Office spaces in Salt Lake City: With costs rising and land at a premium, folks are getting creative, even setting up shop in shipping containers

(Francisco Kjolseth | The Salt Lake Tribune) Michael Yount, left, and Tim Sullivan, founders of a small Salt Lake City company called Little City, along with contractor James Emery, are offering shipping containers as repurposed spaces for doing business. The two founders set up a pop-up project demonstrating the idea called FLEET, near the northwest corner of Fleet Block, an RDA-owned parcel bounded by 800 and 900 South and 300 and 400 West.

If you want to understand the latest trends in Salt Lake City office spaces, look at some of the effects of a sizzling economy.

Utah could gain as many as 50,000 jobs this year — and workers need workplaces. Salt Lake County is expected to absorb up to a million square feet of new office digs, on par with its growth trajectory in recent years.

Utah County will add about 1.5 million square feet, if the latest projections are a clue, with rapid office growth driven by the magnet of Silicon Slopes as a tech hub and the county’s relative edge over its neighbor to the north in terms of available land and large office projects already in the pipeline.

But top real estate brokers who specialize in office spaces say Utah’s capital city is under intense demand as a place to work, with a premium — thanks to TRAX — on locations in the central business district. That’s true of startup companies, existing firms looking to grow, or corporate giants like Amazon, Facebook and Goldman Sachs, all expanding in the Beehive State.

“People are excited to move here and be a part of our downtown area,” says Eric Smith, senior vice president and office market specialist with CBRE, an international commercial real estate firm with offices in Salt Lake City.

Another key factor for the look and mix of Salt Lake City offices is the jobless rate. In Utah, that’s hovering at a near-record low of 3 percent — close to full employment.

The more competition for top talent heats up — particularly in knowledge-based sectors of the economy — the more important it is to fashion workspaces with architectural and design appeal, along with higher-end finishes and plenty of amenities, according to the experts.

Keeping workers happy — and costs down

Brokers say fitness rooms are now standard in many high-end offices in Utah’s urban markets, as are comfortable lounge areas, game rooms, bike lockers and patios. Trendy decor — high ceilings, natural light, top-notch finishes — is as much about making workers comfortable and productive as it is about honing and conveying a company’s image.

A decade ago, many saw square footage of office space as a commodity. Today what an office looks like can be key to a company’s survival and success and is increasingly part of how firms brand themselves — both to the outside world and to their own employees.

(Trent Nelson | Tribune file photo) An interior view of games and other amenities at software giant Adobe's campus in Lehi, as seen in 2012.

“Office space nowadays is very much, particularly for large companies, a tool for retention and recruitment. It’s hugely important,” says Casey Mills, vice president of office leasing and sales at Salt Lake City-based Newmark Grubb ACRES, a top local broker in commercial real estate.

Another force shaping workspaces along the Wasatch Front is the rising cost of construction.

The same trends that have been squeezing affordability in Utah’s housing and apartment markets — shortages of labor and land along with surging prices for building materials — are making it harder to build new offices these days, pushing up office rents, especially downtown.

Regional demand for construction workers is at something of a peak, with labor supplies gobbled up by the $3.6 billion overhaul of Salt Lake City International Airport, work on a new state prison and several large private-sector distribution centers underway.

(Leah Hogsten | Tribune file photo) The Salt Lake City International Airport expansion project, as seen on Monday, Oct. 22, 2018. The first phase construction of the $3.6 billion project was due to open in 700 days. Officials credit the massive project’s demand for labor as a key factor driving up construction costs elsewhere in Utah.

“It’s a labor issue,” says Dana Baird, executive director at the commercial real estate brokerage Cushman & Wakefield, of rising office building price tags. “Steel and tariffs are impacting costs, but labor is the biggest issue.”

While new office towers are expected to rise in Salt Lake City within three to five years, economic boosters at City Hall say the capital lacks a wide selection of larger office spaces — about 50,000 square feet or more — suitable for a larger employer. Whether for cost reasons or for lack of size in available spaces or both, many new firms are picking offices farther south in the county.

“That’s what we’re struggling against,” says Lara Fritts, the city’s director of economic development. “When a company comes to Salt Lake City that needs 50,000 square feet, 100,000 square feet, I have no product to show them.”

At the same time, high demand and costs in the heart of Salt Lake City’s cultural and business district are forcing creative uses of space.

More people, less room

Developers are combining infill — reuse of downtown land among existing structures — with seeking additional height on buildings in their quest to make more of space, bringing several new high-rises to the Salt Lake City skyline, most recently 111 Main.

(Al Hartmann | Tribune file photo) Salt Lake City’s most recently opened office tower, 111 Main at the corner of 100 South and Main Street. The tower uses a unique truss structural system that allows for minimizing columns in the office space on the building’s 24 floors.

That same quest for value is on display in the interior of new office spaces.

“Companies are trying to utilize their space very efficiently," says CBRE’s Smith, “so that they’re not wasting any space and their people per square feet is optimal.”

Traditional ratios of employees and square footage are, in many cases, out the window, with some new firms in Utah’s urban core packing as many as 10 offices workers per 1,000 square feet. Instead of fully built-out offices, floor plans are made up of cubicles mixed with meeting spaces and small huddle rooms in a more open approach.

“And these are not tech companies,” Smith says.

Those higher densities in offices are also raising the importance of proximity to mass transit as company managers search for new spaces and negotiate office leases. With land at a premium, parking stalls and garages are increasingly less available, forcing the option of transit.

Many executives raise concerns about regional air quality in connection with their workers’ commute, says Chris Kirk, managing director for the downtown Salt Lake City office of Colliers International — along with the fact that many millennial employees are less dependent on cars.

“Proximity to TRAX is super important,” says Kirk, echoing other office brokers. “I get asked about that just about every tour I do.”

Some landlords are even offering shuttles from their offices to TRAX lines.

Shared spaces, remodeled places

Cost pressures and a demand for historic character have prompted a spate of renovations of older industrial buildings in downtown Salt Lake City as developers convert them for use as office spaces, often while preserving many of their legacy features.

This trend has brought new life to Salt Lake Hardware, the Crane Building, the Kearns Building, the Boston Building, the Clift Building, the Newhouse Building and others. Interior decor commonly includes collaborative spaces with exposed beams, brick and utility features along with high ceilings and refurbished historic elements.

“There’s huge demand for that creative tech look, though it’s not cheap to do,” says Mills, with Newmark Grubb ACRES.

(Steve Griffin | Tribune file photo) Shalae Larsen and Mark Morris, pictured in Nov 2014 in one of the work spaces at Work Hive, a coworking studio located in downtown Salt Lake City’s converted Crane Building.

Salt Lake City has also seen a proliferation of so-called coworking spaces. These take various approaches, but all offer a kind of entry-level office presence, with affordable subscription-style access to desks and office services such as Wi-Fi, phones, printers, conference rooms and coffee machines.

Open and collaborative by design, these business incubator spaces are well-suited to startup companies by lowering cost barriers, while also representing the way downtown is evolving to suit the preferences of enterprising millennials.

Traditional office space brokers see these coworking spaces as a way for startups and established companies alike to gain a business foothold in Utah, usually before expanding into more conventional spaces.

“It gives them opportunities for a touch-down spot as they evolve,” Kirk says. “It puts people on the streets and makes downtown a more dynamic place.”

A 2014 wave of six small coworking firms in downtown Salt Lake City — including Impact Hub and Church & State — has been followed by several larger national franchises such as Kiln, WeWork and Industrious, all locating offices on the Wasatch Front.

This time next year, a company called Spaces, owned by the workplace company IWG, will move into a 47,000-square-foot office space in the nine-story Traverse Ridge Center III, in what is to be the tallest building in Lehi when fully built.

From there, Spaces says it hopes to provide coworking and temporary-office space options to employers across Utah, centered on tech companies on Silicon Slopes. Michael Berretta, vice president of network development for IWG, says the firm is seeing “an increase in demand from businesses of all sizes looking for flexible working solutions which can be easily scaled up or down.”

Small, portable — and recycled offices

Depending on how small and portable you need your new office to be, a Salt Lake City company might have a solution for you — with a little recycling.

Little City, the brainchild of Salt Lake City residents Tim Sullivan and Michael Yount, offers access to refurbished shipping containers — those ubiquitous metal boxes hauled worldwide by trucks and trains — as a portable, affordable option for small businesses looking for a pop-up presence at street level.

The 40-foot containers — sometimes discarded after only one transoceanic trip — sell for as little as $2,000 to $5,000 and offer about 160 square feet inside, after some interior framing and drywall are installed. Small and mobile, the units could prove ideal for locating on underutilized urban land in advance of wider development, says Yount.

(Francisco Kjolseth | The Salt Lake Tribune) Michael Yount, one of the founders of a small Salt Lake City company called Little City, offering shipping containers as repurposed spaces for doing business, tours one of the containers undergoing the transformation.

Little City has two modified containers, painted bright blue and currently located street side on the northwestern corner of Fleet Block, the expanse between 800 South and 900 South from 300 West to 400 West. The parcel is owned by the city’s Redevelopment Agency, on the eastern edge of the Granary District, a neighborhood targeted by the city for urban improvements.

Yount and Sullivan, both former Salt Lake Tribune employees, say they are focusing on recruiting tenants from among the Granary District’s network of craftspeople, in hope of helping the area’s nascent business community to grow.

The pop-up offices and stores are also intended to help activate neighborhoods, says Yount, a designer, and Sullivan, an urban planner. They are working with city officials in using the portable office containers as gathering spaces in blighted neighborhoods to help catalyze pockets of urban renewal.

Fritts, the city’s economic development director, says the small commercial spaces and others like them are vital "for incubating local businesses that often do not need or cannot afford a larger space.”

“This concept will allow for more innovation,” she says, "which we want to see in Salt Lake City.”

For the fifth straight year, The Salt Lake Tribune has partnered with Energage, an employee research firm, to determine Utah’s Top Workplaces.

To see the 2018 list, click here.