Utah's commercial real estate sector slower, but still performing"Bright Spots" » Retail, industrial and office space sectors holding their own.
By Leslie Mitchell
The Salt Lake Tribune
After several boom years, Utah's commercial real estate sector is slowing as companies of all sizes, stung by recession, put off expansion plans and close locations.
But as with most segments of the state's economy, conditions are far better than in many other areas of the country plagued by empty storefronts and buildings.
"In spite of what's going on nationally, Utah really continues to be a bright spot," said Brandon Fugal, director of corporate services with Coldwell Banker Commercial in Salt Lake City.
Take retail. While many "big-box" retailers, such as Target and JC Penney, are putting off new stores and many malls are on hold, a number of smaller retail and restaurant players continue to set up shop and expand in Utah.
They may not have the cachet of IKEA or Cabela's, but they are creating jobs and filling space that would otherwise remain vacant or unbuilt.
Smashburger, for example, plans to enter Utah with two restaurants: at 1028 E. 2100 South in Salt Lake City and 3513 S. 2700 West in West Valley City. Over the next two years, the chain plans to add eight more. Another popular burger joint, In-N-Out Burger, which has one location in southern Utah, is expanding into the Wasatch Front.
Despite leaner times and tighter credit, numerous small businesses continue to open and expand. In the Daybreak community in South Jordan, seven locally owned businesses are opening this summer in the SoDa Row Village Center.
The 68,000-square-foot center includes expanding companies like Black Diamond Gymnastics and Sport Centers, Tio's Mexican Restaurant and Classic Cleaners. Others, such as Oopsie Daisy, a children's boutique, and Guy's Barbershop, are debuting in the development.
The downturn also has affected Utah's industrial market, which includes buildings used for manufacturing, warehousing and distribution. Earlier this year, several large operators, including Lozier Corp., announced they were cutting back or shutting down, vacating nearly 900,000 square feet of industrial space.
Lozier, which makes fixtures for stores, such as display shelving, said it will close its 500,000-square-foot Cedar City facility by August, laying off 82 employees. The company has been hurt by the lack of retail expansion.
Compensating for these cutbacks are some high-profile, large-scale expansions. Detergent maker Sun Products Corp. is leasing a 400,000-square-foot facility in Salt Lake City. Reckitt Benckiser, which manufactures Woolite, Lysol, Electrasol, French's mustard and other products, is building a nearly 575,000-square-foot facility near Tooele.
Overall, vacancies remain low in the state's industrial sector, said Jim Sheldon, NAI Utah's director of industrial.
"Utah is in an enviable position," he said. "Our industrial market is on more solid ground than other markets."
The same appears true in the office market, which has been hurt by the downturn but is still expanding.
First, the bad news: vacant office in Salt Lake County has increased to a four-year high, according to a report by CB Richard Ellis.
It reached 14.2 percent at the end of June, up from 13.5 percent a year earlier. That translates into an estimated 4.2 million square feet of vacant office space, up from 3.9 million square feet.
Yet Utah still attracts some plum office expansions.
Online auctioneer eBay Inc., is adding 200 new jobs in Draper, where the company already employes 1,100.
Ebay also is building a $334 million computer center in South Jordan. Set to open in 2010, it will employ 50.
Microsoft, the world's largest computer software company, said last month it will open an office in Lehi, creating 100 good-paying jobs. Another large expansion involves the U.S. Census Bureau, which is taking 130,000 square feet of vacant space at the Discover Card building in Sandy.
"Utah's very fortunate to have landed these expansions," said Mike Richmond, an office leasing specialist with Commerce CRG in Salt Lake City.
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$2 BILLION !!!!! Can you imagine how big that thing will be?!!! It seems like it's going to be some mammoth project that will dwarf Camp Williams!
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