10 years of data for new office builds puts Salt Lake City metro among high achievers nationwide
Silicon Slopes’ national reputation continues to shine thanks to numbers released for office growth in the 10-year period from 2008-18.
Commercial Café, using Yardi Matrix data, compiled 10 years of numbers for new office construction counting projects 25,000 SF or greater. The biggest aggregate increases were found on the urban fringes of San Francisco, Chicago, and New York.
That same pattern holds in the Mountain West – the “Western Region” in Commercial Café’s sort – where the strongest growth is outside Central Business Districts and their first urban ring. Suburban office growth continues to dwarf urban and CBD numbers nationwide.
The report calls out Silicon Slopes as “an early Silicon Valley.” It notes that “Salt Lake City has recently seen impressive growth on the heels of the Bay Area.”
Patrick McGregor, the report’s author, asserts that because of San Francisco’s “skyrocketing costs of living and the increasing ease and popularity of remote working, Silicon Valley’s popularity is starting to wane.”
Salt Lake is growing like other hot spots, but not
Salt Lake City stands out on several data points. See the nationwide growth represented in this interactive map.
SLC’s Central Business District showed strong performance relative to regional comparables like Denver and Portland. Salt Lake City’s CBD new office SF additions easily outpaced both those cities by more than 2 to 1.
Denver’s CBD lost less ground to Downtown Salt Lake than did Portland. Salt Lake’s CBD produced growth at a rate of close to 2.5 to 1 to Portland’s (16.75% to 6.89%), while Denver’s growth rate in the heart of downtown registered 7.44% to SLC’s 16.75%, a healthy rate of advantage of more than 2 to 1 for Salt Lake City’s CBD.
Suburban SLC growth is eye-popping
In addition, suburban growth in the Salt Lake City metro region was downright explosive from 2008-18. Denver’s suburban office space expansion lagged behind Salt Lake’s by a factor of 1 to 5, and Portland’s compared at 1 to 7.
Salt Lake City suburban office SF grew by 43.1% from 2008-16. Compared to Denver’s 8.65% and Portland’s 6.59%, it’s an impressive number.
Suburban growth continues to be the main story of new office construction. That’s no surprise, given the incentives for developers to locate new projects there. Affordable land cost, location near freeways, and shorter construction schedules for greenfield development all add up.
CBD development is difficult and expensive – space and capital are at a premium. Yet Salt Lake City’s CBD office market, as well as its luxury apartment supply, continues to grow robustly. It outpaces Portland and Denver in the 2008-16 period by more than 2 to 1.
Where Salt Lake City lags behind other comparable cities is in new office construction in the first urban ring.
The city council has just approved a zoning rewrite for its D-2 zone and demand for office space continues to rise near transit and Downtown.
According to its planning director, Nick Norris, there are “virtually no design standards” in the Central Business District, and planning is hoping to get a revision process started in 2020. It will include a proposal for minimum height requirements in the CBD, and may allow taller buildings midblock.
It remains to be seen if Salt Lake City will soon be measuring substantial urban growth in office demand just outside its Central Business District.
Editor’s note: A previous version of this story failed to mention that the D-2 zoning rewrite was completed, and added information on the upcoming CBD process.