Downtown’s booming but demand still outpaces supply
Like the rest of the state, downtown Salt Lake City is benefitting from the region’s healthy economy. More people live and work downtown than ever before. But according to local real estate experts and representatives from the Downtown Alliance, despite the boom, the supply downtown isn’t catching up to the demand and more development is needed in the city’s central business district to accommodate the growing demand for housing and office space.
“We are behind on everything, what we really need right now is development,” said Ben Kolendar, the city’s deputy director of the Department of Economic Development.
On Tuesday, local officials and staff from the Downtown Alliance presented to the media the Alliance’s annual Downtown Economic Benchmark Report. According to the report, downtown employs 77,850 workers, with employee numbers rising in all sectors but retail that saw a modest net loss of 50 workers, going from 3,300 in 2016 to 3,250 in 2017.
“Downtown is changing so dramatically,” said Jason Mathis, the Downtown Alliance executive director.
The downtown residential population is also the highest its ever been and is expected to continue to grow over the next few years. According to Alliance staff, there were 2,592 units that were either under construction or completed in 2017 with another 2,079 units projected to break ground by 2019.
Despite the residential building boom, the report cites housing gaps in both affordable and luxury units. Citing data from the U.S. Census Bureau, the report notes that the largest housing gaps are for residents earning at or below 50 percent Area Median Income (AMI) and residents earning at or above 150 percent AMI.
“There is a shortage of housing across the board,” said Kolendar.
Patrick Bodnar, a senior associate at CBRE, agreed. Bodnar argued that, while more affordable housing is needed, downtown needs more high-end units as higher-income residents have more expendable income that supports the local establishments that have become the backbone of downtown’s retail health. In 2017, restaurant and bars accounted for almost half of downtown’s retail sales. “We need to deliver luxury that showcases Salt Lake City,” he said.
There are several large commercial and residential projects in development that will help increase the local supply, but no tower has yet to break ground this year. Alliance staff noticeably removed two stalled projects, the Regent Street Hotel and the Convention Center Hotel, from the report’s list of planned developments. But plans for several other towers that should exceed 20-floors appear to still be moving forward including Cowboy Partners’ Liberty Sky apartment tower, Held Properties’ 370 Millennium Tower and an office tower from The Church of Jesus Christ of Latter-day Saints’ private real-estate arm.
Plans for several mid-rise towers, between 10 to 11 floors, are also moving forward. The next phase of Salt Development’s Hardware District development will include a 10-story office building in addition to the project’s nearly 1,000 new residential units. The Ritchie Group plans to build two 11-story mixed-use buildings at the southeast corner of the 100 South and 300 West intersection. And the Patrinely Group plans to build two 10-story commercial office buildings between Main Street and West Temple on 600 South.
For downtown officials, additional development is needed to keep downtown healthy and help it compete with growing suburban centers in cities like Sandy and Draper that have dominated the recent commercial office growth. But downtown has plenty of room to accommodate more growth. Officials estimate that the business district has 84.2 acres of vacant and underutilized land. According to a May 2018 report by CommercialCafé, a nationwide commercial real estate listings platform part of Yardi Systems, that amount of developable vacant land ranks downtown Salt Lake as one of the nation’s highest in urban infill development potential.
