Microsoft word - saltlakecity_americas_alliance marketbeat_office_q32013 pd

A Cushman & Wakefield Alliance Research Publication of this building was prre-leased to Level 3. This brings the number of Even with second quarter GDP raised to 2.5% newly constructed “for-lease” buildings to six with 388,815 sf. from the previous estimate of 1.7%, the second Additionally build-to-own buildings have been completed for part of 2013 is expected to come in below FLSmidth and eBay adding another 320,000 sf of new construction. earlier estimates and economists surveyed by the Federal Reserve Bank of Philadelphia Positive absorption will continue through Q4 13 setting 2013 up to decreased their forecasted rate of 2.0% for the year to 1.5%. U.S. come cclose to a record-setting year. This absorption will continue to unemployment continued to fall to the current rate oof 7.3%, but outpace new construction which will put downward pressure on concerns abound as many of these jobs are lower paying and there is vacancy rates. Concessions will continue to be phased out with free still a large number of people working part-time that would prefer rent diisappearing in many cases while tenant improvement allowances will continue to shrink as landlords obtain the upper hand. Despite some concerns with the overall U.S. economy, Utah continued to perform well with an unemployment rate of just 4.7%. Trade, Transportation and Utilities led all categories with 10,500 new jobs added over the past year while Information jobs had the highest Vacancy rates continued to trend downward at a healthy rate. The 102 Tower in the Central Business District (CBD) is undergoing renovations and is currently not available for lease. This removes 210,781 square feet (sf) of vacant product from the market, which accounts for a 0.6 percentage point (pp) of the 2.8 pps decrease in Absorption continued to track well above its ten-year average of around 700,000 sf with year-to-date absorption at 983,104 sf, the highest level of positive absorption since 2007, the majority of which occurred in class A and B products with a very small amount in class C. Although large expansions such as Sutter Physician Service’s 99,000 sf continued to play a large part in the occupancy gains, an increased amount of expansion came from smaller and mid-size companies. Smaller space in the 1,000 to 3,000-sf range is becoming very competitive. Although direct full service average asking lease rates dipped by 1.7% from Q3 12 to $20.05 per square foot per year (psf/yr), this was mainly attributable to higher-end space leasing, while lower-end space remained available. Furthermore, the trend of fewer concessions continued as free rent became less of a negotiable part of lease transactions, resulting in landlords achieving higher effective rents. CONSTRUCTION The Airport Technology Park Building X, comprised of 85,158 sf in the Northwest submarket completed in Q3 13. Approximately 50% The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness Scott Lovell, Corporate Research Director of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved. DIRECT RENTAL RATES  Average asking rental rates are based on the average asking rent across the market and are weighted based on the vacancy in a  As higher-end space has leased up, average asking rental rates have decreased; this is not an indication of weakness in the office market but rather a mathematical nuance of how this rate is Concessions continued to decline with net effective rental rates increasing as the market becomes more of a Landlord’s market The Northeast submarket has seen the most dramatic increase in rental rates in all property classes over the past year Vacancy rates on average dropped by 2.8 pps across the entire Salt  The 102 Tower, located in the CBD, was removed from the study as it undergoes renovations; the removal of this 100% vacant building reduced the overall vacancy rate by a 0.6 pp  The Central West’s year-over-year decrease of 7.7 pps was the result of space leased up across all property classes and not attributable to any single large transaction The Northeast submarket has increased by 2.3 pps with the addition of two new buildings comprising of 123,000 sf  Absorption of 983,104 sf through Q3 13 has already exceeded full year absorption in all but two of the last ten years and remains on track to achieve the second highest level in Utah history  Higher quality assets continued to dominate absorption with class A and B space accounting for 95% of this absorption, while class A alone accounts for 56% of the total absorption in the market  The Northwest submarket absorbed 70,533 sf during Q3 13 as L-3 took 42,579 sf in the newly constructed Airport Technology Park Building X  Airport Technology Park Building X, comprised of 85,158 sf, was the only newly constructed building during Q3 13  Currently there are 487,000 sf under construction, of which 32%  Minuteman IV, in the Southeast submarket and Wilmington Gardens, in the Northeast submarket, are both being built on a speculative basis with no pre-leasing commitments FLSmidth and eBay each had new buildings completed for a total of 320,000 sf that are not included in our study as they are owner- The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness Scott Lovell, Corporate Research Director of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved. 32,456,875 13.6% 12.0%
983,104 487,000
Significant Q3 2013 Construction Completions SUBMARKET The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness Scott Lovell, Corporate Research Director of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved.

Source: http://www.comre.biz/reports/2013Reports/Utah/SaltLake_Office_3Q13.pdf