Commercial snowball still rolling through county
Growth is here and more growth is coming, so be prepared.
At least, that’s what Park City Board of Realtors statistician Mike Sloan concludes after publishing his final analysis of Summit County’s 2005 retail, office and industrial real estate market for Commerce CRG.
Sloan observes that the list of reasons to leave Summit County continues to shrink as retail and office space vacancies decline.
"Every time we add another element to our shopping, we make the need to go out of the community that much less. So consequently we have a building of a snowball effect," he explains.
The surge in real estate values and decline in vacancies last year had a lot to do with Utah’s global exposure through the 2002 Winter Olympics, according to Sloan, but also, the Summit County community is growing up, he says, "there’s no doubt about it."
Employees commute to Summit County
Quicksilver, Inc.’s decision to move the U.S. headquarters for Rossignol and Dynastar to Park City is emblematic of where the future of the community is headed, according to Sloan.
"The people that are developing that building told me they feel there’s a lot of corporate people that live in the Park City area that are driving now down to Salt Lake," he explained, referring to Quicksilver’s plans. "They’ve come up here and said, ‘wait a sec. Why isn’t it just as easy to drive employees from Salt Lake and have the executives have offices up here?’ I think that Quicksilver was the first to recognize that as a real opportunity and that’s going to continue to grow in my opinion."
The convenience of having Salt Lake International Airport a 30-minute drive away is attractive to companies, he adds, and is something that most ski towns in this country cannot offer.
"No other ski area can say they can be downtown in 30 minutes, and we’re just beginning to take advantage of that," he said.
Retail vacancies plummet
Compared to the previous year, retail vacancies throughout the county were reduced by half in 2005, according to Commerce CRG. The vacancy rate has dropped from 6.4 percent in 2004 to 3.2 percent.
Sloan identifies Kimball Junction and the Redstone Towne Center in particular as an area that has seen immense growth in the past few years. The diverse mix, he says, is part of what keeps shopping within county lines.
"It’s high-end stuff, but you look at T. J. Maxx and that’s pretty straight forward stuff. It’s a huge shopping area, and yet, it hasn’t taken away from what’s going out in town here at all, it’s just magnified what’s going on," he reports.
Keep an eye on Kamas, Sloan adds.
"There’s a lot going on behind the scenes in Kamas Valley and you’re going to see that explode and Coalville is going to follow that it’s down the road, simply because of the difference in distance," he said.
Main Street space hits a record high value
At $45 per square foot, the average lease rate in Main Street last year did not increase more than $5 over the past few years and Sloan expects the rate to remain steady in the future.
The price to buy, however, has virtually skyrocketed.
The typical going rate to buy property on Main was $500 in 2005, according to Commerce CRG’s report.
Store, spa and restaurant owners are still leasing, says Sloan, though there is a trend for owners to use their building space for their own stores.
"Primarily because they want to fix their rent, you’re seeing more and more retailers willing to buy, but the problem is that it’s very, very difficult to find places for sale on Main Street [right now]," he said.
Sloan did not say the prices were outline. He thinks businesses still can make a profit, particularly when they sublease their space during the Sundance Film Festival, because it affords them the ability to offset a good portion of their rent.
"As Sundance gets bigger, there is more pressure [to lease your space on Main Street,]. I’ve already been contacted by someone who wants space next year," he says.
In the next few years, if they haven’t already, landlords will catch on, Sloan predicts.
"The other side of this of course is that if landlords get wise to this, they’re going to say, ‘you can go ahead and do this, but as part of your lease, you have to pay me a certain percentage of what you take in,’" he said.
Prospector Square goes to work
Compared to Main Street’s lease rates, Commerce CRG found Prospector Square’s values have stabilized at reasonable prices.
Rent in the area for 2005 stayed between $18 and $20 per square foot, with sales in the $200 to $250 per square foot range.
Sloan suspects the stability has to do with the fact that other than a few restaurants, shops and a liquor store, Prospector Square tends to be office space.
"Prospector is truly an area where most of the tenants are office users and office users tend to pay less money because they can’t afford to pay more and they have more flexibility of where they can locate than a retailer does.
As more non-retail businesses move to Park City, lower Park Avenue and Prospector Square will see increased growth, according to Commerce CRG’s report.
"I know of at least two other major developments that are going into Prospector that are currently in the process of getting their approvals and both are fairly sizable," Sloan reports.
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Another ski season is in the books, and much to the relief of the restaurant industry, the outlook, like the weather, is looking sunny.