Salt Lake City Retail Market Remains Sluggish
The Salt Lake City retail market remains sluggish, Troy Hardy, a retail specialist for Coldwell Banker Commercial of Salt Lake City, told attendees to this year’s Summer Symposium in Salt Lake City.
Providing a mid-year real estate economic update, featured speakers at the “Bottoms up?” symposium discussed market conditions for single family residential, multi-family residential, office, industrial and retail, mainly in Salt Lake and Utah counties.
According to CBRE, construction on major malls has stopped and planned construction projects remain on hold. Leasing activity remains low. Rising vacancy in existing centers continued to be a challenge while significantly tightened financing requirements have slowed new construction. New startups are responsible for much of the positive absorption in the strip/in-line centers.
Regional tenants that are moving forward with expansion along the Wasatch Front include: Winco, Smashburger, In-N-Out Burger and Sandellas Flatbread Café.
Available retail space is up 754,672 square feet from a year ago to 3,864,539 square feet at the end of the second quarter of 2009. The majority of available space is located in the strip/in-line centers. Landlords have responded by dropping lease rates and offering generous incentives and build-out allowances, Hardy said. The average achieved lease rate for the Salt Lake market is $14.95 per square feet compared to $17.27 per square feet a year ago. These trends are expected to continue the last half of 2009.
“Retailers will continue to ask for rent reductions,” said Hardy. “Shopping centers owners will watch much of their hard-earned equity virtually disappear. CAP rates will continue to climb. New spec retail development will virtually go away.”
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