Mary Street with Colliers International explains trends in multi-family housing development Tuesday, May 1, 2018, at the Utah County Commercial Real Estate Symposium.
Utah County’s future is rapidly changing, and panelists at Tuesday’s Utah County Commercial Real Estate Symposium forecasted trends that will move the valley forward.
“This is not time for complacency,” said Lew Cramer, CEO of Colliers International.
The Symposium, held Tuesday morning at the Utah Valley Convention Center, kicked off with a panel of Colliers International experts who detailed specific trends within the retail, office, industrial and multi-family development spaces. Key takeaways included more housing density, rising costs and diminishing land.
Panelist Mary Street explained that Utah Valley’s economy will suffer without adequate housing for its labor market. While residents and cities loudly speak out against higher density, that is an important part of the answer to housing problems. She encouraged business leaders at the Symposium to lead the push for a paradigm shift on this issue.
Street reminded leaders of the successful “Flippin’ Traffic” video campaign, in which companies collaborated to push for the Point of the Mountain expansion project. She said it was time to do the same for affordable housing.
“I think we need to undertake a re-education, and it starts with everybody in this room. It starts with the businesses, because I think multi-family issue is actually an economic issue, and a quality of life issue,” she said. “We are going to have to educate everyone …. We’re not talking about slums here. The scum of the earth that want to live in those multi-family units are our own children.”
“Let’s solve the flippin’ housing problem,” she concluded.
In the industrial space, Jarrod Hunt also detailed a very tight market, contingent on many factors — one of which is also affordable housing for manufacturing workers. Due to land and construction costs, Hunt said the future of industrial will move south into Springville and Spanish Fork, necessitating more options for affordable housing there.
Space is also tight for businesses looking at industrial and manufacturing uses. There is a 2.5 percent vacancy rate in industrial buildings within the county — a rate that is below industry norms of 5 to 7 percent, Hunt said.
“And we’re not seeing construction to alleviate that,” he said.
The industrial market, which usually has lower square-foot lease rates than office or retail, has a challenge adapting to these rising construction and land costs. Landlords are also being more choosy with their tenancy choices in this space because they can be in this hot market, he said — something he hasn’t seen before.
“So unfortunately for tenants, we’re going to see increased lease rates,” he said.
Office construction has cooled a bit, but is still very strong, according to Shad Webb. There is currently 1.35 million square feet under construction in Utah County. Only a few years ago the majority of this construction was in Lehi, but Webb said the trend is also shifting southward away from Thanksgiving Point.
He sees more corporations, including ones from Salt Lake City, choosing central Utah County locations, so they can “tap into the student populations there.”
In retail, Tim Simonsen described the demise of “boring retail.” When asked to describe what he meant, he clarified that boring retail is shops and stores that have not adjusted to the experience economy. “Experiential retail is really growing quickly,” he said, referring to places like The Void, Evermore and the Airborne trampoline park in Pleasant Grove. “And Utah County is leading the state in experiential retail.”
Simonsen also foresees changes to the way people shop. New voice technology platforms will “create a very simple environment for you to shop, especially for things you buy regularly.” He expects that 75 percent of new automobiles will have an internet connection in them by 2020, opening a huge trend in shopping. Retail apps and artificial intelligence will also continue to expand, allowing users to experience retail in completely new ways.
Customer loyalty is changing as well, and people are looking for retail that is socially responsible.
“People tend to shop at stores with interests that align with its users,” he concluded.
Overall, the panelists encouraged both elected officials and business executives to continue to “collaborate, cooperate and communicate,” as Cramer put it, toward building the cities of the future. They predict a need to create multi-functional spaces where people can live, work and play.
“The communities that will embrace experiential communities of higher density, with shared amenities and with congregation spaces, will flourish. Because people will want to work there, they will want to shop there,” she said. “We’ll see services clustering around these multi-family experiential communities. And those cities in Utah County that will embrace that and will support it, and will plan for it and work cooperatively and collaboratively with developers and with their citizens to design cities that are appropriate for their lifestyle, I think will thrive.”