Utah used to be a state that large commercial real estate companies and investors would just pass over, but in recent years, Utah has truly become the place to be, according to several of the state’s commercial real estate experts. Most also agreed that 2013 showed phenomenal growth in their industry during Utah Business’ annual commercial real estate roundtable Wednesday.
“Utah used to be a flyover state,” said Gary Mangum, regional manager and principal broker at Marcus & Millichap. “None of the large institutional players were looking at placing capital here. But today they say we’ve got everything going for us. They hope other institutional players don’t catch on for a while so they can increase their portfolio holdings here.”
Mangum said this trend portends well for Utah’s economy because the state has gained a lot of recognition and credibility in the market. “Corporations are even setting up their national headquarters here,” he said. “I think Salt Lake and Utah in particular are poised for additional growth. Greg Shields, president of Pentad Properties, said he continues to hear negative comments about other states when it comes to commercial real estate.
“There’s kind of a dichotomy of the states that have it going on and those that don’t,” he said. “There seems to be much more of a division now than I’ve ever seen in my career.” In 2013, the commercial real estate market in Utah did just under $1.4 billion in investment transactions, Mangum said. “You’ve got to go back to 2005 before we’re close to that,” he said. “We’d have been even higher than that had the inventory been available, because almost everything priced right on the market was sold. We saw record numbers on square foot prices and transaction volume, and we’re seeing the start of this year on that same pace. When deals hit the market, there are more buyers than we have deals.”
Kip Paul, executive director of investment sales at Cushman & Wakefield | Commerce, said that $1.4 billion produced the second-highest year on record. Paul said last year alone, there were 41 separate transactions of $10 million or greater. Of those transactions, two-thirds were purchased by out-of-state investment groups, and of those groups, roughly half were repeat buyers and half were new entrants into the market…