Salt Lake City Market Reports

Salt Lake City Office Market

A lack of construction deliveries, new construction and overall tenant movement left the Salt Lake office market relatively stagnant quarter over quarter as companies waited to see how changes in inflation and rate hikes would affect the overall economy. Office occupancy increased by 146,849 square feet, heavily concentrated in Downtown Salt Lake City, West Salt Lake and International Center submarkets. Both local and national companies were attracted to Downtown Salt Lake City as new Class A product delivered, driving positive net absorption for the submarket. Lack of construction and a heavier concentration of tech companies in the southern part of the valley pushed suburban occupancy to contract as numerous tech companies cut jobs and/or office footprints. Overall direct vacancy decreased by 30 basis points quarter over quarter but is up 200 basis points from the fourth quarter of 2021, influenced in part by companies contracting in size or renewing in smaller footprints.

Salt Lake City Industrial Market

A substantial portion of delayed construction delivered in the fourth quarter of 2022, pushing quarterly deliveries to a historic high of 4.7 million square feet, which elevated net absorption to a quarterly high of 4.1 million square feet; much of the space that delivered was preleased or owner-user occupied. Deliveries outpaced net absorption in 2022; 9.1 million square feet to 7.6 million square feet, driving the direct vacancy rate up to 2.6% from an anemic 1.9% a year ago. Even with the increase in vacancy, the market is more than 100 basis points lower than the 3.7% experienced pre-pandemic. While construction starts may be down nationally as a challenging interest rate environment takes hold, starts in the fourth quarter of 2022 for Salt Lake County were right at the quarterly average of 2.3 million square feet experienced since the second quarter of 2020. Strong preleasing in a few of the larger buildings that went under construction was a strong assurance for the developers that proceeded with those projects.