Buoyed by robust tech-sector employment growth, Salt Lake City ranked first for office net absorption growth (growth in occupied office space) among the 30 leading tech markets, according to CBRE’s annual Tech-30 report, which measures the tech industry’s impact on office rents in the 30 leading tech markets in the U.S. and Canada.
Top 10 Office Markets by Overall Net Absorption Growth (Q3 2016-Q2 2018)
Salt Lake City 11.4%
Silicon Valley 7.8%
San Francisco 4.2%
Salt Lake’s high-tech employment grew 8.1 percent during 2016 and 2017, with office asking rents rising 9 percent from Q2 2016 to Q2 2018 to $23.96 per square foot. Salt Lake City’s combination of low office rents—particularly compared to primary markets like San Francisco and Seattle—and steady high-tech labor pool growth make it an attractive market for commercial real estate investors. Furthermore, while many tech firms are willing to pay a significant premium for office space in leading tech submarkets—13 percent more on average, according to the study—Salt Lake’s top tech submarket, Tech Corridor, has just a 3.5 percent rent premium.
“Despite accounting for only 38 percent of the total suburban market size in both Salt Lake and Utah Counties, the Tech Corridor has accounted for 67 percent of total net absorption since 2017. Large tenants are drawn to the area because of low costs, availability of new product and access to talent,” commented Nadia Letey, first vice president and office specialist at CBRE in Salt Lake City. “Looking ahead, the overall tech market is expected to remain healthy; vacancy in the suburbs is in the single digits and development—especially in the Tech Corridor—is strong, with two-thirds of new construction already pre-leased.”