Q2 2012 Salt Lake City, Utah Commercial Real Estate Economy

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Q2 2012 Salt Lake City, Utah Commercial Real Estate Economy

Salt Lake City is far more than the home of the Mormon Tabernacle Choir and the Great Salt Lake. In conjunction with Provo, Orem, and other regional cites, it forms the heart of a major center for high-technology business. In May, Forbes ranked Salt Lake City fourth in the nation on its list of best cities for technology jobs. According to the report, the Metropolitan Statistical Area (MSA) “has enjoyed a 31% spurt in tech employment over the past 10 years.” “Some of this can be traced to large-scale expansion in the area by top Silicon Valley companies such as Adobe, Electronic Arts, and Twitter. These companies have flocked to Utah for reasons such as lower taxes, a more flexible regulatory environment, a well-educated, multilingual workforce, and spectacular nearby natural amenities.” Moreover, the region’s low housing prices give it a noteworthy edge over Silicon Valley: “Three-quarters of Salt Lake area households can afford a median-priced house, compared to 45% in Silicon Valley and about half that in San Francisco.” In addition, notes Marcus & Millichap in a third quarter 2012 report, computer maker Xi3 Corporation “recently agreed to create 500 new positions in Salt Lake and Utah counties over the next five years, all of which will carry salaries at least 25% above the local average.”

Indeed, while cities such as San Francisco, San Jose, and Austin earn national attention for the strength of their recuperative powers, Salt Lake’s less-publicized economic recovery also figures among the nation’s strongest. According to Utah’s Office of Planning and Budget, as related by Cushman & Wakefield in a second quarter 2012 report, the state economy “grew at a rate more than double the national average from 2010 to 2011, and is expected to maintain that pace during 2012, with an anticipated population growth of 44,000 people (1.6%).” Attaching numbers to the assertion, preliminary data provided by the U.S. Bureau of Labor Statistics (BLS) indicate a 15,300-job (2.5%) increase in total non-farm employment in the local MSA over the 12-month span concluding with August 2012. The increase over 24 months was 30,900 jobs (5.1%). Moreover, the MSA has nearly returned to pre-recession employment levels. According to the BLS, total non-farm employment per the latest August was down only 4,900 jobs (0.8%) from the peak-for-August total recorded in 2008.

Among current leaders in job creation is the local Manufacturing sector with its large high-tech component. Employment therein as of August was up 1,600 jobs (3.0%) from 12 months prior. A 5,900-job (5.8%) increase is indicated over the same time span for the Professional and Business Services sector. Employment in Construction has increased as well: for the Construction of Buildings and Specialty Trade Contractors subsectors combined, data provided by the BLS indicate a 1,700-job (6.3%) year-over-year increase.

There has also been good news from the housing front. According to a September report by Deseret News, home sales in Salt Lake County through the first seven months of 2012 were up 19% year-over-year. “In fact, July marked the fourth consecutive month of rising home prices on a year-over-year basis, according to the Salt Lake Board of Realtors. That hasn’t happened since 2007.” According to the board, the median price for August sales (of both homes and condominiums) was $205,000, up 10% since August 2011. “Many home buyers don’t realize that over the past six months the housing market has shifted to more of a seller’s market,” reported a top board executive. “Many sellers are witnessing multiple offers and in some cases offers are coming in above asking prices.”