Bump from City Creek, economy spice up office space demand
Utah's slowly but steadily improving economy and the revitalization catalyst provided by City Creek Center are increasing demand for top-tier office space downtown and spurring renovation of a host of buildings.
The March opening of City Creek Center, the $2 billion shopping mall built by the LDS Church, helped reshape downtown in positive ways, according to commercial brokers. Flanking the Salt Lake Temple, the center features retail stores and restaurants amid the condominium towers, apartments and office space of the broader City creek development.
"A lot of money and effort has gone into revitalization of the downtown, and now owners are recognizing the opportunity to renovate buildings, particularly those close to City Creek," said Eric Smith, first vice president at CBRE, a commercial real estate firm and property manager for the updated 257 Tower.
The 13-story office building is among several landmarks downtown that are being renovated. According to Smith and others, they are attracting tenants and easing an exodus to the suburbs that began during downtown reconstruction, which included City Creek rising over a four-year period from a two-block area dissected by Main Street.
During a recent tour of 257 Tower at 257 E. 200 South, Smith pointed to other buildings, some historic, that have either been reconditioned or are in the process to coincide with the opening of City Creek.
The Boston office building at 9 Exchange Place was refurbished in a project that began in 2008. All 11 floors were cleared and updated during the $10 million interior facelift. In addition, the grand staircase that runs top to bottom was restored, and hundreds of thousands of individual tiles on the stair's risers were replaced.
The 20-story Walker Center, which is celebrating its 100th anniversary at the corner of Main and 200 South, has been modernized and upgraded. Co-owner James Tozer Jr. said he purchased the building in 2006, counting on the fact City Creek was on the way and that demand for top-tier office space could grow.
Even though the Great Recession intervened and derailed many development plans, the state's economy has rebounded at a steadier pace than many others, reinvigorating renovation efforts.
Also altering the real estate landscape downtown was Goldman Sachs' decision a couple of years ago to move into then-new 22-story building at 222 S. Main Street. With more than 1,400 employees, Goldman Sachs' Salt Lake City office is the New York-based investment firm's second-largest North American operation.
As a result of these and other moves, demand in Salt Lake City and statewide for Class A office is the highest among all areas of commercial real estate, according to a report by NAI West, a commercial brokerage. Class A space represents top-notch construction in prime locations that are professionally managed.
In its outlook for 2013, NAI forecasts that barring something unforeseen, investors and companies will be attracted to Utah's growth prospects, and, pushed by low interest rates and other factors, help maintain the momentum in commercial real estate that took hold in 2012.
At 257 Tower, CBRE's says the building soon will be ready for even more tenants. The entry plaza is being renovated, with new stairs, benches and canopies that will feature night-time illumination. Common areas and restrooms are being updated on the five top floors, and the building's exterior has been cleaned and repainted. Method Studio was the architect and Layton Construction is overseeing the renovation.
Built in 1985, 257 Tower is a reinforced concrete frame building with an Energy Star rating. Amenities include a fitness center for tenants and a restaurant.
The building has 20 tenants, including law firms, environmental consultants, medical software and civil engineers. The building has 100,000 square feet of space available to rent.
Historically, there were to have been two towers when construction began in 1985. But the developer went bankrupt and the second tower was never built. Today, 257 Tower faces east, toward what was to have been a corner plaza between the two buildings.
Location • 257 E. 200 South, Salt Lake City
History • 13-story office building constructed in 1985
Remodel • Entry plaza, common areas, exterior repainted
Owner • California-based Nearon Enterprises