Utah County’s industrial market experienced an increase in industrial construction over the first part of the year. Hopefully the over 1.3 million square feet of industrial space currently under construction can keep up with the pent-up demand that has been building over last four years throughout Utah County. With minimal amounts of available space, market activity continued at a healthy pace. Net positive absorption reached 287,184 square feet —almost double what it was at this same time last year.
Over 900,000 square feet of industrial space has already reached completion this year, though over 72 percent of this speculative space was pre-leased before the buildings were finished. As supply struggles to keep pace with demand, leasing activity within the Utah County industrial market will remain challenging well into 2018.
Vacancy rates continue to drop, reaching a historically low 2.36 percent and making quality available space hard to find. Landlords who do have available space are asking for much higher rents, increasing overall average lease rates from $0.55 NNN at year-end 2017 to a current rate of $0.65. Lease rates should continue to inch upward into next year as continued pressure from oil prices, tariffs and a shortage of construction labor force inflate the overall cost of industrial space.