Roundtable: Commercial real estate.

• Author: Malan, Mekenna

This month, Utah Business partnered with Holland & Hart to host a roundtable event featuring Utah's commercial real estate industry leaders. Moderated by Lana Howell, executive managing director of Colliers, they discussed Utah's commercial real estate trends, inflationary pressures, record growth, and more. Here are a few highlights from the event.

How do you see inflation affecting Utah's market?

Bryce Blanchard | Executive Managing Director, Capital Markets | Newmark

The negative effects of inflation and hyper-inflation are devastating. I'm a big believer that the federal government has got to continue to act and act quickly. Our interest rates are back up to almost four percent, which we haven't seen since 2007. What's going to happen for investment real estate--which is my playground--is cap rates have to go up. And if it does, we'll have a healthy market that finds equilibrium. And if it doesn't, it's going to be a rocky road with free pricing. We are in a new price-per-square-foot paradigm for every asset class ... and we just have to get used to that new norm until we find equilibrium.

Lee Dial | CFO | Cowboy Partners

We've had a lot of new developers come into this market over the last decade. In my opinion, you could go into development, make a lot of mistakes, and still be saved and come out OK because cap rates compressed, interest rates came down, and that made up for a lot of financial mistakes. My worry for the real estate market is that those who maybe aren't as savvy and haven't gone into it conservatively--perhaps they're going to get bitten through that. Continuing with higher interest rates and higher construction costs, I think it's going to be harder for deals to pencil. We're already seeing players in the market who are looking to buy product starting to pull back because everybody's a little bit uncertain.

Natalie Manning | CEO | ABG Builders

Our biggest problem with inflation in construction is locking down prices for materials. We're trying to buy steel for a project in Las Vegas and they've said, "You have to give us the money in one or two days, or the price goes up." And that's how it's been for a lot of materials. If we don't lock in those prices--not just lock in but have the money to that company--they'll turn around and sell the materials to somebody else. I think lumber went up 300 percent last year. Though it did fall a little bit, the question is, will the price of materials ever go back to where it was...