HAS UTAH FINALLY GROWN UP?

• Author: Bollow, Rusty
• Position: INDUSTRIAL

With new entrants to the Salt Lake County industrial market such as Amazon's approximately 2.2 millions square-foot multi-level/multi-building lease, UPS's 875,000-square-foot regional processing facility (one of UPS's largest processing facilities globally), and Stadler Rail's only U.S.-based manufacturing facility and test track, it appears so. These entrants to our market give new credence to our state song "Utah, this is the Place" and will unquestionably lead the way to a bigger and brighter Utah.

SALT LAKE COUNTY OVERVIEW

The Salt Lake County industrial market continues to see growth. Since 2012, developers and owner-users have added more than 13 million square feet to our industrial base, lease rates have increased in almost all product types, speculative development continues to flourish and direct vacancy continues to drop.

Utah will remain as one of the fastest growing states in the nation due to its $3 billion expansion of the Salt Lake International Airport, its continued additions and improvements to existing road infrastructure, and the potential availability of 3,500 acres of newly developable industrial land within a 15-minute drive of downtown Salt Lake City--all of which have contributed to keeping Utah in the national spotlight. As of October 2017, EDCUtah has 56 open industrial projects.

CONSTRUCTION

Developers and owner-users continue to break ground on new industrial buildings despite continually increasing land and construction costs. In fact, 2017 was the largest year on record for new construction starts and deliveries with 3,297,358 square feet of new building deliveries versus the average of 2,088,310 square feet of building deliveries over the past five years. Recently delivered properties include Post Foods's 903,000-square-foot distribution building, Seefrieds 500,000-sqaure-foot speculative distribution building, and Price's 300,000-squarefoot build-to-suit for Keystone Automotive Industries. Notable building deliveries planned for 2018 include Amazon's 857,000- square-foot (ground floor square footage) build-to-suit, UPS's 870,000-square-foot build-to-suit, Hamilton Partners's two-building speculative project totaling 472,362 square feet, and RWK's speculative 200,000 square feet.

VACANCY AND ABSORPTION

Two of the key metrics that show overall health of a real estate market are declining vacancy and positive absorption and 2017 was a record year for both. The overall average industrial direct vacancy rate year-end 2017 was 2.76%, which is the lowest direct vacancy rate ever realized in Salt Lake County. Flex buildings benefited the most with...