Whether you’re an investor looking to buy or lease a commercial property, or a prospective tenant looking for a place to rent, you’ll want to check out the latest Utah Commercial Real Estate market statistics. This brief report will give you a look at how the office, industrial, and multifamily sectors have fared in the third quarter of 2018.
Multifamily rents grew by an average of 5.5% during the quarter
During the third quarter of this year, multifamily rents rose by an average of 5.5%, reaching all-time highs. The rate of growth was the highest since the end of the recession, with the national average rising to $1,584 per month.
The strongest growth was in the West, where seven markets – San Francisco, Los Angeles, San Diego, Seattle, Phoenix, Reno, and Denver – experienced rents that increased by over 10%. Vacancy rates also improved. The lowest vacancy rates were in the Inland Empire and San Diego.
In the Sunbelt, Tampa, Charlotte, and Fort Lauderdale all saw rents that declined. These markets are fueled by robust tourism and employment growth. Domestic migratory patterns are also energizing demand in key markets in the Southwest.
While the market is forecasting moderate growth, a lack of available construction financing will limit new multifamily development. A tight debt market will also constrain new development.
Office space sector has decreased quarter-over-quarter by about 3%
During the third quarter of 2019, Salt Lake City’s office space sector suffered a 3% decline in overall asking rents compared to the same period last year. In spite of the slowdown, demand for office space remains on the upswing. The VTS Office Demand Index showed that employer demand for office space was up 31 percent compared to the previous year.
The market is still hot, as evidenced by the plethora of listings on the market. A notable uptick in leasing was seen in the CBD, as companies continued to relocate their headquarters.
While this is not a new phenomenon, the COVID-19 pandemic forced many companies to make the switch from working in a traditional office to working remotely. The best part is that this has resulted in an impressive ROI for the office space industry.
Industrial market is expected to grow substantially through the rest of 2022
Historically, Utah has enjoyed an excellent economy and employment landscape. Its unemployment rate is currently 1.5 percentage points lower than the national average.
Utah has seen an increase in job growth in retail trade and manufacturing in recent years. The state has also seen strong growth in leisure and hospitality industries. These sectors have been able to attract more young people into Utah.
However, the real estate market has been a challenge for buyers over the past few years. Although Utah has a low cost of living, its housing market is a seller’s market. The typical home value in the state is $572,971 and 50 percent of the state’s housing stock is worth more than that amount.
While the Zillow Home Value Index is not a perfect measure of value, it is a good indication of the value of a typical home.
Climate supports hot summers and cold winters
Generally speaking, Utah has a warm and wet winter, but a cold and dry summer. The average summer temperature in the state is about 68.3 degrees, compared to a more temperate 80.3 in Los Angeles, but the snowpack in Utah is relatively low. The largest reservoir in the state is at 61% capacity, but it is the smaller reservoirs that will be the most likely to run dry in the near future.
Despite the state’s relative dryness, Salt Lake City is a wetter than average metropolis. This is thanks in large part to its large urban water supply, which provides 21 inches of precipitation per year. The city also gets a decent amount of rainfall in the form of storms, which can carry into the northern parts of the state.
Property tax is based on 100% of fair market value
Whether you are buying a new home, selling a home, or looking to rent a home, it is important to understand how property tax works in Utah. If you’re unsure, you can get a professional estimate from an appraiser. This estimate will help you determine the fair market value of your property. If you’re negotiating a sale price, you can use this value to make an offer.
The Assessor’s Office uses three nationally recognized appraisal methods to value a property. Typically, the assessor uses data from each approach and then correlates them into a final value.
The appraiser’s office must know what buildings are in the area, how much it will cost to build new buildings, and who is willing to buy in the marketplace. They also need to be aware of changes in zoning and financing.
