American Stores was going to occupy well more than the required pre lease percentage, thus they were able to get funding for so much height and total square footage.