2015 State of Downtown
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2015 STATE OF DOWNTOWN 2014-2015 Economic Benchmark Report Purpose of the State of Downtown Purpose of the State of the analysis comprehensive a offers report of Downtown State 2015 The decisions. These in making informed stakeholders key assist to economy downtown and makers policy brokers, retailers, developers, investors, owners, include: property civic leaders. urban core Salt Lake’s and compare highlight trends to data historic collects study This important to are comparisons These indicators. economic and regional statewide to downtown. and growth improvement gauge opportunities for and future with detail: current will be treated indicators economic following The hub, retail, employment and restaurants market, office downtown development, and and entertainment culture and mobility, transportation estate, real residential the area to refers downtown the purposes of this report, For hospitality and tourism. and 300 East. 400 South, I-15 North Temple, between In the Rankings 19 THE WORD IS OUT 36 Hospitality and Tourism 18 A MAJOR DESTINATION FOR LOCAL, REGIONAL AND OUT-OF-STATE VISITORS Culture and Entertainment 16 SALT LAKE CITY’S VIBRANT CULTURAL CENTER Transportation and Mobility 14 EASY TO ACCESS Residential Real Estate 12 MORE AND MORE PEOPLE ARE CHOOSING TO CALL DOWNTOWN HOME Employment Hub 11 2015 UTAH’S ECONOMIC CENTER STATE Restaurants and Retail 10 RESTAURANTS AND RETAIL OFFER SOMETHING FOR EVERYONE OF Downtown Office Market OFFICE MARKET SHOWS STRONG 08 DEMAND AND GROWTH DOWNTOWN Current and Future Development DEVELOPMENT IS BOOMING 06 2014 Year in Review ECONOMIC PROFILE, HIGHLIGHTS AND 04 OPPORTUNITIES CONTENTS table of 2014 Year in Review Downtown 70,000 $3.1B 10.6M 13.4% $800.9M 2.6M 66.2% 226K $210.5M 33K $6.1B 501 2014 Economic Employees Wages Paid Office Office Retail Sales Retail Hotel Citywide Spending by Parking Total Downtown Total Downtown Square Feet Vacancy Rate Square Feet Occupancy Convention Convention Spaces Property Value* Acreage Profile Delegates Attendees Source: Bureau of Economic and Business Research, University of Utah. CBRE, Visit Salt Lake, Utah State Tax Commission, Downtown Alliance, Bonneville Research, Department of Workforce Services. * Includes commercial over 20,000 sq. ft., residential and exempt properties. 2014-2015 Downtown 2014-2015 Downtown Economic Highlights Opportunities Residential Development Main Street’s Success Continues Downtown’s Sharing Economy Legislature Authorizes Local Expanded Homeless Services Local Leadership Nightlife Economy Downtown Innovation District Demand for urban living and 111 Main and Eccles Theater broke Options are growing for Option Sales and Use Tax Vote Concerns about a high The public sector plays an A vibrant nightlife is important A dynamic economy requires favorable market conditions are ground in June 2014 on Main Street entrepreneurs and small businesses The Utah Legislature passed a bill concentration of homeless service important role in building a dynamic to create a dynamic and diverse new research and development driving a residential development between 100 and 200 South with looking for office space and during the 2015 general session providers, and the impact this downtown. Local ordinances downtown that is welcoming to facilities to foster additional growth. boom in downtown Salt Lake City. expected completions in the Fall of support in downtown Salt Lake City. which authorizes comprehensive has on homeless people and should support flexible and locals and visitors alike. While Downtown is a distinct urban With a solid job market and a 2016. 111 Main is a 24-story, class A Coworking spaces have opened transportation infrastructure the surrounding neighborhood, creative projects that encourage new restaurants and bars are environment that nurtures ingenuity, highly educated, young workforce office development that is expected throughout the area—including funding. In Fall 2015, voters will has emerged as a top concern entrepreneurship. Blunt impact opening doors downtown, state collaboration and proximity which favors renting, the number to accommodate between 3,000- Church & State, Impact Hub, consider whether the sales and on downtown’s west side. The fees, cumbersome demolition laws and perceptions impact not found in the traditional of units will continue to grow. 4,000 new office jobs. The Eccles Holodeck, Sustainable Startups, use tax should be increased by .25 concentration has created an unsafe ordinances and inflexible zoning tourism potential and additional suburban office environment. The Future developments should focus Theater is a $117 million, 2,500- Work Hive and Office Evolution. (one-quarter) percent on a county environment for homeless people policies combined with a development. Consensus-driven development of an innovation on opportunities for all ages and seat project directly south of the These spaces plug startups into a ballot—the equivalent of one penny who are preyed upon by drug complacent bureaucracy threaten policies should address issues such district on downtown’s west income levels. new office tower. The two projects community of mentors, business for every four dollars spent—to dealers and other criminals. Efforts to undermine downtown’s regional as “the Zion curtain,” intent to side—where leading-edge anchor coincide with the redevelopment partners, investors and customers. pay for local transportation needs, to redesign, expand and build competitiveness as a residential and dine and the number of restaurant institutions and companies cluster of Regent Street just to the east. including more walking and additional shelters and housing will employment center. licenses for downtown. and connect with start-ups, business These improvements will provide biking trails, road improvements, focus on providing safety, dignity incubators and accelerators—will heightened access and connectivity GREENbike and public transit and opportunity for Utah’s most further downtown’s ability to grow between Gallivan Center and City service expansion. vulnerable. in ways that align with disruptive Creek Center, and are intended to forces in the economy. catalyze small retail development along the corridor. 04 | 2015 STATE OF DOWNTOWN 2015 STATE OF DOWNTOWN | 05 Current and Future DEVELOPMENT Continued development is vital to the future success and vibrancy of downtown Salt Lake City. New office, residential, hotel and arts & entertainment developments are redefining the city’s growing 583,611 skyline and bringing additional employees, residents, visitors New office space completed or under construction (sq. ft.) (2014-present) and wealth into the district. The influx of residents, patrons and millennials drives demand for commercial development. Residents also live, work and play downtown. To that end, retail uses, particularly food-service-related businesses, show growth. 25.8% New construction reflects this trend with office and multifamily Increase in total commercial valuation developments including street-level retail. (2013-present) 04 1,804** New residential units completed, under construction or planned 11 New (2014-present) Developments 07 08 14 By Percentage* New restaurants in downtown Salt Lake City 1 6 (2014-present) % Office 02 03 05 12 10 *** % 1 8 1,334 4% % New hotel rooms completed, under construction or planned Residential (2014-present) 09 Hotel 2,500 Government/Arts/Cultural Seats in the new Broadway-style theater Mixed Use 291,322 * Figures based on total square footage 5 Available retail space (sq. ft.) of all new developments in downtown. 2% (as of Q2 2015) 01 06 10 13 Source: Downtown Alliance ** CBD or periphery 01 ......................111 Main 04 ...............Eccles Theater 07 .............Air Urban Center 10 ..........Plaza at State Street 13 ...............360 Apartments *** Includes 1,000 room convention center hotel 02 .....................151 State 05 .........Salt Lake Intl. Airport 08 ..Proposed Regent Street Hotel 11 ...... Liberty Crest Apartments Source: Downtown Alliance, CBRE Research Q1 2015 03 ..Proposed Arrow Press Square 06 ................Regent Street 09 .........Courtyard by Marriott 12 ...............Paragon Station GUIDE 06 | 2015 STATE OF DOWNTOWN 2015 STATE OF DOWNTOWN | 07 Downtown OFFICE MARKET $21.51 13.4% 440,895 SF 439,611 SF Office Market Highlights Regional Downtown Average Asking Lease Rate Vacancy Rate Net Absorption Under Construction Lease Rate Comparison Downtown Salt Lake City’s office market posted considerable gains in 2014. In fact, the comeback of this area’s office market 439,611 sq. ft. was a notable story for the year. This is significant, because the data began to confirm that factors which have long been ⅓ new office space under construction downtown accounts for one-third of expected to boost demand for downtown commercial real estate are beginning to positively influence the the Salt Lake City office market market. Such factors include a generational shift, availability of space, amenities and access to unrivaled transportation. Seattle $37.20 Downtown’s vacancy rate fell by 370 basis points (bps) in 2014 and settled at 13.4% at year-end. Demand in class A and B Demand Drivers properties, along with limited new supply, is primarily responsible for this drop in vacancy. The average asking lease rate Portland increased by $0.17 to $21.51 per sq. ft. FSG over the 12-month period ending in December of 2014. $26.15 The downtown office market accounts for one-third of the net rentable area (NRA) in Salt Lake’s office market. In 2014,