Retail Market.

• Position: STATE OF THE MARKET

OVERVIEW

Utah demonstrated extreme economic strength and resilience in 2014. However, the overall retail market saw minimal construction activity throughout much of the year. Retail market vacancy rates declined with an increase in net absorption. At year-end, overall vacancy decreased to 7.02%.

As big-box retailers slowed growth on a national basis, local markets encountered the effects of hesitant big-box expansion. Major retailers such as Costco and Target were largely inactive within the Utah market during 2014. With Home Depot and Lowes claiming a combined number of nearly 4,000 locations throughout the United States, many big-box corporations with similar geographic footprints are content holding current assets until sensible growth opportunities arise. The national growth window within primary and secondary markets is closing, and tertiary markets have yet to provide big-box retailers the necessary consumer confidence for expansion. Big-box grocery chains like Harmons, Smith's, and Walmart may be the exception to this trend. These organizations embraced growth in order to secure market share across the Wasatch Front.

Salt Lake County

SUMMARY

A limited mid-box base continued to expand throughout Utah, despite sharing similar growth hesitancy to big-box business. Salt Lake County demographics are aligning with stringent expansion requirements of many specialty retailers looking to enter new markets. This evolution of consumer demographics was evident when mid-box retailer, Container Store, leased space within Fashion Place Mall. Existing tenants such as Ross, Nordstrom Rack, Dick's Sporting Goods, and Petco also continued to expand across Salt Lake County due to positive growth patterns and overall economic stability.

Quick-service restaurants (QSR) carried the highest level of momentum in 2014- These tenants drove rising market rates for the most part of the year. Class A properties are seeing high absorption as demand out paces supply. Indicators suggest this trend will remain a market constant for the foreseeable future.

ANCHORLESS STRIP CENTER [0-50,000 SF] NEIGHBORHOOD CENTER [500,001-100,000 SF] COMMUNITY CENTER [100,001-350,000 SF] REGIONAL CENTER [350,000 SF OR GREATER] Utah County

SUMMARY

The theme of the 2014 Utah County retail market was new expansion and a surge of retail development in the North and Central quadrants. The Utah County South quadrant experienced marginal activity. Tremendous growth was seen as QSR tenants...