Office 2Q2018 SLC
The Utah County office market continues to face strong demand for quality office space with an ongoing positive net absorption rate of 403,700 square feet year-to-date. After delivering approximately 480,000 square feet of new office space to the market so far this year, the construction boom persists in the North quadrant with an additional 1,569,952 million square feet of space underway.
Tenants who signed pre-leases during year-end 2017 have now moved into their new space in North Utah County, causing an increase in mid-year net absorption. The absorption of large amounts of Class A product in the North quadrant has decreased vacancy rates by 4.18 percentage points from year-end 2017 to 10.34 percent currently, demonstrating a healthy balance between supply and demand.
Class A lease rates increased slightly, but is not indicative of what landlords are achieving. Prime office space was fully leased during the first part of the year. The remainder of this type of space at the lower end of the class A spectrum is priced with lower asking rates, adjusting the reported study. Over 1.5 million square feet of class A office buildings that are currently under construction are not included in current asking lease rates. Most of this speculative space is being pre-leased in a range of $21.00-$27.00 full service gross.