2018 COMMERCIAL REAL ESTATE BENCHMARK INTRODUCTION houses literally estate real commercial in a box,’ to as the ‘economy Often referred a contains report This an economy. that move of commerce the organizations office, (including markets commercial local City’s of Salt Lake brief overview extension, this information By properties). and multifamily industrial, retail, health of the local future to gauge the past and perspective an invaluable provides leverage can estate alike real of commercial Owners and occupiers economy. the and City businesses as Salt Lake position their to better knowledge such evolve. environment economic broader has economy City’s Salt Lake this report, throughout detail greater in As explored For decade. the last over transformation and positive a significant undergone and increased tenancy, high-profile development, elevated now, years several has been somewhat growth While been commonplace. have deployments capital estate market real commercial the local cycles, to prior compared prolonged healthy. fundamentals remain has been growing economy metro Salt Lake the In terms of employment, low very with a However, years. the last several for about 3% annually by increasingly has become growth such 2018), (3.3% in March rate unemployment to ability area’s The participation and in-migration. workforce upon dependent of living, cost favorable and recreation, with lifestyle workers out-of-state attract to growth. to be—key will continue of amenities has been—and variety and a the near for is positive economy City’s Salt Lake Looking ahead, the outlook for inherent City’s Salt Lake to thrive. is expected to continue term and the market environment—will and pro-business geography, workforce, qualities—its investments infrastructure significant In addition, to support growth. continue as the Salt well as Quadrant, of the Northwest the development (most notably boost a short-term will provide Airport redevelopment) International City Lake into the future. well dividends and pay economy stabilized global a currently by is underpinned forecast favorable This on a remain risks always While and conditions. trends local as positive well as shocks or economic broader unforeseen barring any level, national and global in Salt growth As such, to run. has some room business cycle crises, the current positive remain economy—will estate and the broader terms of real City—in Lake of variety a across to thrive will continue term and business during the near industries and markets.

SALT LAKE CITY 2018 COMMERCIAL REAL ESTATE BENCHMARK MULTIFAMILY MARKET 07

RETAIL MARKET 05

INDUSTRIAL MARKET 03

OFFICE MARKET 01 SALT LAKE CITY SALT LAKE CITY SALT LAKE CITY OFFICE AT A GLANCE

Available for Lease (SF) Leasable Inventory (SF) 2.32M 0.61M 16.16M 5.30M

2018 COMMERCIAL REAL ESTATE BENCHMARK OFFICE Total Class A Total Class A 14.4% 182 MARKET Market Available (All Classes) $23.19 Total Buildings Average Direct Asking Rate (PSF, FSG) (NNN excluded) Salt Lake City’s office market is comprised of 16.2 million sq. ft. of leasable office space with four major pockets: ; Sugar House, about 3 miles to the south; Research Park, at the University of ; and the International Center, west of the airport. Office users are drawn to Salt Lake City for its centrality, with major highways and public transit 1.8M SF providing easy access to booming population centers in neighboring areas, as well as several universities and popular Available Downtown recreation areas. 12.3% In recent years, new construction has created opportunities CLASS A for office users who previously had limited options, opening INVENTORY 755K SF the market with 14.4% available for lease across the city. Lease rates per sq. ft. range from $12.00 FSG for older Class C GROWTH Construction/Redevelopment properties up to $37-$39 for brand new Class A construction. SINCE 2016 Since 2016 Since the beginning of 2016, Class A office space in the city has grown more than 12% including the 111 Main office tower. 60 Park Ave, a 150,000-sq.-ft. Class A office property is currently under construction in Sugar House. Other large planned projects may break ground depending on tenant commitments. PROMINENT OFFICE TENANTS

Local drivers of office demand are strong. Professional and business services jobs grew 2.5% year-over-year. In a ranking Technology Finance Law Life Sciences of the 20 hottest cities for tech jobs, Salt Lake City ranked no. 7 with a year-over-year growth in tech jobs of 117%.1 This • Clearlink • Fidelity • Durham Jones & • ARUP Laboratories significant growth in office users will strengthen the Salt Lake • Ernst & Young • Goldman Sachs Pinegar • BioFire City office market and facilitate expansion for the near future. • Google Fiber • Merrill Lynch • Holland and Hart • Huntsman Cancer • MRM // McCann • PWC • Kirton McConkie Institute • Workday • Wells Fargo • Parsons Behle • Intermountain 01 Latimer Healthcare • Stoel Rives • Myriad Genetics 1. ZipRecruiter, “The Fastest Growing Tech Towns in 2017.” June 2017. OFFICE MARKET Salt Lake City N Boundary Map

International Center Interstate/Highway UTA Trax Light Rail Downtown UTA Frontrunner Major Office Centers CBD DEVELOPMENT HIGHLIGHTS

Research Park Sugar House

OFFICE DEMAND DRIVERS NOTABLE RECENT OFFICE DEVELOPMENTS*

111 Main 37.0K 33.9K 2.5% 3.5% CBD Bachelor’s Degrees Net Migration Employment Growth Employment Growth 439,661 SF total • 3.5% available Granted in 2016/2017 State of Utah Total Non-Farm Information Svcs. Station 41 (5 Major Institutions) (2018 Projected) (YoY, Mar 2018) (YoY, Mar 2018) Downtown Source: Utah System of Source: Kem C. Gardner Source: BLS, Salt Lake City MSA. Source: BLS, Salt Lake City MSA. 120,000 SF total • 16% available Higher Education. Policy Institute. School Improvement Network Downtown AVERAGE LEASE RATES 130,680 SF total • 50% available $35.00 FUTURE OFFICE DEVELOPMENTS Market Average Class A Class B Class C 60 Park Ave $30.00 $29.33 Sugar House • 150,000 SF • Under Construction

$25.00 $23.66 650 Main Downtown • 320,000 SF • Planned $22.83 $20.00 $18.81 *includes newly developed office as well as re-purposed or heavily $15.00 renovated office completed during the last 24 months. 2015 2016 2017 2018 Q1 02 Source: CBRE Research, Q1 2018. SALT LAKE CITY SALT LAKE CITY SALT LAKE CITY INDUSTRIAL AT A GLANCE

Available for Lease (SF) Leasable Inventory (SF) 3.70M 1.83M 72.15M 22.59M

2018 COMMERCIAL REAL ESTATE BENCHMARK INDUSTRIAL Total Class A Total Class A 5.13% 1,167 MARKET Availability (All Classes) $0.45 Total Buildings Average Asking Rate (PSF Monthly, NNN) Home to one of the largest industrial submarkets in Utah (California Avenue), Salt Lake City hosts a strong and dynamic industrial market. There is over 72 million sq. ft. of industrial across the city, 22 million of which is Class A distribution. Salt Lake City ranks 2nd in the west for access to transportation (and 9th nationally)2, providing direct routes to Denver, Los Angeles, 47.0M SF San Francisco, Portland and Seattle via highway and rail. The city is also under review to receive an inland port designation. Total Space in California Avenue Together with infrastructure projects in the Northwest, this will open up over 3,000 acres of developable land. 36.0% CLASS A WAREHOUSE Beyond its strategic location, Salt Lake City’s low utility costs, & DISTRIBUTION 5.7M SF competitive lease rates, and available land have spurred growth. Most activity is concentrated on the west side INVENTORY GROWTH Built or Under Construction Since along I-80 and California Avenue. While growth has been SINCE 2012 2017 predominantly big-box distribution and warehouse, other sizes and uses are strong as well. Production and manufacturing facilities are particularly active, with thriving sectors in composite materials, food and chemical production, packaging, and aerospace technology. PROMINENT INDUSTRIAL OCCUPIERS As of Q1 2018, the overall average achieved lease rate was $0.40 per sq. ft., slightly lower than pre-recession due to increased availability of larger, more economical product. While lease Consumer Goods Logistics/Distribution Services rates are expected to gradually climb as availability—currently at 5.1%—remains tight, favorable local conditions (including • Sun Products • Amazon (New 857,153 SF building) a state-sponsored extension of infrastructure into the deep • Boeing • UPS (New 840,000 SF building) northwest) will negate any supply constraints that could • Keystone Auto (New 307,559 SF building) • Exel compromise the favorable cost of doing business in Salt Lake. • Post Foods (New 901,183 SF building) • Unisource These trends, among others, will help pave the way for the next phase of industrial growth in Salt Lake City. • Schiff Nutrition • ISPS 03

2. CNBC, “America’s Top States for Business 2017.” July, 2017. INDUSTRIAL MARKET Salt Lake City N Boundary Map

Airport Access

Interstate/Highway Downtown Union Pacific Rail Lines International Industrial Union Pacific Intermodal Hub Center Major Industrial Centers Northwest Quadrant (NWQ) DEVELOPMENT HIGHLIGHTS NWQ Developable Land Central Valley Research Park California Ave

INDUSTRIAL DEMAND DRIVERS NOTABLE RECENT INDUSTRIAL DEVELOPMENTS*

I-80 Logistics Center 3 3.0% 4.8% 2nd 6.23 ¢/kWh International Center • Completed Employment Growth Employment Growth in Western U.S. for Industrial Electricity Price 503,249 SF total • 40% available Manufacturing Trans./Whse./Utilities access to transportation (Feb 2018) I-215 Commerce Center Building B (YoY, Mar 2018) (YoY, Mar 2018) (2017) Airport Access • Under Construction Source: BLS, Salt Lake City MSA. Source: BLS, Salt Lake City MSA. Source: CNBC Top States Source: Energy Information Administration. 371,602 SF total • 100% available for Business. Meridian Commerce Center II California Ave • Under Construction ACHIEVED LEASE RATES (BY SPACE SIZE) 261,302 SF total • 32% available $0.70 RWK Legacy Logistics Center Market Average 1,000-20,000 SF 20,000-99,000 SF 100,000+ SF California Ave • Under Construction $0.60 214,391 SF total • 100% available $0.60 $0.50 Gladiola Distribution Center A $0.42 California Ave • Completed $0.40 $0.40 156,750 SF total • 79% available $0.30 $0.34 *comprised of the top five largest speculative projects either under $0.20 construction or completed since 2017. 2012 2013 2014 2015 2016 2017 Q1 2018 04 Source: CBRE Research, Q1 2018. SALT LAKE CITY SALT LAKE CITY SALT LAKE CITY RETAIL AT A GLANCE

Shopping Centers (SF) Street Retail (SF) 6.37M 0.58M 5.49M 0.24M

2018 COMMERCIAL REAL ESTATE BENCHMARK RETAIL Total For Lease Total For Lease 9.1% 96 Shopping Center Shopping Centers MARKET Availability $25.23 Shopping Center Asking Rate (PSF, NNN) Retail in Salt Lake City is premiered by three major downtown malls—City Creek, The Gateway and historic . An additional 93 community, neighborhood and strip centers dot the eastern half of the city. Street retail lines downtown’s business district and stretches along major transit arteries towards the airport, the University of Utah, and cities to the south, with significant pocketing in Sugar House, the Foothill Corridor and along 200 West. THREE With 9.1% of retail shopping center space available for lease, retail leasing opportunities have increased from prior years. MALLS/ $130 MILLION Lease rates range from $12 PSF for larger or older spaces to $40 or more for prime Class A suites. Development is active REGIONAL across the city, with a focus on redevelopment areas. This has Recent/Planned Retail resulted in numerous planned or recently completed mixed- CENTERS Capital Improvements use and high-image retail projects—one example is Regent Street in the heart of downtown. Major improvements and expansions are also occurring at both the Gateway Mall and Trolley Square, both downtown.

Salt Lake City retailers benefit from burdgeoning consumer 2017 RETAIL SALES BY CATEGORY confidence among a growing local and peripheral residential base, along with 240,000 daytime workers. Multifamily projects abound, with over 3,600 new residential units Eating & Drinking $830M 4.4% actively under construction in January 2018. The county’s Grocery & Convenience $518M 1.0% population growth is projected to average 1.6% annually Home, Furniture & Garden 10.6% over the next five years; as such, Salt Lake City retail is well $395M positioned to continue thriving. Clothing & Accessories $267M 0.0% Specialty (Electronics/Books/etc) $216M 3.2% Arts, Entertainment & Recreation $155M 16.5% 05 Other Retail $589M 6.5%

Source: Utah State Tax Commission, 2018. RETAIL MARKET Salt Lake City N Boundary Map

Interstate/Highway UTA Trax Light Rail Downtown UTA Frontrunner Major Retail Centers Residential Infill RETAIL CENTER HIGHLIGHTS North Temple/ Redwood South Foothill City Corridor Corridor Sugar House

RETAIL DEMAND DRIVERS MAJOR RETAIL SHOPPING CENTERS

City Creek Center 6.6% 1.9% 3,617 129.5 Central Downtown • Mall Median Household Utah Population Active Residential Units All-time High 774,000 SF total • 3.9% available Income Growth Growth - 3rd Fastest Under Construction in SLC Consumer Attitude Index (YoY, 2016) in the Nation (Jan 2018) (March 2018) The Gateway (2017) West Downtown • Mall Source: U.S. Census. Source: Ivory-Boyer Construction Source: Cicero Group for Zions Bank. 537,086 SF total • 22.3% available Source: U.S. Bureau of the Database. Census. Trolley Square East Downtown • Mall SHOP SPACE* ASKING RATES (AVG, MIN/MAX) 310,136 SF total • 35.2% available $50.00 Brickyard Plaza Sugar House • Community Center $40.00 322,610 SF total • 2.6% available $32.37 Foothill Village $30.00 $28.94 $28.25 $25.10 Foothill Corridor • Community Center $21.65 258,571 SF • 17.9% available $20.00 $20.22

$10.00 West/Central Foothill East South City Sugar North Temple/ Downtown Corridor Downtown Corridor House Redwood 06

Source: CBRE Research, Q1 2018. *Retail spaces less than 5,000 SF in Salt Lake City shopping centers. SALT LAKE CITY SALT LAKE CITY SALT LAKE CITY MULTIFAMILY AT A GLANCE

Completed Construction (Units, 2011-Present) 3,892 941 236 0

2018 COMMERCIAL REAL ESTATE BENCHMARK MULTI- Standard Affordable Senior Student $1.45 1,204 FAMILY Rent Per SF $1,342 Average Unit SF MARKET Average Rent in Salt Lake City

Spurred by a growing populace and workforce, multifamily 2.7% development has been central to Salt Lake City’s recent urban renaissance. Over 5,000 new units have been completed Vacancy Rate in Salt Lake City since 2011 and another 6,700 are planned or under construction. The majority of growth is centered downtown, 14 with additional major growth areas along commuter routes COMPLEXES UNDER 6,704 south of downtown and west toward the airport, as well as in population-booming Sugar House. CONSTRUCTION WITH Units in Salt Lake City Planned or Under Construction Walkability, public transit, and access to community OVER 100 UNITS amenities continue to be major drivers for tenants; as such, new development is highly concentrated in the Salt Lake City CBD. Demand for resort-style apartment living has influenced the design of many of these projects, which have been known to include features such as roof-top pools, RENTAL RATES BY UNIT TYPE massage rooms, outside game areas, dog parks, jumbo sized hot tubs, and on-site bike or ski workshops.

Vacancies remain at or below typical industry standard Studio 1Bed/1Bath 2Bed/1Bath 2Bed/2Bath 3Bed Overall levels, despite new supply. Rents continue to climb, but Downtown Class A $1,395 $1,327 $1,563 $1,614 $1,494 $1,446 remain competitive with other major markets in the region. While the market is expected to slow somewhat, with Downtown Class B $776 $987 $1,074 $1,364 $1,273 $1,023 population growth nearly double the national average, lease- up of new product in Salt Lake is swift, and fundamentals for County-wide Class A $1,076 $1,096 $1,125 $1,333 $1,544 $1,234 the multifamily market remain sound. County-wide Class B $748 $905 $1,013 $1,167 $1,297 $1,047 07 County-wide Class C $745 $825 $963 $877 $1,118 $907 MULTIFAMILY MARKET Salt Lake City N Boundary Map

West Interstate/Highway N. Temple Downtown UTA Trax Light Rail & Redwood CBD/East Downtown UTA Frontrunner Major Multi-Family Centers DEVELOPMENT HIGHLIGHTS

South City Corridor Sugar House

MULTIFAMILY DEMAND DRIVERS RECENT COMPLETED PROJECTS

4th West Apartments #10 1.9%/Yr. 2.5% 30.6 West Downtown Best Places to Live Utah Population Growth Employment Growth Utah Median Age 274 units (2017) 3rd Fastest in the Nation Total Non-Farm Lowest in the Nation Alta Gateway (2017) (YoY, Mar 2018) (2016) West Downtown Source: U.S. News. Source: U.S. Bureau of the Census. Source: BLS, Salt Lake City MSA. Source: U.S. Bureau of the Census. 264 units

UNDER CONSTRUCTION

Meridian CONSTRUCTION BY LOCATION (NO. OF UNITS) N. Temple & Redwood 263 units N. Temple & Redwood 145 576 146 Hardware Station 1,694 1,227 1,113 West Downtown West Downtown 462 units CBD/East Downtown 1,862 766 1,444 Sugarmont 514 408 365 South City Corridor Sugar House Completed since 2011 352 units Sugar House 854 640 19 Under Construction Planned 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 08 Source: CBRE Research,CBRE Research. Western States, Jan 2018. Salt Lake City Department of Economic Development | +1 801 535 7200 | [email protected] | www.slcgov.com/ed CBRE, Inc. | 222 South Main, 4th Floor • Salt Lake City, UT 84101 | +1 801 869 8000 | www.cbre.us/slc

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