Commercial real estate awaits an upturn.

• Author: King, Heather
• Position: Business Trends

Buildings are going up, shopping centers are spreading out, and urban eyesores are being renovated into yuppie eateries and funky retail shops. Commercial real estate appears to be a booming business in Utah as structures such as the Wel]s Fargo Center (formerly the American Stores building), Gateway and the Commons at Sugar House have developed around the city. But even with these new properties adding diversity to our neighborhoods and dollars to the economy, the commercial real estate industry has seen lowered returns in recent years.

The consensus from industry experts is that the market is experiencing the same type of downturn as the general economy. Most notably, the crash of the dot-com industry has affected national and local markets as many of these companies have downsized or closed.

Fortunately, the news is not all bad, and many commercial brokers and property management companies are predicting an upturn for the market in the near future. "However, I don't see the same kind of geometric growth as there was before," warns Scott McDonald, director of Coldwell Banker Commercial for the Utah region.

John Dahlstrom, executive vice president, general council, of Wasatch Property Management, agrees with McDonald's assessment and further explains that recent world events have had an effect on the industry. "There was a pause in business after September 11, but vacancy is decreasing. People have gotten over the shock of September 11--people are making decisions again."

And while the market may not rebound to the record-breaking levels set in the high-tech era anytime soon, the commercial real estate industry sees hope for the future in the form of several burgeoning trends.

Location, Location, Location

As with most industries, location is an important measurement in the success of a business, and it is one of the largest determining factors in the success or failure of commercial real estate. This was conclusively demonstrated during the years Interstate 15 was under construction. Many companies chose to locate their businesses in the suburbs in order to make their employees' commutes easier, and there was a notable increase in suburban real estate. Now, with the completion of the interstate and the huge success of TRAX, many businesses are choosing to return or relocate to the downtown area. "Generally, there is a trend away from urban sprawl," Dahlstrom explains.

In the downtown area, the addition of the Gateway land II properties...