CBC Advisors
Over the past few years, numerous business websites and publications, including Forbes and CNBC, have pronounced Utah to be one of the best states for doing business. As you travel up and down I-15 along the Wasatch Front, you’ll see silhouettes of construction cranes erecting gleaming office towers. But when you exit I-15 and head west on one of its two major arteries, Highway 201 or I-80, you will notice testaments to Utah’s growing industrial sector: concrete and steel tilt-up office-warehouse buildings that are a key part of Utah’s economic engine.
When hearing about Utah’s industrial sector, people naturally think of Salt Lake City and Salt Lake County. In 2017, with the announcement of the 855,000-square-foot Amazon distribution center and the 62-acre site of Stadler Rail, Salt Lake County dominated the headlines. While Salt Lake will always play a key role as the “Crossroads of the West” for the industrial sector, the continued development of the industrial sectors outside of Salt Lake County are of paramount importance in supplying jobs and economic output for the state. So, what exactly is happening in the industrial sector throughout the rest of Utah?
Weber County
Ogden, the once-robust railroad town, has transitioned into a manufacturing and distribution center for items shipped by train and truck. Ogden has long been the hub of Weber County, and the epicenter of all the recent growth is the Business Depot Ogden (BDO). What was once a 1,139-acre United States defense depot has transformed into a burgeoning manufacturing and distribution complex operated and developed through a partnership between Ogden City and The Boyer Co. Cameron Cook, project manager at Business Depot Ogden, reported that the largest deals completed in 2017 in Ogden at the BDO included a 500,000-square-foot office-warehouse for Readerlink, a 204,000-square-foot production and distribution building for Honeyville Farms and a 260,000-square-foot distribution center for Home Depot. Coming online at the BDO in 2018 is a 107,000-square-foot expansion for Treehouse Foods and a 300,000-square-foot facility for Autoliv. The Boyer Co. has such confidence in the market that it will be completing a 110,00-square-foot spec building as well as a 32,000-square-foot multi-tenant flex building for smaller tenants. Vacancy rates in Weber County have trended lower over the past few years, which will likely continue.
Davis County
The Davis County industrial market epicenter is located in the former Navel Logistics Base in Clearfield. Two real estate development companies now operate there: Freeport West in the western portion and Freeport Center Associates in the eastern portion. Some of Davis County’s largest employers, including Lifetime Products and ATK, are located at the former base. Davis County has some new multi-tenant office warehouse projects that will be coming online in 2018. The continued extension of State Route 193 westward through Clearfield and Syracuse is opening new corridors for office-warehouse development. Plans to eventually connect State Route 193 with the West Davis Corridor will create a vital east-west economic corridor for Davis County. East Gate Business Park, near the east gate of Hill Air Force Base in Layton, recently saw the expansion of Kihomac, a government contractor.
Utah County
Utah County is the fastest-growing county in Utah. Though the skyline around the Point of the Mountain and Lehi is punctuated with new office towers to support the growth of the Silicon Slopes area, just a little further south, to the east and west of American Fork, are large areas of newly constructed office-warehouses. Many tenants of these office-warehouses have a connection to the companies with offices at Silicon Slopes as fulfillment centers. The fast-growing population of Utah County is also driving the need for industrial projects, as many tenants support the growth of the population and construction industry.
Michael Roderick of Roderick Enterprises is one of the most active industrial developers in the Utah County Market. Roderick Enterprises has developed approximately 400,000 square feet of industrial space so far in American Fork and Springville. Roderick is also the developer of one of the most iconic and successful industrial parks in Utah: Pheasant Hollow, located in Sandy. Roderick recognized the need for a higher-end office-warehouse product to serve the growing needs in the northern and southern portions of Utah County. He sees a continued need for office-warehouse product in these areas for the foreseeable future. Utah industrial vacancy is the lowest in the state, currently about 3 percent. With the continued growth and absorption rate, it will likely stay that way.
Washington County
Sunny St. George is known for its red-rock beauty, for its scenic golf courses and as a growing retirement destination. However, if you head just a little bit southwest, you will run into the Fort Pierce Industrial Park, the center of the industrial market for St. George and Washington County. Its largest and most notable tenant is the Family Dollar Distribution Center at 832,000 square feet of space. The industrial market remains a vital part of job creation and economic output for St. George and Washington County. Recent developments in the area include a new cold storage facility for Martin Milk Service and a new facility for Barney Trucking. Current vacancy rates in Washington County for all types of industrial buildings remain low.
The industrial sector in Utah will continue to be a vital part of the economic output of the state. Salt Lake County will always play an important role with the intersection of major transportation corridors. However, the industrial growth of the other counties in the state is vitally important in supporting local economies and job growth. Growth in counties out of Salt Lake County will also help lessen commuting traffic on the increasingly congested I-15 corridor. Utah’s industrial markets benefit from the steady hand of our financially responsible state government, which knows how to balance a budget, and from Utah’s entrepreneurial spirit. Utah’s industrial market will continue to be a beacon for what is right with our economy.
Don Enlow is vice president/industrial and Marcy Pitman is an industrial specialist at CBC Advisors in Salt Lake City.