Salt Lake commercial real estate market shows signs of recovery in Q4 2024

The Salt Lake City office and industrial commercial real estate markets showed positive signs of recovery in the fourth quarter of 2024 (Q4), according to new figures released by commercial real estate company CBRE. The company said the figures highlight a turning point in market right-sizing, indicating that Salt Lake City is well-positioned for further recovery in early 2025, driven mainly by strong tenant demand.

According to CBRE’s figures, The Salt Lake City-Provo office market saw 253,216 square feet of positive net absorption in Q4 2024, totaling 135,850 square feet year-to-date. This marks the first positive annual net absorption in two years, driven by strong demand for newer, amenity-rich spaces.

The report also said the total vacancy rate decreased by 44 basis points (bps) to 23.7 percent in Q4, down from a peak of 24.2 percent in the third quarter of 2023. This improvement is due to increased tenant demand, reduced new construction, slower corporate right-sizing and steadying work strategies.

Leasing activity slightly declined to 980,212 square feet in Q4, with a total leasing volume of 4.22 million square feet, an 11.1 percent increase from the previous year. New leases were mainly driven by internal market moves and relocations to higher-quality spaces.

Capital market activity rose significantly in 2024, led by owner-user acquisitions. Notable deals included Salt Lake County’s purchase of Overstock’s 258,000-square-foot former Midvale headquarters for $52 million, Summit County’s acquisition of the 45,000-square-foot Skullcandy headquarters for $17.5 million and Canyons School District’s purchase of eBay’s 240,000-square-foot campus for $50 million.

In the industrial 2024 real estate market, net absorption exceeded 4.0 million square feet, surpassing 2023 by over 3 million square feet but still below the 2022 peak of 9.4 million square feet. Availability and vacancy rates increased in Q4 to 7.2 percent and 6.3 percent, respectively, the highest since CBRE began tracking in 2012. This rise is due to increased construction and a recent influx of sublease space, with stabilization expected in 2025.

Leasing activity rebounded slightly in Q4 with just under 2 million square feet leased, up 900,000 sq. ft. from Q3 2024. Total leasing for 2024 was 9.1 million square feet a 21.6 percent decrease year-over-year, but still above 2019 levels and the 10-year average.

CBRE reported that sales activity rebounded slightly in Q4 2024, highlighted by a 787,309-square feet portfolio sale of multiple industrial properties, the largest since 2023.