In late 2016 or early 2017, the new office tower 111 Main will grace the skyline in Salt Lake City’s Central Business District.
Designed to be LEED Gold Certified, the tower will offer 440,000 square feet of premier, customizable class A office space. The only question is, how long will it take to fill it?
“Not long,” is the answer. Chris Kirk, executive director of office properties for Cushman & Wakefield/Commerce, says with 111 Main pre-leasing the way it is, by the time the office tower gets delivered there’s a good chance it will be fully occupied.
The demand for all types of office space in the CBD is hot and Kirk envisions the need for another 111 Main-type office tower before long. “Historically, we have brought on a new office tower every 10 to 15 years,” he explains. “But we are already thinking there will be another office tower that goes vertical in just a few short years. The velocity we are experiencing suggests that the CBD will not wait another 10 years for the next office tower.”
A decade ago the Salt Lake CBD was vibrant, but it didn’t have nearly the office space or the demand for it. The flight to quality was in the suburbs. Today, businesses want access to the growing urban workforce – the millennials – that unique wave of individuals who want to live, work and play downtown, where they have easy access to shopping, dining, the arts, sporting events and nightlife.
Kirk says the new office environment in the CBD has put more people on Main Street than ever before. Main Street has been vibrant in times past, but nothing like it is today. Certainly, the CBD’s strong fundamentals, as compared to other markets, make it affordable for businesses to locate downtown and access the workforce. All of the interest and activity has translated into more leases downtown, new condos and apartments, office renovations and new construction.
The CBD also has a key anchor tenant that has certainly assisted with the urbanization process. That anchor tenant is Goldman Sachs, which has been growing its Utah presence for more than a decade. As Kirk says, “Goldman is like a cog in the urbanization wheel that has added to the vibrancy and growth velocity of the CBD.”
For its contribution to Utah’s economic vitality, the Goldman Sachs Salt Lake City office will receive an “Economic Growth Award” from the Utah CCIM Chapter during the latter organization’s 2016 Excellence Awards ceremony Mar. 19 at the Grand America Hotel.
“We are obviously thrilled to see David Lang receive this award on behalf of his company and especially pleased to have Goldman Sachs continue its growth trajectory in Utah,” says Jeff Edwards, president and CEO of the Economic Development Corporation of Utah (EDCUtah). “The growth of Goldman Sachs in Utah is an economic success story that has reverberated through the financial services industry, caused other financial services firms to sit up and take notice, opened doors for us and enhanced the vibrancy of Salt Lake City’s central business district.”
The financial giant’s Salt Lake City office is its fastest growing location and the second largest in the Americas. The back story of Goldman Sachs’ continued growth in Utah since its opening in 2000 obviously centers around how pleased the company is with its Utah labor force, the fundamentals of the market here and the office’s overall performance, says Edwards.
“Why else would Salt Lake City be its fastest growing office?” he asks.
During a recent EDCUtah-hosted site selector event, five site consultants from the West Coast, Midwest and East Coast toured the Goldman Sachs office, visited the new 111 Main office tower and spent several days experiencing all that the Salt Lake City CBD has to offer. Their feedback was universal: The Salt Lake City CBD is one of the prettiest in North America and a real gem.
“It was an experience this group of site selectors would not have had 10 years ago,” says Edwards, who has led EDCUtah for nearly a decade and worked for the organization for 15 years. “Before the Great Recession the Salt Lake City CBD was vibrant, but nothing like what we are experiencing today. In fact, looking back over my time at EDCUtah, it is thrilling to see how the CBD has evolved with the new office towers, the City Creek Center and so many people living and working downtown.”
While the evolution of the CBD wasn’t directly driven by Goldman Sach’s investment in Salt Lake City, the investment has clearly had an impact on the city and state in many positive ways, says EDCUtah Chief Operating Officer Todd Brightwell. “Goldman Sachs is known for making smart decisions, so when it makes an investment like it has in Salt Lake City, other companies take note and also feel bullish about our market,” he explains. “That has led to other large economic development projects for us; larger than we could ever have hoped for a decade ago.”
Brightwell believes Goldman Sachs’s presence in Utah adds validation to the state’s robust economy, the economic development effort and the ability for EDCUtah and the Governor’s Office of Economic Development to coordinate large-scale, landmark projects with globally recognized brands. “It’s a validation that nothing else can match and has led to other major projects for us,” he adds.
Noting the CBD’s strong fundamentals, Kirk says the high water mark for premier, class A office space in the CBD is $30 to $35 per square foot, as compared to $80 or $90 per square foot in a market like San Francisco. “If you are a company like Goldman Sachs and you are used to being on an upper floor of a downtown high rise, that’s a huge difference.”
Looking at the bottom line, when companies add in Utah’s other competitive advantages, like the young, educated workforce, easy transportation system, lifestyle, close airport and business-friendly environment, it’s easy to see why the growth of Salt Lake City’s CBD is increasing in velocity.