Utah's Business Journal
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UTAH’S BUSINESS JOURNAL www.slenterprise.com Feb. 6-12, 2012 Volume 41, Number 28 $1.50 $34 million SLC THIS Business property tax industrial supplier relief legislation WEEK sold to New York firm stalls in committee MSC Industrial Direct Co., a By Brice Wallace Rep. Patrick Painter, R-Nephi. Melville, N.Y.-based distributor of The Enterprise Painter acknowledged that, metalworking and maintenance, A bill designed to help busi- from a practical standpoint, the Firm launches repair and operations (MRO) ness owners with personal prop- bill would not eliminate audits but school for supplies to industrial contractors serves its customers from loca- erty tax costs stalled in a Utah it might lessen the likelihood. throughout the U.S., has acquired tions in Salt Lake City, Phoenix legislative committee. “If there’s anything that I’d freight brokers the assets and certain liabilities and Tijuana, Mexico. HB41 received much dis- like to give to the small-business See page 3. of ATS Industrial Supply, a Salt “We are pleased to acquire cussion but no vote during a meet- owners in this state for hanging Lake City-based firm that had ATS Industrial Supply Inc., a ing of the House Revenue and in the last three or four years of sales of approximately $34.5 mil- regional leader with excellent Taxation Committee as people this recession, [it] is a break on lion in 2011. management and an emphasis questioned whether the measure some of their equipment personal Terms of the deal, which on value-added services that fits would result in too much of a tax property [tax],” Painter said. “If I closed Jan. 31, were not disclosed. well with the MSC model,” said Wheeler shift onto Utah residents. can make life easier for them, then MSC is funding the acquisition David Sandler, CEO of MSC. creates new The bill would exempt from I’m all for it, and that’s basically with available cash. “In keeping with our long-term taxes the first $25,000 of taxable what the bill does.” mining services Established in 1970, ATS acquisition strategy, ATS builds tangible personal property for About 50,000 businesses division Industrial Supply Inc. is a leading out our geographic footprint, sig- metalworking and MRO industrial nificantly increasing our presence businesses. Currently, the level statewide would benefit from the See page 4. distributor in the Rocky Mountain in the Rocky Mountain region, is $3,500, although a consumer bill, but it would result in a tax region. It distributes a broad range while further extending our lead- price index component has moved shift of about $12 million. Painter of industrial tools, cutting tools, ership position in metalworking. it to about $3,800. said business owners would see a • Earnings Roundup • abrasives, machinery, precision We welcome their talented team “My motivation for this rise in business real estate taxes See page 6. instrument supplies and other of associates to the company and is hearing from a lot of small- and homeowners also would see MRO-related supplies to a large look forward to working together business constituents that say if personal property taxes rise, typi- • Industry Briefs • customer base ranging from small to grow our combined business- there’s one thing they’d like to cally $7 to $12 on a $200,000 Begin on page 7. machine shops and fabricators to es.” eliminate [it’s] personal property home, depending on the county. some of the largest aerospace and David Hellberg, CEO of audits,” said the bill’s sponsor, • Calendar • manufacturing concerns in the see BILL page 2 See page 13. country. ATS Industrial Supply see ATS page 4 Utah County start-up receives Real estate speaker: U.S. economy $20 mil. in additional funding suffers from exaggerated uncertainty Lindon-based Domo, a new By Brice Wallace sion to have ended in commercial software-as-a-service (SaaS) ven- The Enterprise real estate, it has a lot more to do ture launched by Omniture co- Today’s U.S. economy is suf- with that more-pedestrian defini- founder Josh James, has closed fering from “exaggerated uncer- tion of ‘recession’ than it has to $20 million from Institutional tainty” as it recovers from the do with economists’ definition of Venture Partners (IVP) in Series recession. ‘recession.’ … If we are not creat- A-1 funding. This round brings That’s what Sam Chandan, ing jobs, then we will not observe total investment in Domo to $63 president and chief economist at sustained demand for commercial million. Chandan Economics, told a group real estate in this country,” said “While we weren’t in the of Salt Lake real estate profession- Chandan, who also is an adjunct market for additional funding, the James als last week. professor in real estate and public capital from a trusted and experi- addressing high-growth markets. Economic figures such as policy at the Wharton School of enced partner such as IVP made GDP accelerated throughout 2011 the University of Pennsylvania. Josh is an extraordinarily tal- a lot of sense. We’ve experienced and the recovery has actually Corporate profits are back ented, world-class entrepreneur. positive feedback from the mar- lasted longer than the recession — the 2011 third-quarter figures We know he has the experience ketplace,” James said. “This move itself, but “families don’t feel the were higher than those in the peak to build Domo into a disruptive recession is over because we’re markets of 2007 — “but that’s not fills the coffers and enables us and dominant player in a growing not creating jobs. … That makes translating into actual outcomes” to stay focused on execution. It $10 billion market,” said Todd it [feel] like the recession has not for businesses or individuals, he also provides flexibility as we Chaffee, general partner, IVP. In ended, even though the economy said. The result is that labor utili- build out our sales organization addition to Omniture, IVP has may be expanding,” Chandan said zation — how many people ages and position the company to take backed a rich portfolio of Internet during the 2012 Utah Commercial 18 to 65 who are actually working, advantage of strategic growth leaders and disruptors, such as Real Estate Symposium. which he said is a better indicator opportunities.” Concur, Dropbox, LivingSocial, That weak labor market than the unemployment rate — IVP invested in James’ prior Shazam, Twitter and Zynga. remains a drag on the economy has been “falling precipitously.” company Omniture, and developed IVP joins a list of angels and and, perhaps as importantly, peo- While a year ago compa- a relationship with the Omniture investors including Benchmark ple’s perception of the economy. nies had trouble finding credit team through that investment. Capital, Andreessen Horowitz, “Ultimately, when we think and capital, now they are hesitant “At IVP, we look for dynam- Ron Conway and David Lee of about what it means for a reces- see REAL ESTATE page 2 ic management teams that are see DOMO page 2 2 The Enterprise Feb. 6-12, 2012 took place during the last quarter ticularly the retail market in Utah, back in with their families are now “Utah investors may well pre- REAL ESTATE of 2011 and into 2012, accord- will continue to see and enjoy an seeking to get back into the rental sume the higher range of growth from page 1 ing to Brett Palmer, retail and improving year.” markets. Foreclosures are slowing predictions due to solid Utah fun- investment property specialist at but are still a lingering problem, • Industrial: Chris Liddell, an daments. The market cycle appears to use their profits to create jobs Mountain West Commercial Real associate at CBRE, noted that the working to force people into rent- to have been bouncing along the because they remain concerned Estate. Lower rents allowed ten- industrial market saw a “modest” als, he said. bottom, with a modest climb to a about the business environment ants to have “comfortable” occu- increase in total gross activity in “[The year] 2012 should con- over the next six to 12 months. pancy costs that are helping drive 2011. There was lots of construc- tinue to see solid economic stabil- recovery has that begun.” With previous recessions, an the economy, he said. tion, but much of it was specula- ity, with moderate growth,” Hart • Michael Morris, executive average of 28 months would pass “Even with this increase in tive. As for 2012, he said there said. “With that said, the Greater vice president of Zions Bank and from the beginning of a downturn activity, rents have been slow to should be “no major peaks or val- Salt Lake multifamily market managing director of real estate until jobs lost during the recession respond and are just starting to should remain strong. We see at leys.” capital markets, said qualifying were recovered. The U.S. is now at show signs of improvement,” he least 2 percent rent growth even • Office: Vacancy and absorp- for a mortgage remains an obstacle the 48-month mark from the most said, noting that rents likely will with the new supply of apartments tion rates strengthened in 2011, recent recession’s beginning and not change much and retailers are coming in the market. Occupancy for potential homeowners. “It is with a stronger demand for sub- “only a small fraction” of lost jobs cautious about opening new stores. levels should remain around 95 the qualification process that is urban space, increased demand has been recovered, he said. “We will continue to see only min- percent. [In] 2012 and even into preventing a stronger recovery in for higher-quality properties and But Chandan noted that reces- imal adjustments to rent, land and 2013, we see a stable rental mar- a return of modest speculative residential housing right now and sion impacts often last for years in building prices until the economy ket.” construction, according to Dana it is boosting the demand side for real estate markets.