Retail demand up, office and industrial struggling – Salt Lake City market wrap 2023

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Strong consumer spending and low construction activity have brought good news to investors in the retail sector, as demand and rents continue to rise region-wide.

The two-year flurry in warehouse-building and seemingly flat demand for storage and logistics has industrial RE investors facing high vacancy rates, yet for now, continued rent growth year-over-year.

Office is faring better than the national market writ large, but the pain being caused by what may be a permanent drop in demand shows no sign of letting up.

Below we summarize the Salt Lake City metro section of Mountain West Real Estate’s Year-end Market Report for 2023. The report covers MWRE’s markets from Las Vegas to Billings, including St. George, Provo-Orem, Salt Lake City, Ogden-Clearfield, and Logan in Utah.


Despite the retail apocalypse experienced by some sub-sectors of the market, population growth and consumer spending continue to pedal forward other retail segments like entertainment, restaurant, and travel, reports Mountain West.

Retail vacancy sits near an all-time low at 2.9%.

Asking rents are up 13.1% y-o-y, and now sit at $22.02/SF.

However, overall square foot effective rents fell slightly (to $22.02/SF)—but “most square footage transaction segments showed positive growth [for the year],” MWRE reports.

MWRE’s Scott Brady sees a 2024 where retail “remains solid and tenant demand for space is strong amid resilient consumer spending. Low vacancy and reluctance from developers to build new product due to high interest rates, construction costs and land values will apply upward pressure on rents.”

Images courtesy Mountain West Real Estate


We previously shared CBRE’s 2023 Industrial and Logistics report, which highlighted the unprecedented building boom in warehouses built on spec as well as the Salt Lake City market’s attendant high vacancy and sub-lease rates.

A vacancy rate of 6.7%, MWRE notes, hasn’t been seen since the early 2010s. A second consecutive year of over 9 million SF of new inventory offers businesses looking for storage and logistics space plenty of choices.

MWRE’s Rob Kingsford argues “Increasing vacancy is largely a function of new construction delivering without pre-leases in place and not companies going out of business. A mix of tenant shuffling through space is expected and tenant will have more leverage in lease negotiations, after very little from 2020-23.”

Images courtesy Mountain West Real Estate


Mountain West has vacancy hovering around 10%, below the national rate of 13.6%.

Rents are flat since 2021, ending 2023 at $25.33/SF.

Sales activity has been weak, predictably, for all sectors, given the cost of borrowing. 2023 saw 78.4% fewer office product sales in the Salt Lake City market that the year before. Not surprisingly, such a parched market is seeing prices for office buildings crumble, down 25.8% since 2022.

Value for buyers who can put together financing for lagging assets is clearly emerging.

And the high tide for new luxury Class-A product may be receding.

Josh Vance from MWRE notes that “abundant sublease space is lowering lease rates, particularly in Class A offices. Unlike the post-2008 recession trend favoring quality spaces, the current inflationary cycle is boosting demand for cost-effective Class-B spaces.”

Images courtesy Mountain West Real Estate

It seems like value for office-seekers, too, will continue to grow.

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Posted by Luke Garrott

Luke Garrott, PhD, has published in The Salt Lake Tribune and the Deseret News, and written features for the Salt Lake City Weekly City Guide and The West View. A former two-term councilman in Salt Lake City's District 4, he lives in Downtown Salt Lake City and grew up in the Chicago area.