SALT LAKE CITY—February 22 2021—The Salt Lake office of CBRE has released its Q4 2020 MarketView reports; click here to download full copies of each report.
Record-Breaking Construction Leads Industrial Market to Banner Year
The industrial market continued to show not only resilience, but strength during the fourth quarter of 2020, adding 1.7 million square feet of newly constructed space to end the year with 6.3 million square feet of new industrial space. Even amid such high construction levels, vacancy held at a moderate rate of 3.4%, an indication of steady demand for industrial space and a market that is in balance.
“2020 was a standout year for industrial activity, particularly new lease activity which was up 35% year-over-year, reaching 8.8 million square feet and surpassing 2018’s leasing record of 6.9 million square feet,” stated Tom Dischmann, executive vice president. “It’s important to note that more than 70% of all industrial product delivered this year was either pre-committed or leased by Q4 2020, signifying the user-driven nature of recent industrial growth. This is not an imbalanced market, but rather one that’s experiencing significant demand and a steady supply of new product to meet that demand.”
Office User Activity Stalls Creating A Surplus of Direct and Sublease Space
After a strong start to 2020, the Salt Lake City-Provo office market was impacted by the Covid-19 pandemic throughout the duration of the year. As of March, sublease availability increased 67% to more than 2.26 million square feet at year-end. In addition, net absorption was negative three quarters in a row, ending the year at negative 211,163 square feet and pushing vacancy to 15.6%, its highest level since 2012. Coming on the heels of a very economically successful year in 2019, there was a good amount of office construction underway which reached completion during 2020; 2.5 million square feet of total completions were realized, just shy of 2016’s record of 2.6 million square feet.
“Though remote work became commonplace for many office users during 2020, for numerous companies this was not a new practice but an extension of a longer-term plan to build more flexibility into their real-estate strategies. The pandemic merely acted as an accelerant to this cultural shift of ‘right-sizing’ that has been growing in popularity among real-estate users for several years now,” commented Nadia Letey, senior vice president. “With the increase in Covid-19 vaccinations taking place, office users and landlords appear optimistic for a resumption of activity throughout 2021. And although the existence of workplace flexibility isn’t going away, we expect office occupancy and leasing activity levels to increase to new equilibrium levels during the year.”
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CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.