Salt Lake's industrial and logistics (I&L) market has experienced remarkable growth in recent years and is poised to continue growing. For the sixth straight quarter, industrial leasing has topped one million square feet1, amounting to the longest run on record for Salt Lake County. This leasing momentum is being facilitated by high construction levels; last year, 2.9 million square feet was completed and as of Q1 2018 another 4.4 million square feet is currently under construction. To give some perspective, ten years ago at the height of the market in Q4 2008, there was 2.8 million square feet of construction underway in Salt Lake County. While impressive at the time, today's sum is nearly double that pre-recession high, and the market's most significant, catalyzing changes are still on the horizon.
In March, Governor Herbert signed a bill creating an Inland Port Authority in Salt Lake City. The historic legislation clears a pathway for the creation of a zone for international trade that would serve as the country's only inland port west of Kansas City. The legislation--and efforts for a new inland port--has been in the works for years, making way for a Tier 1 intermodal facility to operate customs inland. This presents a unique opportunity to push freight in from coastal ports, lowering costs and clearing congestion. This has the potential to greatly impact the local industrial market as well as the broader economy, and development plans for the area are already underway.
During Q1 2018, NWQ, LLC announced the SLC Port Global Logistics Center (the Center), an industrial development that covers 3,000 acres of land in the northwest quadrant of Salt Lake City just five minutes west of the Salt Lake International Airport. The Center has capacity to accommodate up to 50 million square feet of class A speculative and build-to-suit buildings, combined with owner-occupied and mega-site land for sale. Phase 1 of the development has just launched and is planned to consist of 10 buildings totaling approximately 6 million square feet of bulk distribution and manufacturing industrial space. The first two buildings--sized 532,000 square feet and 170,000 square feet--are planned to deliver in the Spring of 2019; groundbreaking for Phase I is expected to occur in Q3 2018.
With so much potential development on the horizon, it begs the question of whether the market can absorb such a high increase of product. However, in recent years, e-commerce sales...