Page 1



Utah Site Selection Quarterly A P U B L I C AT I O N O F T H E E C O N O M I C D E V E LO P M E N T C O R P O R AT I O N O F U TA H First the rebar, then the concrete, then the building. Utah’s commercial real estate market continues to grow and outpace its neighboring states.

Reflecting on a Record-Setting Year in Economic Development When I joined EDCUtah 12 years ago, the organization held 12 site visits for the entire year. Last year we had 82. Fiscal 2012-2013 proved to be a record-setting year for economic development activity. We now have 354 open projects on our books—more than ever before—and it represents an even greater opportunity for growth.

2014: Building Upon Utah’s Strong Commercial Real Estate Market Utah’s commercial real estate market performed well during 2013 and with steady demand across all property types leading to an upbeat outlook for 2014. Nearly all of Utah’s commercial real estate market segments experienced positive absorption during 2013, especially across the Wasatch Front. More space was leased than vacated. Demand was solid. Supply was limited. And average lease rates increased marketwide. Looking ahead, EDCUtah’s partners in the commercial real estate sector, such as Cushman & Wakefield | Commerce, CB Richard Ellis, Coldwell Banker Commercial Intermountain, Cresa - Salt Lake City, Foursquare Properties, Freeport West, Hamilton Partners, Inc., Newmark Grubb ACRES Commercial Real Estate Services and Suburban Land Reserve, Inc., say Utah’s Follow us on

commercial real estate sector reflects the vision, security and longevity that have made Utah a safe place to grow a business. Indeed, Utah’s consistently strong economic fundamentals helped create market optimism in 2013 that has become the foundation for a strong 2014. Any uncertainty in the market will likely be related to the Federal Reserve’s efforts to relax bond buying, which totaled $85 billion per month from September 2012 through December 2013. Office Market Commercial real estate analysts say the Salt Lake County office market reached its third highest level on record during 2013—a postrecession high—in terms of space absorbed. Practically every submarket in the county saw some type of improvement during 2013 and demand is expected to continue this year.

For more information, and Site Selection, please visit

EDCUtah also set another record for jobs created and retained with 9,405 new jobs created and 1,931 jobs retained. And, while I am excited about the new jobs created, helping keep so many jobs in the state is equally important. Those jobs were in jeopardy of leaving the state, and we are thrilled to keep them here. Thirty-one companies announced they would locate or expand in Utah during the fiscal year. Notable project wins include Emery Refining, with 125 jobs in Emery County; SyberJet, with 1,200 jobs in Cedar City; HireVue, with 540 jobs in South Jordan; SolarWinds, with 1,040 jobs in Utah County; Boeing, with 100 jobs in West Jordan; and Enve, with 324 jobs in Ogden. Utah has been considered for projects of a greater scale than the state has seen before, including full-size corporate headquarters and very large manufacturing projects. Being considered for larger-scale projects is partly due to our exceptional resources, but I believe it is also because of the can-do reputation we have as a state in the national marketplace. The state’s IT sector has reasserted itself as a major force for growth and is now an economic engine in its own right, and the depth of the industry gives Utah’s tech talent the reassurance (continued on page 5)

1-800-574-UTAH (8824)

U TA H S I T E S E L E C T O R Q U A R T E R LY W I N T E R / 2 0 1 4

(Continued from page one) In Utah County, analysts say the office market experienced moderate growth with 35,349 square feet of positive absorption. The overall vacancy rate dropped by 0.7 percentage points (pps) and ended the year at 13.8 percent. Meanwhile, Weber County saw its overall office vacancy rate decline significantly, with the largest absorption occurring in class-A buildings. In Davis County, class-B and -C office vacancy rates declined from 2012, while class-A space increased in vacancy, the latter being due to new office space that came online at Station Park in Farmington. The Summit County office market was strong in 2013 with approximately 65,000 square feet of net absorption. With no new construction and strong absorption, the vacancy rate dropped to its lowest level since 2008. Consequently, average asking lease rates are on the rise in the county, especially in the Kimball Junction area, where much of the new development is located. Down South, the Washington County office market showed moderate improvement as the overall vacancy rate decreased 1.7 pps to end the year at 11.5 percent. Looking ahead, commercial real estate analysts say optimism remains high for the office market because Utah continues to provide a friendly environment for businesses to expand or relocate. Steady demand coupled with limited amounts of new construction in the Salt Lake office market will allow for continued improvement. Furthermore, the Salt Lake City central business district has experienced reinvigorated leasing activity, new construction, enhanced amenities and better transportation, which has created optimism for continued positive absorption there. Industrial Market Demand remained strong for space despite a slowdown in activity during the second half of the year. Analysts say the 2013 Salt Lake County industrial market recorded its highest level of annual absorption since 2007. Low energy, land and labor costs make Salt Lake County an attractive location for industrial operations of all types. Expanding local operations and increasing interest from outside users bolster the county’s position as a preferred location for industrial users. Meanwhile, strong activity in Utah County led to positive absorption of more than 2.5 million square feet of space. The overall vacancy rate decreased 2.4 pps to end the year at 5.7 percent in Utah County. The Weber County industrial market was the strongest of the commercial real estate sector there, as industrial vacancy rates decreased Follow us on

PA G E 2

from 8.3 percent to 6.4 percent for 2013. In Davis County the overall vacancy rate dropped to 3.9 percent for the year. Both lease rates and sales prices are on the rise in the county as quality space has become harder to find. In Washington County, the industrial market continued its strong recovery, with the vacancy rate dropping 3.8 pps to end the year at 4.0 percent. Analysts say activity was solid throughout the year, and the increase in demand for industrial land is expected to continue through 2014. In Summit County the little remaining industrial inventory available was mostly absorbed in 2013. Hence, the vacancy rate dropped to a rock bottom 1.1 percent at year end. Given the severe lack of supply in the county, analysts say speculative construction is expected during 2014. Looking ahead, higher interest rates and new speculative inventory will affect leasing activity in the Salt Lake market. Analysts expect overall activity to remain strong during 2014; however, as smaller space is absorbed, average rental rates will climb, which will boost the opportunity for developers to meet demand through new construction. Analysts also expect new construction of larger buildings in excess of 100,000 square feet, with up to 2.7 million square feet of new product expected to be added to the market in 2014. With strong economic fundamentals in the marketplace, developers are turning to more speculative construction in anticipation of new tenants. Retail Market Overall, the retail market of Utah’s sector experienced positive absorption during 2013, with little new construction completed during the year. In Utah County, growth in Lehi City is driving dramatic retail expansion. With an increase in new construction expected through 2014 and beyond, vacancy rates will likely level off in the area to compensate for the new space on the market. Retail vacancy rates in Weber County have steadily declined over the past two years. Landlords there have been aggressive in offering incentives and improvements to attract new tenants. Lease rates were relatively flat in 2013 but are expected to inch up as the market strengthens. Analysts say the Davis County retail market was hot during 2013, as more than two dozen retailers and restaurants opened their doors during the year. Thanks to renewed confidence and steady growth in the county, overall lease rates will continue to rise in the retail sector during 2014. In Washington County, the retail market was hit by the departure of several significant

For more information, and Site Selection, please visit

tenants. Nonetheless, analysts say anchored class-A retail space is in high demand there and continues to outperform all other property classes despite commanding high rents. In Summit County, the retail market experienced a strong decline in vacancy, and the area’s retail momentum is expected to remain strong through 2014. Looking ahead, analysts say new retail construction will increase in 2014, bringing the sector more in line with long term averages. Absorption in the market is also expected to stay ahead of new product availability, so vacancy rates will remain level or decrease slightly, putting upward pressure on average asking rates. Investment Market While nearly every commercial real estate category returned to pre-recession levels during 2013, analysts say the most prolific sector was in investment sales, where Utah recorded the second-highest level of activity in the state’s history, with nearly $1.4 billion in sales. Transaction volume has been steadily trending upward since the low water mark was set in 2010. Analysts expect more positive momentum for the investment market as they look at the properties currently on the market and considered potential sales for 2014. By analyzing the spread between cap rates and the 10-year treasury, analysts say the spread through 2013 remained 0.25 percentage points above the long-term average. This spread, or difference between cap rates and the 10-year treasury, represents the added risk an investor is willing to bear to own real estate versus what is generally considered a zero-risk investment. As demand remains strong and the underlying fundamentals of the leasing market continue to improve, analysts expect the risk level an investor will assume should come more in line with its long-term average, thus providing a small cushion. While cap rates will not likely decrease in the face of increasing interest rates, these factors will suppress some of the impact of higher interest rates on cap rates, and pricing is expected to improve across the market. During 2013, occupancy gains in office, retail and industrial properties strengthened while net effective rental rates also increased. As new construction remains largely controlled, analysts expect fundamentals in the market to strengthen, which in turn will increase net operating incomes for properties. And, barring a large increase in the 10-year treasury of more than one percentage point, the improving market fundamentals expected to continue in 2014 should offset any increases in cap rates with respect to pricing. 1-800-574-UTAH (8824)

U TA H S I T E S E L E C T O R Q U A R T E R LY W I N T E R / 2 0 1 4

PA G E 3

2014 Winter Rankings Provo and Orem ranked No. 2 and Salt Lake City No. 5 for the 15 U.S. Cities That Are Driving the Future Business Insider Provo ranked 2nd; Salt Lake City ranked 5th in U.S. Best-Performing Cities Milken Institute

Salt Lake #1 in “Best Cities for Kids” MSN Salt Lake City #1 in “10 Cities where You’re Most Likely to Achieve the American Dream” PolicyMic Utah in the Top 5 “Best States to Start a Business”Business2Community

Olympics: The Legacy Lives On In less than a mile you’ll will rip through 15 turns, reach speeds up to 80 mph and experience up to 5 Gs as gravity tries to drain the blood from your head. This isn’t in a new F-35 Joint Strike Fighter preparing to take off from Hill Air Force Base, but in a bobsled flying down the Olympic track in Park City. While the eyes of the world were on Russia in February for the XXII Olympic Winter Games, Utah still basks in the glow of the 2002 Salt Lake City Winter Olympics. Jeff Robbins, Utah Sport Commission president and CEO, notes that the past four months have been exceptionally exciting for Utah sports leaders, whose Olympic legacy strategy has manifested itself in Utah’s own “Road to Sochi” series of events. “We have held 13 top-level events, including four World Cups, a Grand Prix, three U.S. Olympic Trials events and the Olympic Committee Media Summit in Utah since September, in the buildup to the 2014 Sochi Olympics,” says Robbins. “We’ve had a spectacular winter-sports lineup that has provided fans the opportunity to see some of the world’s elite athletes compete before the Olympics.” Coinciding with those events, Utah received significant media exposure with two stories on the home page of the website: – Salt Lake City still basking in 2002 Winter Games legacies – Winter Games provided ‘springboard’ for Salt Lake City With the International Olympic Committee highlighting Utah’s successes during the week leading up to the Sochi Games, Robbins says it is another validation that Utah truly has carried the Olympic legacy forward. “It’s a Herculean task to keep the Olympic venues viable long after the Games are over. No city has done that better than Salt Lake City,” he adds. While most post-Olympic cities tend to stay within the Olympic space they hosted, summer or winter, rather than broadening out, Robbins says Utah took a different track by focusing on the potential sports legacy even Follow us on

before the Games came to Salt Lake City. “That has differentiated us from nearly every other host city,” he explains. “Our Olympic legacy is actually a sports legacy, a strategy that builds on the Olympics to create the brand: ‘Utah, the State of Sport.’ Every day we leverage our Olympic venues and our brand to create economic impact by bringing major sporting events to Utah.”

Click on the image above to learn more about Utah’s Olympic venues and how you can use them.

Utah the most “small business-friendly state in the U.S. Inc. Utah computer science grads jump 47% to 534 Silicon Slopes Utah #5 “The Best and Worst Run States in America: A Survey of All 50” USA Today

Utah’s tourism industry has also been boosted by the worldwide exposure generated by the 2002 Games. The state has enjoyed a 42 percent increase in skier visits since 2002 and direct expenditures from skiers and snowboarders have grown 67 percent, from $704 million in the 2002-03 season to $1.29 billion in 2012-2013. During the 2002 Games, the Utah Olympic Park in Park City hosted bobsleigh, skeleton, luge, Nordic ski jumping and Nordic combined events. Today, the park still serves as a training center for Olympic- and development-level athletes. It is also a popular destination for locals and tourists and receives approximately 300,000 visits per year. Cradled by the Wasatch Mountains, the 389acre venue is home to six Nordic ski jumps, a 1,335-meter sliding track with five start areas, a freestyle aerials winter training and competition hill, a 750,000-gallon summer freestyle aerial training pool, the Joe Quinney Winter Sports Center, Alf Engen Ski Museum and George S. and Dolores Dore Eccles 2002 Olympic Winter Games Museum. Meanwhile, the Utah Olympic Oval in Kearns remains uncontested as the “fastest ice on Earth” with an incredible 10 Olympic records and eight world records set during and after the 2002 Olympic Winter Games. The oval, which receives more than a half-million visits annually, consists of five acres--roughly the size of four football fields under a clear span suspension roof that covers a 400-meter speed skating oval and two international-size ice sheets.

The Salt Lake City Winter Games generated $100 million in profits for the Beehive State, including a $76 million endowment to create the Olympic Legacy Foundation that would maintain and run the Olympic facilities and $10.2 million for Olympic Legacy Plazas. More than a decade later the legacy continues. Utah’s private ski resorts also continue to With partners that include the Olympic Leghost major events and stay involved in the acy Foundation, the U.S. Ski and Snowboard Olympic space, even though they don’t Association, U.S. Speedskating, Price Realty receive public funds. The U.S. Ski and Group, Rocky Mountain Power, Sandy City, Snowboard Association is located in Utah, Layton Construction, Zions Bank and Comas is the U.S. Speedskating. cast Business, the Utah Sports Commission has brought more than 550 events to the state “We have two anchor tenants of the winter sports world located in Utah and many other since the Olympics, pumping an estimated great partners. That gives us a significant $1.5 billion into the Utah economy economic foundation from which to build,” says and providing $322 million in media value. Robbins. “We also have some of the best Moreover, the state has hosted nearly 200 facilities in the world. Everyone knows that, Olympic-related events that go beyond and everyone comes here to train. Utah is winter sports, including volleyball, rugby ‘The State of Sport.’” and soccer competitions.

For more information, and Site Selection, please visit

1-800-574-UTAH (8824)

U TA H S I T E S E L E C T O R Q U A R T E R LY W I N T E R / 2 0 1 4

PA G E 4

Lights, Camera, Action: Utah’s Economy and the Sundance Film Festival they intend to visit Utah again during the next year, according to the BEBR. Almost 40 percent of nonresident attendees said they intended to ski or snowboard in Utah during their stay, which equates to about 12,000 people.

As festivals and sporting events go, few are tied to a city or a state as closely as the Sundance Film Festival is associated with Park City and Utah.

ated 11,900 television pieces. In total, publicity value from the festival totaled more than $56.8 million with more than 900 registered press from 16 countries attending.

“People talk, almost in every breath, about our marketplace when they talk about the Sundance Film Festival,” says Mike Lawson, president of Commerce Real Estate Solutions. “I would challenge you to name three other events anywhere in the country that provide the same visibility that a single, twoweek event like the Sundance Film Festival provides Utah.”

More than 65 percent of the 2013 festival attendees came from outside of Utah. The largest share of non-resident visitors came from California, New York and Illinois with another 4,000 attendees coming from 22 countries. Canadians accounted for the single largest share of international visitors, followed by Australia and the United Kingdom.

It’s been said that the 2002 Salt Lake Olympics introduced the world to Utah. Perhaps every January the Sundance Film Festival makes a reintroduction and an invitation: World, come to Utah. The full impact of that annual reintroduction is significant. Over the last five years, the Sundance Film Festival has brought Utah more than $375.6 million dollars in economic activity, $21.9 million dollars in tax revenue, supported more than 8,224 jobs and attracted more than 219,987 festival attendees, according to the Sundance Institute. Over the last decade, the festival has generated in excess of $500 million in economic activity for Utah. It is the state’s largest annual international event, bolstering tourism and attracting worldwide media attention. Last year, the University of Utah Bureau of Economic and Business Research (BEBR) at the David Eccles School of Business said the 2013 Sundance Film Festival generated close to $70 million for the State of Utah in overall economic impact. It supported more than 1,407 jobs, generated more than $56.8 million in international media exposure, provided nearly $5.8 million in tax revenue and was attended by nearly 46,000 people. From the announcement of the film program in late November 2012 through wrap-up articles in February 2013, the Sundance Institute and the 2013 Sundance Film Festival generated more than 31,100 print and online articles, according to the Institute. And from Jan. 15 to Feb. 15, 2013, the festival generFollow us on

“At EDCUtah, we invite a group of national site selectors to be our guests for the opening weekend of Sundance. It’s the perfect opportunity for us to showcase Utah and why it’s a great place to live, work and play,” says Kim Frost, director of marketing and communications for EDCUtah. “Last weekend we had a group of five site selectors here to ski, attend films and learn more about what is happening in Utah. One of our guests said he has never accepted an invite like this from an economic development group, but he was so intrigued by the success we’re having in Utah that he had to come out to see for himself.” EDCUtah has been leveraging the festival to introduce site selectors to Utah for over seven years, Frost explains. As a direct result, site selectors have brought a number of projects to the state. “After their visits, the site selectors put Utah on their lists for projects that they previously may not have. It keeps Utah on their radar and helps them understand that Utah can compete on projects of all size and scope,” she says. Many of the site selectors have never visited Utah, much like the majority of festival attendees. Of the estimated 30,065 nonresident festival attendees in 2013, approximately 36 percent said this was their first visit to Utah, and 83 percent said they traveled to Utah specifically to attend the 2013 festival. Forty percent said they would visit Utah again during the next year and more than 40 percent of tourist attendees indicated that

For more information, and Site Selection, please visit

Of the 2013 festival attendees, the most popular resorts for skiing were Park City and Deer Valley. Of those who said they would ski or snowboard, about half indicated they would spend at least one full day at the Park City Mountain Resort and 31 percent said they would spend at least one day at Deer Valley. The BEBR says a smaller share of locals indicated they would combine skiing with festival attendance. About 20 percent of those surveyed said they would either ski or snowboard in conjunction with film attendance. The Park City Mountain Resort and the Canyons were the ski areas mentioned most often by locals. “We can’t underestimate the importance of outdoor recreation to the state. Not only is it essential to the economy but it introduces people to the amazing quality of life that Utah has to offer,” says Frost. “There are very few other places in the country where you can live and work in a metro center and be 30 minutes from ten world class ski resorts.” Will a recruitment deal get done because of Sundance’s visibility? We may never know, adds Frost. “But Sundance’s success here speaks volumes about Utah’s credibility and long-term stability, about the state’s businessfriendly environment, its support for the arts and about the fantastic recreational opportunities that are here. That message is priceless,” she says. In addition to its cultural value and economic impact, the Sundance Film Festival has become a powerful business recruitment tool for GOED and EDCUtah, who focus on CEOs and other top-level executives in fields such as technology, finance and sports that visit Utah specifically to attend the Festival. In past years, GOED, with Zions Bank, has hosted networking events that drew acclaimed and rising filmmakers and executives from companies from the likes of Oracle, Adobe, Expedia, HP, Hilton Hotels and Microsoft. The festival is also a leading example of how the arts can support the local economy, help grow local businesses and highlight Utah as great place for other businesses to locate. 1-800-574-UTAH (8824)

U TA H S I T E S E L E C T O R Q U A R T E R LY W I N T E R / 2 0 1 4

PA G E 5

(Jeff’s Message continued) that there are growth opportunities here. EDCUtah’s success is hinged to the remarkable partnership the organization shares with the Governor’s Office of Economic Development. We enjoy a unique, unprecedented relationship with the government and private sectors, and our ability to work together in a cohesive way presents a seamless image to our out-of-state clients. It is just a remarkable thing. Looking ahead, we envision another year of excellent opportunities for growth, thanks largely to Utah’s stable, pro-business environment. In November, when Pepperidge Farm opened its newly expanded facility in Cache County, CEO Irene Chang Britt attended the ribbon cutting ceremony. In her remarks she said the main reason for expanding the facility in Utah was because, in the plant’s 30-plus-year history, it has the highest productivity of any plant in the company. A few days after the Pepperidge Farm event, the EDCUtah team met with a senior officer from a global 50 company that has operations in Utah. That officer told me his company would put its Utah workforce up against any of its workers in the world. He means places like China, Brazil, Germany and India. The people in Utah are being recognized as smart and nimble and ready to adapt to the fast-changing world markets and technologies. I am excited about our future, but I know we need to be prepared in order to take ad-

Goldfish crackers and cutting ribbons at Pepperidge Farm’s expanded Goldfish manufacturing facility in Richmond, Utah.

vantage of the opportunities before us. Part of the preparation involves Utah’s young, educated and dedicated workforce, which continues to be a tremendous competitive advantage for the state. If Utah is to retain that workforce advantage, the state must do whatever it takes with regard to training and educating our population. Every educational investment we make now will pay off in the years ahead. Another area of preparation involves economic data. When site selectors and companies come looking for location information, requests are often urgent. They want it all, and they want it now, including up-to-date information about sites, zoning, utilities, workforce, education, long-term development plans and more. We must be agile as an organization and as a state to seize the opportunities that are out there. EDCUtah continues to be the go-to source for business data essential for company expansions

and relocations. For FY2012-2013, EDCUtah researchers created 61 custom operating cost models for companies considering relocating to Utah, up 13 percent from FY20112012. The research team also responded to 744 requests for data, up 14 percent from the previous year. As the state’s central economic development organization, EDCUtah this year also experienced unprecedented growth in its membership, which now includes more than 275 members. We appreciate that support and the unique relationships we enjoy with our investor cities, counties, public and private sector organizations. Their involvement in economic development is essential to our success, now and in the future.

Jeff Edwards President & CEO, EDCUtah

E co n omi c D e v e lo p me n t R e s o u r c e s EDCUtah Web Site

Utah Governor’s Office of Economic Development (GOED)

Utah Economic Developer Directory

EDCUtah Economic Review Weekly Newsletter

EDCUtah Custom Research

Important Contact Information Jeff Edwards, EDCUtah President & CEO


Spencer P. Eccles, GOED Executive Director


Chris Conabee, GOED Corporate Recruitment and Incentives


Todd Brightwell, EDCUtah Chief Operating Officer


Kim Frost, EDCUtah Director of Marketing & Communications


Please note: This newsletter is produced to give site selectors and corporate decision-makers the best opportunity to stay up to date on ED news in Utah. This publication is simultaneously e-mailed to site selectors and corporate decision-makers within the edcUtah database. We are solely publishing this document via a e-mail. If you would still like to receive a print copy of this publication, please contact or call 801.328.8824.

Red rocks and white snow.

Follow us on Facebook and Twitter

t h e p artners h i p for U ta h ’ s g rowt h

Edcutah siteselectwinter14  
Edcutah siteselectwinter14  

Utah's Commercial Real Estate Market and how Sundance and the Olympics Boost the Economy