2017 EXCEEDS EXPECTATIONS.

• Author: Nielsen, Rawley
• Position: INVESTMENT

For most commercial real estate professionals, it is probably not news that 2017 was a historic year for investment sales and capital markets in Utah. Within the state, the investment market reached unprecedented levels, with a continued increase in the infusion of out-of-state and cross-border capital. There was far more investment capital available than deals for sale in 2017, and yet total sales volume exceeded $2 billion for the first time ever. Individual Utah cities, and the state as a whole, also continued the recent trend of receiving prominent national accolades, awards and Top 10 rankings for population growth, income growth, quality of life and business performance.

As a result of Utah's 2017 achievements across a variety of performance indicators, commercial real estate investors and forecasters have taken note. The Utah market has such positive momentum and strong underlying fundamentals, that the prestigious PwC and Urban Land Institute "Emerging Trends in Real Estate" report recently ranked the Salt Lake City metro market as the #3 overall real estate market to watch in 2018 (a combination of ranking #1 for Investment and #10 for Development). This ranking placed Salt Lake City behind only Seattle and Austin, and ahead of prominent Top 10 cities such as Dallas, Los Angeles, and Boston. Salt Lake City is the smallest metro region to ever make the Top 10.

Before digging into more specifics of the Utah investment market in 2017, it's important to understand what happened on a national level this last year.

NATIONAL CAPITAL MARKETS OVERVIEW

The national economic recovery is headed into its ninth year in 2018. For 2017, the nation saw record lending levels, but a decrease in overall sales volume.

DEBT

In 2017, U.S. commercial-loan dollar volume grew 5% from 2016, reaching historic high levels. The Mortgage Bankers Association (MBA) estimates that lending hit an all-time high of $515 billion in loans originated during the year, exceeding the previous high of $510 billion from 2007. This record level was the result of increases in lending across all major property types, including office, industrial, retail, and multifamily all experiencing year-over-year volume increases of 8%, 20%, 8%, and 15% respectively, and with all originating sources being very active (CMBS, Life, Agency, banks, etc ...). The MBA projects lending to dip slightly to $513 billion in 2018 as sales volumes slows and refinances decrease from the 2017 wave of loan maturities.

Much of the 2017...