Commercial real estate.

• Position: Industry Outlook

With Downtown Rising beginning to ascend, regional malls undergoing reconstruction and redevelopment efforts in progress across the state, Utah is poised for significant commercial momentum and growth. While the real estate market has softened on the residential side, our panel of experts indicated that commercial real estate is holding steady. Noteworthy commercial developments coming on line in northern Utah County coupled with growth in eastern and southern Utah add to the state's historically strong retail and industrial markets. Our panel also discussed the impacts of the housing market, tightening lending regulations and opportunities in the suburban market.

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What is the current state of commercial real estate downtown? How is the City Creek project impacting what's going on?

WILMARTH: I think downtown has a lot of excitement right now. We are looking at City Creek as being the impetus of bringing people back downtown. We saw a huge out-migration of tenancy during that time period when light rail and the interstate were being redone for the Olympics. But we see City Creek as being really the force to bring people back, both from a residential standpoint as well as an office standpoint. Now with the construction of 222 South Main, we are finally going to see some class A product that's going to accommodate some of these higher end corporate users that are looking to make a statement. 222 is really the office component of City Creek right now. City Creek is primarily residential and retail and someday probably will accommodate additional offices. This represents a great opportunity for our city to have a resurgence again.

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CHILD: One thing we are seeing is that investors are looking at the Class C buildings in the periphery to buy them and turn them into Class B. I think that's going to really brighten the periphery and make the retail and residential sector work a lot better here in Salt Lake.

BOGDEN: We are in probably one of the most unique market scenarios in the United States. Every regional mall we have is under construction, redevelopment, being torn down or rebuilt. And the positioning of retail is going to be very interesting to see what happens in the next few years because of all of these changes. What they are doing in Cottonwood Mall certainly will have an impact on what happens at Fashion Place and such.

It's going to be interesting to see what City Creek does to The Gateway. They are both vying for the higher scale tenants,, but City Creek has the same anchor tenants. There's no one new and unique, but it's going to be an incredible development. It's going to be exciting to see what happens in retail in Salt Lake County.

BARTH: It's a very interesting market right now. As we drive through downtown, people are very interested to see all the construction and the cranes and a lot of movement. That's not something that is happening all over the country. The retailers that we deal with are moving from 2008 to 2009. Some are moving to 2010. That's creating an opportunity for local and regional tenants to fill that gap. Just the fact that so much money is being spent and that there's a lot of movement is creating a lot of excitement for retail, in spite of what you read and what you hear on the news. It's a very positive thing.

BOUCHARD: In the local community, we describe it as "City Creek" and "the [LDS] church's project." Something that has been extremely understated is who the Church's partner is in the project--Taubman. This is a world class developer who has done some of the finest retail developments around the country, if not internationally. They have quite a following themselves because of the nature and quality of the projects they develop.

Real estate at its roots is still simply a business of great location and great opportunity with a blend of great demand in a marketplace. Utah represents the highest per capita purchase rate in retail of anywhere in the country. We spend more money in retail as a community, absent the Las Vegas strip, which is an anomaly in the world. You couple that with where we are economically compared to the rest of the country and any recession where Utah is concerned will be very shallow, very subtle, and I think we will come out of it fairly rapidly. In fact, I would suggest that we will be one of the first states out of it when we turn the corner. When that happens I think the momentum is going to be significant.

On the subject of The Gateway, I think this only adds to the strength of the downtown area. If you look at major metropolitan cities in the United States that went through this major transformation in the last decade, the region has lent itself to success for all phases of their development, from residential to retail to their condominium markets. The Gateway project is a well conceived, well developed project with strong tenants. That is an added value, because although you'll see some overlay, the reality is you're going to see a lot of new tenants from each project. In that situation, you're just going to have a greater array of services for people to be attracted to. When you have two to three billion dollars of new development with top-end developers participating, that partnership has got to lead to success.

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MARTIN: I agree with what everyone said, but maybe look at it a little bit differently. Every single major project that Steve talked about and Mark talked about have leasing teams. They are all extremely good developers. These are not the smallest developers in the world. These are the largest developers in the world that are doing each one of these redevelopments. Every single one of them has teams out looking to try to secure tenants in a market in which the top 50 tenants in the world are not concentrating on opening new stores. They are concentrating on closing stores. It's a very unique time.

I think within the next year you are going to have to watch real carefully to see who gets what signed. It's good press for Utah because all these people are out selling the benefits of Utah, right? But anybody who owns those real estate projects is going to have to pay a lot of...