STATE OF THE MARKET.

• Position: MARKET REPORT

The Wasatch Front Vacancy

RATES

Utah's economy continues to recover from the effects of the pandemic, garnering national recognition as one of the best states to bounce back from the crisis. Throughout the Wasatch Front, vacancy rates are the highest in the office market, particularly in Salt Lake County at 12.6 percent. The industrial market has the lowest vacancy rates, dipping below 1 percent in the Davis and Weber County area. The Bureau of Economic Analysis (BEA) ranks Utah as number 1 in the U.S. for largest growths in GDP of 2021. Utah's GDP grew by an astonishing 19.1, the second highest growth rate for that period out of all 50 states.

2022 Utah Report

OFFICE

Davis/Weber Counties

Davis and Weber Counties experienced an uptick in office activity in 2021 as many users returned to the office.

Overall asking lease rates decreased from $18.52 full-service gross to $16.71 year-over-year. Tenants want to return to more high-end spaces, so they put their older spaces back on the market-bringing down overall asking lease rates.

Vacancy rates decreased drastically from 7.17 percent in 2020 to 4.76 percent one year later. Many of the vacant spaces in Davis and Weber Counties were either leased by tenants wanting new space or existing tenants looking to expand in their current location.

Construction remains at a standstill, with labor and product shortages at an all-time high. With only 25,000 square feet currently under construction and no new product delivered in 2021, this market continues to see a significant decrease in development.

Salt Lake County

The Salt Lake County office market finally saw positive absorption at the end of 2021. As Utah's economy continues to succeed, office activity is expected to increase throughout 2022.

Construction numbers are the lowest since year-end 2018 and are expected to be cut in half unless vacancy rates drop and developers are more motivated to start new projects.

Overall average asking lease rates are currently at $25.32. With a new record high of $29.68 full-service gross, Class A overall average asking lease rates are expected to jump even higher as buildings like 95 State and 650 Main are completed.

Year-to-date absorption secured a positive rate for the first time all year at 40,290 square feet.

Overall vacancy increased slightly to 12.58 percent at yearend. The most significant vacancies can be found in the CBD, Cottonwood, and West Valley/Lake Park submarkets, with over 15 percent vacancy. Class B product has the most vacancy with 16.59 percent.

Sublease availability increased slightly to 1.2 million square feet at year-end. Vista Station, Six69 Building, and Vista Station 6 account for 95.68 percent of new sublease availability in the fourth quarter.

The average asking lease rate for buildings currently under construction is $40.91 full-service gross. The overall rate for buildings under construction is expected to drop to roughly $28.56. Overall asking lease rates for the existing Class A product are expected to jump to over $30.00.

Utah County

More office tenants in Utah County are seeking quality space, opting to pay higher lease rates for the newest and best built-out spaces.

Office projects currently under construction in Utah County are almost evenly distributed between the North (42 percent) and Central (54 percent) quadrants. Of Utah County's office projects currently under construction, 41.79 percent are already preleased to future tenants.

Asking lease rates increased slightly to $23.35 at year-end 2021. The highest asking lease rates are found in Class A product in the North quadrant at $26.47.

Year-to-date absorption increased from positive 378,956 square feet at the end of 2020 to a positive 928,298 square feet one year later.

Since the previous quarter, the overall vacancy rate decreased by 2.31 basis points year-over-year and 0.94 basis points. The largest vacancies can be found in Class B product in the Central quadrant, with 6 out of the 14 buildings in Canyon Park Technology Center more than 50 percent vacant.

The amount of available sublease space continues to decrease throughout the Utah County market and was 516,756 square feet at year-end. Over 100,000 square feet of sublease space was absorbed in the fourth quarter.

Average asking lease rates for buildings currently under construction remain significantly higher than existing buildings. The overall asking lease rate for under-construction buildings is $28.40 full-service gross, $0.56 more than what construction rates were in the last quarter and $1.31 more than the previous year. Construction projects in the county will continue to decrease until tenants are willing to pay higher prices for new construction.

CONSTRUCTION

COMPLETED CONSTRUCTION

677.3K

Current SF Utah County

835.5K

Current SF Salt Lake County

0K

Current SF Davis/Weber Counties

UNDER CONSTRUCTION

555.0K

Current SF Utah County

1.4M

Current SF Salt Lake County

25.0K

Current SF Davis/Weber Counties

2022 Utah Report

RETAIL

Davis/Weber Counties

Davis and Weber Counties continue to see a rise in job and population growth.

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