If the Market's like a Mountain, Where's the Peak? A commercial real estate analyst's mountain-top view of Utah's economy, how far we've come and the path ahead.

• Author: Farrell, Joseph
• Position: UB VOICES

We love our mountain analogies here in Utah. It's convenient, then, that the national business community has adopted our favorite over-indulged visual aid for posing today's top business concerns:

Has this market cycle reached its peak? When will we descend into the valley? How rocky is the road ahead? Will there be mountain lions? Am I supposed to "get big" to scare them off or is that just grizzly bears? Hey, why can't we just stay up here? Who says we have to leave the peak at all?

Good questions, business community! And not just because of the loose 'mountain' theme. Unfortunately, any answers you'll hear won't be very concrete. Like the preliminary weather forecast for next month's hiking trip: there's a chance of snow, or rain--depending on temperature--and if not, we may experience dry, overcast skies, or else some sunshine! But for all its uncertainty, looking ahead is not fruitless. Establishing a baseline market scenario and anticipating what could cause deviations is critical. And independent of where the "peak" is, or how much longer we can go, we do know how high we've climbed, and we have never had a better view.

As it turns out commercial real estate is the perfect set of binoculars for taking in this mountain view. So, let's adjust that focus wheel and have a look. We'll start by looking back the way we came.

WHOA, WE'RE WAY UP HERE, AREN'T WE?

That dizzy feeling you get when you listen to economic reports, that's normal at this altitude. It's been nine-and-a-half years now since the U.S. economy bottomed out (in terms of GDP), making this the 2nd longest expansionary period in U.S. history. If things keep up through July 2019-as is expected-it will officially be the longest expansion in U.S. history.

Like a good decade-long climb can turn a peach-fuzzed boy scout into a bronzed and bearded mountain man, Utah's commercial real estate market has really 'filled out' during this expansion. Office, industrial, and multifamily properties have all seen record levels of leasing in recent years, driving down vacancy rates and spurring more development than Utah's ever seen. This diverse, elevated demand from both national and local tenants is what happens when the broader business community-emboldened by low lending rates to start or expand their businesses-finds Utah's unique combination of prospective talent, affordability, friendly public policy, and (of course) majestic mountainous landscapes.

Accelerated business and...