Opportunity knocks: institutional investors turn Utah into the next hot spot.

• Author: Sorensen, Dan

A tectonic shift in the Salt Lake City investment real estate landscape is currently shaking up the market. Until recently Utah has been dominated by local and regional developers and investors with strong Utah ties. But over the past 18 months, major institutional investors have entered Utah in a big way--and commercial real estate insiders see this as an escalating trend that will continue bringing fresh opportunities to the area.

When the big players enter a market, their projects often attract top-tier companies to relocate to the state, along with attention from around the world. Utah is already a magnet for technology companies, and the facilities, infrastructure and connections institutional investors bring to the state only fuels this growth. As Utah attracts more national and global attention from technology companies, institutional investors and members of the Fortune 500, it creates a snowball effect that will amplify and diversify economic development in the state.

THE SECRET SAUCE

Utah's ability to draw institutional investors is nothing random. These groups are very calculated in where they place in vestments, as their end goal is to maximize return and provide the best value to shareholders.

"When we made our investment in Utah, there was a lot to like about the economy and business environment. We love how Utah is a business-friendly state and its low unemployment really stands out," says Greg Davis, vice president of capital markets and investor relations for Excel Trust, a California-based real estate investment trust that focuses on retail properties.

Gateway cities, like San Francisco, New York, Chicago and Los Angeles, are generally primary targets for major investors, as properties and tenants are plentiful--however, so is the competition. When properties hit the market, it is not uncommon to see 10 or more groups jockeying for top bid.

On the other hand, properties in Utah can offer a rate of return that is comparable--or better than--primary markets, with far less competition. For investors, it's a no-brainer to capitalize on these budding regions.

"The allocation and diversification of properties in Utah is very appealing to institutional investors," says Adam Gatto, senior vice president of investment properties at CBC Advisors. "It gets down to total return, risk metrics and location."

By diversifying real estate investments across various primary and secondary markets, institutional investors can better manage...