The Salt Lake office of comercial real estate company CBRE has released its second quarter 2021 MarketView reports.
Among the finding in the reports is an indication that record industrial construction and vacancy have set up a strong finish to 2021. In the second quarter, vacancy dropped to the lowest point ever on record, falling to 2.1 percent, while availability also fell to its lowest point in four years, landing at 2.6 percent. However, the market has a strong construction pipeline in place, which will help balance the supply/demand dynamic as new product is delivered. If the availability of product still under construction is included (currently totaling 10.3 million square feet), availability within the market would increase to 6.7 percent.
“When considering current construction levels by themselves, one might think the industrial market is being overbuilt, but steady development is the one thing that is making it possible to keep up with the demand that we’re currently seeing,” said Tom Dischmann, executive vice president at CBRE. “Healthy market indicators like transportation dynamics and increased e-commerce are expected to continue for the foreseeable future, so we don’t anticipate the industrial market cooling off anytime soon.”
The report also said office vacancy has shown signs of leveling off. It has been one year since the COVID-19 pandemic upended the office market’s trajectory, and thus far in 2021, lease activity has rebounded and sublease availability has declined — two signs that the market is starting to rebound. First-dose vaccination rates within the state are reaching 50 percent, prompting many office users to announce a return to the workplace or reduce the number of work-from-home days allotted to employees.
The construction pipeline also remains robust, according to the report, though deliveries have been slow compared to previous years as developers carefully monitor demand levels for office space. Yet even with this evolving market, low unemployment, positive job growth and strong industry performance are all expected to contribute to the positive momentum being experienced in the office market — positive momentum that is expected to continue for the remainder of the year.
“Our local market continues to outpace national averages when it comes to unemployment levels and job growth, and this strong economic performance is certainly a factor in the rebound occurring within the office segment,” said Nadia Letey, a senior vice president at CBRE. “There has been a clear pivot from 2020’s downturn, which is reflected in the increase in absorption — nearly 600,000 square feet for the quarter — and the reduction in vacancy — a reduction of 30 basis points quarter-over-quarter. More employees are returning to the office, and this is fueling a more optimistic environment for landlords and developers throughout the industry.”
The full MarketView reports are available at CBRE’s website.