The Salt Lake City industrial market continues to see unprecedented growth.
Construction activity continues to make headlines, while leasing activity remains very strong. Despite record levels of new construction deliveries in 2018, overall availability and vacancy remained stable at 4.7% and 3.4% respectively. These figures are indicative of a balanced market and justify the current levels of construction, as 2019 will bring another wave of new supply to the market.
While construction starts and deliveries have been strong for many years, 2018 brought the highest level of construction ever seen in the market. At year-end there was 4.2 million square feet under construction, and a record 4.7 million square feet delivered. While the under construction amount is very similar to 2017 (3.9 million SF under construction), deliveries outpaced the year prior by 1.8 million square feet, thanks in part to the completion of major distribution facilities for Amazon and UPS.
While existing developers Freeport West and Price Real Estate added new projects to their base, the emergence of new developers to the market is noteworthy and presents an interesting narrative going forward. As the Salt Lake City industrial market continues to gain national attention, it is no surprise that a host of new developers kicked off projects in 2018. The Boyer Company (533,880 SF), Ritchie Group (457,320 SF), Brennan Investment Group (312,600 SF), Synergy Development (123,487 SF), and Wasatch Property Management (411,838 SF) are all currently developing sizable projects as other developers work to get proposed projects in place as well. The total square footage of these notable developments, among others like Phase I of the SLC Port Global Logistics Center, will quickly surpass 2018's record total for new deliveries as close to 5.0 million square feet is set to deliver in 2019.
Lease activity in 2018 continued to remain elevated, with approximately 5.3 million square feet leased and 4.2 million square feet of overall net absorption--much of which was due to pre-leased construction. This was a year-over-year decrease of 30%. However, it should be noted that the 6.9 million square feet leased in 2017 was highlighted by three large lease transactions (857,173, 307,559, and 297,685) that helped push 2017 to the highest level of leasing activity on record--with 2018's top lease coming in at 336,000 square feet.
Analyzing asking and achieved lease rates in their various size increments helps to provide additional...