E-commerce driving industrial property in Salt Lake County
When agents sold a $15 million distribution building on Salt Lake City's west side in early April, it marked the city's largest industrial property sale in 2014.
Until two days later, that is, when they sold an even bigger industrial building located farther west on the same street, for an even higher, though undisclosed, price.
Taken together, sales of the two 700 South warehouse sites Pacific Landing III at 4475 West and Westport Distribution III at 6050 West represent upward of 760,686 square feet of high-quality industrial space close to Interstates 80, 215 and 15 and just south of Salt Lake City International Airport.
The deals, both handled by commercial real-estate brokers at Newmark Grubb ACRES, also mark another milestone in the growth of Utah's capital as a regional transit center, with many of those gains focused on the northwest of the city.
"The northwest quadrant is very active," said Nick Wood, director of operations at Newmark Grubb ACRES. "We've seen a lot of demand ramp up."
According to Utah's chapter of the Commercial Real Estate Development Association, Salt Lake County saw a 73.2 percent gain in the total square footage of industrial property sold in 2013, as the local and national economies continued to recover from a real-estate crash that rolled across the prior seven years.
The average sales price per square foot of industrial space in the county rose 10.5 percent last year, as demand spiked for better-quality, more recently built warehouse properties, referred to in the industry as Class A.
Several factors are driving the trend, converging to Salt Lake City's advantage, industry experts say.
Continued growth in online and direct-to-consumer sales is, in turn, spurring need for warehousing built to accommodate more efficient supply chains and logistics to get those goods to customers, including a new generation of order fulfillment, packaging and delivery technologies.
"These are not your granddaddy's warehouses," Kyle Roberts, a leading industrial broker with Newmark Grubb ACRES, told an industry gathering in January. "These are well-oiled, very high-functioning machines, the kind that Henry Ford would be proud of."
The new logistics require more capacity. And new warehouses are bigger by orders of magnitude than those built a decade ago, with higher ceilings and more doors, according to Mike Farmer, an industrial specialist with Cushman & Wakefield | Commerce in Salt Lake City.
"It's all about moving the product in and out of the building quickly,'' Farmer told another industry group earlier this year.
Salt Lake's central geographic location in the West, with relatively low drive times to metropolitan clusters of customers in at least a dozen other states, is helping it to draw facilities in the economic shift toward smart warehousing, experts say.
Pacific Landing III was built in 2012 on speculation meaning without a particular tenant in mind when construction started by Salt Lake City-based Eckman & Mitchell Construction. The 345,686 square-foot facility was purchased by Exeter Property Group, marking the Pennsylvania-based national real-estate investment company's first foothold in the Utah market.
The Westport Distribution III facility is a 415,000 square-foot bulk distribution site. Its new owner, Industrial Income Trust, is based in Denver.