2019-2020 Downtown Economic Benchmark Report A comprehensive report produced by the Downtown Alliance and CBRE. 01 03 05 07 09 11 15 17 19 21 Transportation Transportation Hospitality Culture Culture Workforce Workforce Retail Retail Current Current Parks Parks Downtown Office Market Downtown 2019-2020 at a Glance 2019-2020 at How to use this report* table of CONTENTS Estate Real Residential The 2020 State of Downtown report offers a comprehensive analysis of downtown Salt Lake City’s economy to assist key stakeholders, + + Restaurants Public Spaces + such as property owners, investors, developers, retailers, brokers, policy makers and civic leaders as they make informed decisions. For + Entertainment the purposes of this report downtown Salt Lake City’s boundaries are defined as the area between North Temple and 400 South, and Development Future + + Employment I-15 and 300 East. Tourism + Mobility *THE 2020 ASTERISK This benchmark was published in December 2020 with content gathered earlier in the year. At the time of publishing, the impact of the COVID-19 pandemic is not yet fully known and is not fully accounted for in this report. We will reflect the impact and evolving trends in future benchmark publications. We hope that this benchmark is useful to you in making sound decisions. We welcome your feedback at [email protected]. + Planning Initiatives Close Deals Use this report to get the information you need about downtown Salt Lake City relevant to your business, industry, investments, or career. Start a Business Make sure you have a clear understanding of the technology, access to transportation, talent and tools to help your business thrive. Be Street Smart Stay up-to-date with downtown’s changing skyline and discover what’s on the horizon for the heart of Utah’s hot economy. Want more information? Contact Ryan Mack at [email protected] or visit downtownslc.org/building-downtown/reports-data. 2019-2020 at a Glance INDUSTRY SNAPSHOT The largest employment sector in the Salt Lake City Central Business District (CBD) is the Professional, Scientific, and Technical Services sector, employing 11,341 workers. The next largest sectors are Accommodation and Food Services (7,988 workers), and Finance and Insurance (7,042). High location quotients (LQs) indicate sectors in which a region has high concentrations of employment compared to the national 45,685 $1.5 BILLION average. The sectors with the largest LQs in the CBD are Management of Companies and Enterprises (LQ = 2.82), Finance and 16.2M 5.5M Salt Lake Tourism Impact WORKERS RETAIL SQ. FT. Insurance (2.66), and Professional, Scientific, and Technical Services (2.51). Professional, Scientific & Technical Management of Companies & 260 70.2% $3.4B 7.6% Services | 16.9% Enterprises | 4.2% underutilized acres HOTEL OCCUPANCY total wages paid Class A Vacancy Accommodation & Food Services | 11.9% Transportation & Warehousing | 4.1% Finance & Insurance | 10.5% Arts, Entertainment & Recreation | 3.2% citywide 3,000 On-Street convention & Retail Trade | 7.9% Wholesale Trade | 2.4% $950.5M 30,000+ Public $7.62B 45,685 Public Administration | 7.2% Manufacturing | 2.3% downtown retail sales 424K delegates TOTAL DOWNTOWN PROPERTY VALUE parking spaces Total Workers in Downtown SLC by Administrative, Support, Waste Mgmt. & Real Estate, Rental & Leasing | 2.3% Renovation Services | 6.2% industry Information | 4.8% Educational Services | 2.1% $287 MILLION $30.47per SQ. FT. 790,787 direct visitor spending $74,836 Other Services Except Public Utilities | 0.2% lease rate YR/FSG AVERAGE ANNUAL WAGE Hotel Room Nights Booked Administration | 4.8% Healthcare & Social Assistance | 4.7% Agriculture, Forestry, Fishing & Hunting | 0.1% Construction | 4.2% Mining, Quarrying, Oil & Gas Extraction | 0.1% Source: Produced by JobsEQ® for the Economic Development Corporation of Utah. 01 02 01 02 03 CURRENT Current & Future Current + Future Development Challenges Development CONSTRUCTION AND REAL THE WEST QUARTER + ESTATE COSTS 01 FUTURE DEVELOPMENT Construction and real estate costs are at an all-time high, driven in part by 02 LIBERTY SKY Utah’s robust economy and growing population. From 2010 to 2016, Utah 03 THE BEVERLY had the fastest population growth rate in the country and the highest 04 MYA & AVIA increase in nonagricultural jobs. 04 06 07 08 Investors’ caution globally has also 05 THE OLIVE constrained capital. However, Salt Lake City is better poised for rebound than 06 CONVENTION CENTER HOTEL many cities. 07 95 STATE 08 THE REVIVAL Opportunities 09 PAPERBOX LOFTS HEALTH INNOVATION SECTOR 10 THE BIRDIE Salt Lake City is home to the fastest- 05 09 growing life sciences community in 11 255 S. STATE STREET the nation with 538 bioscience-related patents last year. A robust ecosystem UNION PACIFIC HOTEL of health innovation companies has 12 emerged from the University of Utah. Public and private investment is 13 KENSINGTON TOWER attracting life sciences and health IT companies to the Rio Grande District. 260 RESIDENTIAL DEMAND acres of underutilized lots (2020) The demand for downtown housing continues to exceed the supply due 10 11 12 13 to population growth and one of the 2,079 planned residential units projected to break ground in 2018-2019 strongest job markets in the nation. 3,600+ residential units completed or under construction (2018) Source: Downtown Alliance. 03 04 DOWNTOWN OFFICE MARKET DOWNTOWN Challenges $25.53/SF FSG 11.4% 274K SF 648K SF Downtown Office Market Asking Lease Rate Vacancy Rate Net Absorption* Under Construction SUBURBAN COMPETITION Office space can be built faster and cheaper in the suburbs than in the urban core. Downtown must leverage the benefits of transit, creative Comparative Rents 7 collaboration and amenities for Downtown SLC vs. Other Downtowns recruiting top talent. 4 Market Overview ECONOMIC UNCERTAINTY #1 Salt Lake City ($25.53) Economic uncertainty related to the In 2019, occupied office space in COVID-19 pandemic has softened #2 Phoenix ($26.19) downtown Salt Lake City grew by demand for office space across the 274,435 sq. ft. (measured by net absorption). Additionally, vacancy country. #3 Las Vegas ($29.64) decreased by 250 basis points over the 1 same period, from 13.9% to 11.4% in 2019. #4 Portland ($34.96) This positive growth is largely attributed Opportunities 5 to a large lease signed by WeWork for #5 Denver ($35.09) 8 flexible office space, in addition to a NEW INVENTORY strong undercurrent of diverse users 3 varying in size and industry background. Over 1 million sq. ft. of new and #6 Los Angeles ($45) adaptive-reuse Class A office space is 6 Bolstered by a resilient local economy under construction in and around the Seattle ($56.71) 2 and strong demographic base, demand CBD. #7 for office space in the downtown Salt #8 San Francisco ($80.40) Lake City market is expected to continue URBAN AMENITIES TO strong—despite global uncertainties. RECRUIT TALENT While large blocks of vacant space are Downtown office stock is currently limited, active construction surrounded by unique dining, in the downtown area (including the nightlife, transportation, and arts and Lease Activity by Industry 95 State Class A tower and Industry’s entertainment amenities that are not (top 50 new lease transactions since 2017) flexible-space complex) will service new available in suburban developments. or expanding office tenants seeking both quality and flexible urban space, along with strong amenities and ease of access. COMPARATIVE RENTS As of year-end 2019, there were 648,000 Salt Lake City lease rates compare sq. ft. of active construction in downtown favorably to other western cities in 38.1% 32.3% 1% 13.4% 15.1% Salt Lake City. our competitive set. Misc. Business Technology Education Law & Finance Other Source: CBRE Research, Q1 2020. *Net absorption spans 15-month period from 2017 through Q1 2020. Arrow indicates year-over-year trend, not negative growth. 05 06 WORKFORCE WORKFORCE Challenges Estimated Employment by Sector in Downtown Sector 2015 2016 2017 2018 2019 Workforce + Employment SKILLED WORKERS Utah needs more skilled workers— Office 33,711 35,438 36,067 36,686 38,227 across the state and in the Salt Lake City CBD. Employment in downtown Restaurants 3,653 4,127 3,864 4,182 4,253 + EMPLOYMENT is projected to increase 1.3% over the Retail 3,146 3,070 2,642 2,569 2,132 next year, according to data from the Economic Development Corporation Hotel 1,222 1,270 1,317 1,172 1,048 of Utah (EDCUtah). We also need those workers to be educated. Average Manufacturing 300 299 236 154 147 annual job growth is 1.7% for jobs in the CBD that require a bachelor’s Miscellaneous* 1,059 1,110 940 923 970 degree. Jobs in the CBD that require a Total Employment 43,090 45,315 45,065 45,685 46,776 postgraduate degree are growing by 1.6%. Over the next year the fastest- Total Wages $2,812,009,446 $3,064,132,321 $3,156,214,207 $3,420,132,501 $3,633,614,561 48,462 degrees growing occupation group in the CBD is expected to be in healthcare support, Avg. Annual Wage $65,260 $67,618 $70,038 $74,836 $77,681 awarded in 2018- with a projected +2.3% year-over-year rate of growth. Source: Utah Department of Workforce Services. 2019 academic year* *Miscellaneous includes mining, construction, utilities, transportation and warehousing. Opportunities Wages by Sector in Downtown (2019) 189,000 enrolled NATURAL INCREASE AND NET OFFICE MANUFACTURING MIGRATION OF WORKERS $87,106 38,227 $3.3B $53,087 147 $7.8M in public colleges The Kem C. Gardner Policy Institute Avg. Annual Wage Employment Total Wages Avg. Annual Wage Employment Total Wages estimates 59% of our population growth through 2028 will come (Fall 2019) from natural increase (births minus deaths) and 41% will come from net RESTAURANT HOTEL migration.