The commercial real estate market in Washington County continues to be solid, with the largest decrease in vacancy occurring in the office sector. Office vacancy has dropped to a ten year low with considerable gains in average asking lease rates and absorption. Industrial saw an increase in vacancy due to the former Viracon building being vacated. Beehive Industrial, the first substantial spec industrial project in the last 10 years, was completed in 2018 and has only 30,000 sqaure feet left of the 150,000 sqaure feet for lease. Retail continues to grow around the newly constructed grocer sites. Hospitality has experienced explosive growth over the last few years with unprecedented room growth and VRBO projects coming to market. Multifamily has seen several new projects come to the St. George market with remarkably high absorption. Residential construction remains a solid sector but topped out over the summer with buyers taking a bit of a breather. Increasing construction costs continues to have a significant impact on new construction growth across most of the commercial sectors and will continue to do so for the foreseeable future as rental rates play catch up.
LEASE RATES PSF $10.00 to $19.20 NNN
CAP RATE 7.0% - 8.3%
LAND VALUES PSF $8.00 - $14.00
The market showed considerable strength throughout 2018 absorbing over 90,000 sqaure feet of space. Vacancy fell to 4.3%, which is the lowest office vacancy rate in the past 10 years. Average asking lease rates jumped up to $1.25/ SF NNN, which represents a 14% year over year increase. The new 57,000 sqaure foot Riverfront Medical Center was completed this year and nearly full by year end. Another smaller medical office building near the new hospital has gone vertical with the two other medical office developments following close behind. Tech Ridge is also close to lifting its first two buildings above the tarmac on the old airport site. High construction costs and impact fees weigh heavily on the minds of the developers In this new economy.
However, accelerating lease rates give a glimmer of hope to both developers and owners that the market may yet push closer to sustainability and profitability.
LEASE RATES PSF $5.60 to $9.60 NNN
CAP RATE 6.5% - 7%
LAND VALUES PSF $4.00 - $5.00
The industrial sector showed a 22% growth in average asking rents. Vacancy increased to 4.35% due to new spec space added to the...