Pandemic Economic Trends: What's Happening in Industrial Real Estate in Salt Lake County?
Posted By Regional Development
July 22, 2021
As Utah experiences economic recovery from the initial impacts of the pandemic, and real estate continues to skyrocket, EDCUtah poised how the private and public sector can strike a balance when it comes to current and future development, given the extra stresses added with rising costs in construction and in real estate.
Alan Rindlisbacher, Director of Community Strategy at EDCUtah, shared advice on striking a balance in real estate development. What perhaps received the most emphasis was the need for the public sector to recognize and remember that time is money — or as Angela Eldredge, COO at Price Real Estate, said, “Time kills all deals.”
Among Alan's other advice to Salt Lake County entities?
Understand a development's goals. It's important to make sure public and private parties are on the same page for the goals of the project.
Trends in Industrial Real Estate in Salt Lake County
Angela shared insight into the state of the industrial real estate in Salt Lake County following the pandemic and how it economically impacted this specific sector of the local real estate market.
She reported that as land prices have seen 187% increase over last year, paired with an increase in construction costs, that acquiring land is tough right now. Challenges and trends include:
- Land is beginning to be constrained here. Across Salt Lake Valley, land that's developable is mostly under control or in the cycle that an investor bought it with the intent to develop.
- Land banking for a future development cycle is less likely to happen than in previous years. With an increase in costs, investors are more constrained to develop immediately.
- The pandemic was good for industrial real estate. According to Angela, vacancies prior were closer to 20% and now stand at nearly 1% at their company. Tenants realized they need more space, as customers don't want to wait for weeks for products to be delivered. Amazon set a benchmark for delivery and other businesses are working to follow suit to avoid losing sales — that means more warehousing and distribution centers.
- Trailer storage has increased.
- Expect more manufacturing to come to the Salt Lake County market. There are opportunities in rural communities and outliers. The challenge for developers and tenants is to have a vision with the city and "be nimble."
Industrial real estate "became the darling" real estate sector during COVID-19 when retail was hit heavily. Some investors and developers chose to get into the industrial sector that haven't been there before.