Washington County.

• Author: Parry, Travis J.
• Position: COUNTRY REPORT

Washington County continues to show growth across all commercial real estate sectors. Industrial continues to be the darling sector with record low vacancy, increasing lease rates and strong pricing. Beehive Industrial is under construction bringing, 151,000 square feet of concrete tilt spec space to the market, 80,000 square feet of which is already preleased to a national tenant. Retail is growing around the newly constructed grocer sites. Hospitality has at least six planned and announced hotels in St. George, with three of them already under construction. Vacation rental projects are continuing to attract investment dollars and add pressure to the traditional hotel model. Multifamily is seeing new construction with new townhomes being added in several projects and two new apartment projects under construction in the Riverside Drive and Mall Drive Area. Office is at an all-time low vacancy with brisk leasing and sales activity. Residential construction remains a hot sector, especially in the Little Valley/Washington Fields area. Increasing construction costs have held back expected new construction growth across most of the commercial sectors.

OFFICE

LEASE RATES PSF $8.00 to $19.20 NNN

VACANCY 5.0%

CAP RATE 7.0% to 8.3%

LAND VALUES PSF $7.00 to $14.00

OFFICE SUMMARY

The market continued to tighten through the first three quarters of 2017. Vacancy fell to 5.0%, which is the lowest office vacancy rate in the past nine years. Average asking lease rates bumped up to $1.05/SF NNN, which represents a 10% year-over-year increase. Construction has gone vertical on a new 57,000-square-foot medical office building at Riverfront Medical Center.

Despite the falling vacancy, tenant velocity and lease volume has picked up a bit in the second half of 2017 as some key vacancies have allowed some tenant reshuffling. However, market conditions continue to put upward pressure on rates and prices as buyers and tenants compete for the best spaces in the market.

RETAIL

LEASE RATES PSF $13.50 to $30.00 NNN

VACANCY 3.2%

CAP RATE 5.5% to 7.5%

LAND VALUES PSF $12.00 to $22.00

RETAIL SUMMARY

Retail remains strong, with the vacancy below 3%. Ancillary retailers...