Retail Market Update
The commercial retail market along the Wasatch Front was great through the end of 2016. The number of leases, lease rates, sales per square foot, and investment transaction sales volume placed 2016 at the top of recent past years in almost every county. With Utah as one of the fastest growing states in the nation, it is little wonder so many companies are entering the Utah market and taking advantage of all the new growth and expansion taking place.
The number of retail leases, owner-user sales, and investment sales all increased in 2016 for Salt Lake County. Furthermore, the average lease rate per square foot and average owner-user sale price per square foot also increased; in contrast, the square foot amount leased and sold decreased—mainly due to a scarcity of large blocks of retail space. Therefore, more deals were done but were smaller in size. This is illustrated with 86% of the total retail transactions ranging in 0-4,999 SF and consisted of 46% of the total lease transaction volume. Overall lease transaction volume increased from $61.3 million in 2015 to $69.4 million in 2016–$8 million over the average volume the past seven years. The same trend is visible for the owner-user sale price per square foot ($174.47 in 2015 to $186.14 to 2016) and sales transaction dollar volume ($21.6 million to $30.2 million year over year).
Retail investment sales along the Wasatch Front surged by an incredible amount in 2016. Investment sales in 2015 brought in a very respectable $309.9 million in transaction dollar volume. This increased by nearly 50% in 2016 to $461.9 million, and, also increased from 64 to 81 investment transactions year over year. Cap rates compressed in almost all retail subtype with the sole exclusion being community center product. The highlight of investment sales in Salt Lake City was the sale of The Gateway, a 623,972 square foot lifestyle center.
The retail market in Utah is primed for growth and expansion for local and out of state companies alike. Companies and investors looking to enter a solid market at lower rates than surrounding larger metropolitan cities in the West but still want to reach a new and ever increasing population will find a home to flourish in Utah.
