Silicon Slopes vs. Downtown – Who’s winning the battle to attract tech companies?

While the suburbs of Utah and Salt Lake Counties continue to add new office space at a greater rate than Salt Lake City, a new report on technology sector growth contains good news for Downtown enthusiasts. 

The report, authored by Levi Pace, Senior Research Economist at the Gardner Policy Institute at the University of Utah’s Eccles School of Business, notes the dominance of Salt Lake City and Salt Lake County in the state’s technology sector. Salt Lake County hosts 42,461 jobs in tech compared to Utah County’s 25,366. 

There is a widely-held perception that the “Silicon Slopes” area (roughly Sandy to Provo, spanning 33 linear miles) is Utah’s tech hub. Yet the Gardner Institute reports that Salt Lake City is home to more tech companies (916) than the next four leading municipalities (Sandy, Orem, Provo, and Lehi) combined.

Part of Micron’s sprawling campus in Lehi. Photo courtesy Micron Technologies.

Lehi leading Downtown?

High-visibility Utah Valley-located tech companies like Adobe, Ancestry, Domo, Qualtrics, and Vivint give the impression that the center of the state’s tech development is south of Point of the Mountain. Commercial real estate experts projected that in 2019 Utah County would add 1.5 million SF of Class A office space in versus 1 million in Salt Lake County.

Utah County’s effectiveness in attracting tech companies is explained by development factors, as well as public policy, workforce, and cultural reasons.

Commercial real estate professionals cite cheaper land cost, room for expansion, ability to build surface parking (instead of expensive garages), lower impact fees, and regulatory hurdles – all of which can result in faster and less expensive construction schedules. 

Adding to those factors are the proximity of college graduates from BYU and UVU, entrepreneurial LDS culture, and assistance from the State of Utah. “Silicon Slopes” was conceived over a decade ago as an initiative of the Economic Development Corporation of Utah (EDCU) and the Governor’s Office of Economic Development (GOED). 

It sure looks like Lehi is eating Downtown’s (office) lunch.

How much is the Class-A office game changing?

Large floor plates and executive-style office designs still make up a large part of Class A office demand, says Nadia Letey, First Vice President at CBRE who specializes in Class A office and creative space in Salt Lake City. 

Letey tells Building Salt Lake that out-of-state developers are also getting into the game.

Rendering of 95 South State as designed by Skidmore, Owings & Merril. Image courtesy Salt Lake City public documents.

Two conventional Class A office developers, one local and one out-of-state, are currently responding to market demand with new product Downtown. 95 South State, by City Creek Reserve, is under construction, and will supply 500,000 SF of new space. The Patrinely Group is in the pre-leasing stage for 320,000 SF at 650 South Main.

95 South State current construction status. Photo by Luke Garrott.

These developments are “breaking the cycle of one new office building Downtown about every ten years,” says Chris Kirk, Managing Director at Colliers International in Salt Lake City. 

The 1990s saw the American Stores Tower (now known as the Wells Fargo building) constructed at 300 South and Main, the mid-2000s brought 222 South Main, and the 2010s ushered in 111 South Main attached to the new Eccles Theater.

There are signs that what insiders call “the flight to quality” – offices leaving the aging building stock of Downtown for shiny new suburban digs –  is being reversed. Letey notes that with Downtown demand strong and absorption good, “people are spending extra because there’s not a lot of availability.”  

For the first time in decades, Downtown seems well-poised to capitalize on its competitive advantages in the Class A office space market. 

“Critical pieces are falling into place,” Kirk tells Building Salt Lake. “The redevelopment of City Creek Center and its positive effects on Main Street happened at the same time that urban became cool.”

Commercial real estate professionals cite two main forces elevating the attractiveness of the Downtown office market. 

World-wide, companies are recognizing the advantages of urban locations. Even suburban Silicon Valley companies want offices in downtown San Francisco, for example.  

At the same time, young professionals seems to want to work in spaces that are less corporate and more authentic. Executive-style suites in shiny new suburban buildings are now having to compete with a different kind of product Downtown. 

The urban advantage: transit + amenities

Kirk states that “lots of companies are looking for that urban feel” for several reasons. It’s easier to attract educated and skilled workers from cities like New York, Chicago, and San Francisco to Downtown Salt Lake rather than the suburbs.

GREENbike promo picture, courtesy GREENbike.

This societal trend has been widely reported. Young adults in the Millennial and GenZ demographics are urban creatures who value transit, walkability, amenities, and culture greater than previous generations’ desire to own a home and drive to work.

Proximity to Trax is consistently high on the list of desirables for companies looking for office space in Salt Lake City. “I get asked about that just about every tour I do,” Kirk stated to the Salt Lake Tribune.

Coworking spaces

Nothing illustrates the attractiveness of a downtown office location for young people better than the explosion of coworking spaces in the city center. Spaces like Impact Hub, Work Hive, Church & State, Ladybird Society, Industrious, Holodeck, Access, and Kiln present a combination of affordability and sociability that is in high demand.

The common area at Access Salt Lake coworking space. Photo courtesy Access.

Downtown’s older buildings offer the opportunity for designing unique interiors for office uses. On Main Street, the last decade has brought historical renovation to the Newhouse, Boston, Clift, and Kearns Buildings, as well as the Hardware and Crane Buildings on 400 and 300 West, respectively.

CommonGrounds coworking space recently opened in the old Orpheum Theatre on State Street. Impact Hub is just down the street, at 150 S. State. Photo by Luke Garrott.

The new office frontier: industrial to office conversions

Industrial to office conversion is another niche in the Downtown office market about to get a big boost. Denver-based Industry, a coworking and office leasing firm, is preparing to create big waves in the Granary District after making its mark in the Mile High City’s RINO District.

Industry SLC’s Silver Company project, currently under construction in the Granary. Photo by Luke Garrott.

Sources tell Building Salt Lake that Industry and its financing team, Bridge Partners, have nearly 30 acres – that’s a full three city blocks – under contract or purchased in the Granary. Their interests include the Silver Company site currently under rehab/conversion construction on 500 W and 600 South, as well as the block on the north side of 600 South between 300 and 400 West that hosts the old NAC Building and A-Z Produce. Industry is providing parking and staging their construction on the block east of the Silver Company, where Level 9 Sports is located on 400 West between 600 and 700 South.

Mural on the side of Industry SLC’s current office space at 537 West 600 South, around the corner from the Silver Company site. Photo by Luke Garrott.

The Granary provides a wealth of opportunities for both adaptive reuse of existing warehouses and manufacturing spaces, as well as vacant land for build-to-suit projects. It lacks Downtown’s amenities, however, including public transit (the closest TRAX station is at 200 West and 900 South). A streetcar along 400 West has long been included in city planning documents but is at least two decades out. Its current zoning, General Commercial (CG), is also a detriment to urban-grained development, with its encouragement of large minimum lot sizes and surface parking.

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.