Utah Visit Notes
Last week I dropped through Utah for a quick market refresh. John Blatter from NAI Premier was nice enough to provide an in-depth market tour from SLC all the way down to the Spanish Fork.
My previous visit in December 2021 centered on touring the NW quadrant and Inland Port of Class A warehouse expansion, along with in-depth broker meetings outlining the incredible growth story of Utah. The previous trip lived up to expectations. After a brisk 25-min terminal walk through the newly expanded SLC airport, I got my first look at the explosion of Class A development in recent years. Surrounding the airports on 3 sides were massive tilt-up warehouses as far as I could see. Amazon occupied a few of the biggest. Every major logistics company had a presence in the area.
Fast foward 3 years to my trip last week, a few highlights:
This trip delivered more of the same in terms of the Class A dominance riding on the heels of the healthy Inland Port narrative. While I could see a few 1mm SF warehouse pads as we approached landing, the flurry of construction seen 3 years before wasn’t there. Clearly, high interest rates and construction costs have taken a bite out of new deveopment activity, but not completely.
My itinerary this trip took me south to Provo and eventually the Spanish Fork. Along the way, I saw thousand of new homes recently built or under construction. I passed Draper, and “Silicon Slopes” with shiny glass office buildings lining the freeway. Draper, I learned, has plans for Lincoln Property Company to develop a former prison site into a massive mixed-use live-work community called “The Point”.
In some areas along the way South, it looked entire sub-markets of both residential and commercial, were built in the last 5 - 10 years. The larger Class A product thinned out as we travelled further south of Salt Lake City, but re-appeared again in Spanish Fork, at the crossed rounds of I-15 and highway 89 which branches off into other parts of southern Utah and states further East.
In recent years, entire new freeway systems have been built on either side of Salt Lake City to better facilitate cross-town travel. It’s no longer a one-highway option when travelling north from Provo to Ogden.
As John explained, to put an emphasis on growth story, the Miller family, previously the majority owner of the Utah Jazz , the states only professional franchise, sold an 80% stake in the team in 2020, along with all their car dealerships, to go all-in on buying a former mining site slated for future housing development. Clearly those in the know are positioning for further growth in the state. Hosting the Olympic Games in 2034 will only help. Further on the topic of sports, a new pro hockey franchise, the Utah Hockey Club, will debut in the 2024 - 2025 season. A new AAA baseball stadium is set to open in the spring of 2025 in downtown Daybreak, a fast growing suberb of Salt Lake City. Finally, discussion are ongoing to bring a new MLB franchise to the state with no definiteive timeline in place.
The highest birth rate and lowest media age of any state in the country. Utah’s current population of 3.42 million is set to double by 2050.
At the end of my drive, going North towards the airport and once again bypassing downtown, the stock of small-bay warhorses built 30 - 40 years ago literally stopped on a dime a mile or so out. Thereafter, it was brand new multifamily until the city's core of high-rise office towers. After downtown, the sea of multifamily continued, eating into former industrial areas and stretching out ever so closely towards the airport. It'll only be a matter of time until the line stretches further south and north, deeper into the zone of older warehouses, to accomodate what appeared to be endless growth.
For a warehouse guy like me, it's a sight for opportunity and reflection on the fate of small-bay industrial properties in high-growth cities. Population growth needs industrial product to support the trend, and not necessarily just the Class A variety needed for e-commerce and distribution. Small-bay industrial often houses the local contractors building these homes and maintenance companies servicing them therafter. It’s an essential link in commerce.
As I saw the end of the older warehouse zones, I thought to myself, “where will these legacy mom-and-pop type businesses go? Is there a future where housing expansion and small-bay construction co-exist?” If industrial-type businesses are forced from infill locations to the suburbs, prices, to account for added transportation costs, must be adjusted accordingly, right? What else changes?
Separate from the fate of small-bay, Utah’s growth story stuck with me on my flight back home. The level of infrastructure from airports to freeways and industrial development being built is a testatment to where this state sees itself going in the next 50 years. It’ll be a story I plan to follow closely in the years to come.