Monday, Monday: commercial real estate awakens to better days.

• Author: Thompson, Tabitha
• Position: Businesstrends

CALL IT THE MORNING AFTER the morning after. The delirium of the 2002 Olympics drove fast and furious growth in the economy, but the post-production hangover left the state in a several-month slump that didn't wear off until 2003. That year, both the economy and the commercial real estate market that bears its mark finally started returning to normal. Like the Sunday after an overindulgent Friday night, the effects of the slowdown have not only dissipated, but 2004 felt even better than the year before.

"[Last year] was much stronger than the previous two years combined," says Jeff Edwards, interim president and CEO of the Economic Development Corporation of Utah (EDCU). The numbers in each commercial real estate subcategory--retail, office, industrial and investment--showed improvement. But Edwards notes that one of the biggest indicators of our strengthening market was the number of inquiries from out-of-state investors last year.

"We see companies when they first consider a project in Utah. There was a dramatic upturn of interest in 2004. One trend, though, is that companies are doing more careful due-diligence now. They want a lot more information because there is a serious downside to making mistakes in today's market," says Edwards. Some of the information companies are considering include long-term rent profiles and incentives such as property tax rebates, preferred financing rates for manufacturing companies, and building improvements and allowances from landlords for commercial investors.

"There are some nice opportunities coming to Utah. According to the state economists, there has been three percent job growth," says Edwards. And there seems to be a fair amount of optimism about the economy with Governor Huntsman taking the helm. The governor campaigned on a platform of economic stimulus and Edwards says that Huntsman plans to strengthen incentive programs such as the Industrial Assistance Fund that promotes the creation of jobs with higher-than-average salaries.

At the beginning of this year, EDCU was involved in some 60 new projects, the majority of which were manufacturing and distribution. According to William K. Martin, co-managing partner of Commerce CRG, a member of Cushman & Wakefield Alliance, the most exciting trend in industrial real estate in 2004 was the drop in vacancy rates from 10.50 to 8.49 percent, although this was "fueled primarily by expansions undertaken by local and regional tenants who already have a...