Salt Lake City's office vacancy rate falls
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Office vacancies in Salt Lake City are decreasing and below the national average, according to data analytic firm Moody's.
The big picture: Vacancies hit a new high last year, with 20.4% of office space in the country's top 50 metro areas empty, per Moody's.
Driving the news: Salt Lake City's vacancy rate hit 18.3% in 2024, according to the latest data.
- The number of downtown Salt Lake City workers increased from 23,673 in 2023 to 24,001, according to a Downtown Alliance census count of workers released last year.
By the numbers: The Salt Lake City metro's vacancy rate reached 19.5% during the second quarter of 2024, a 3% increase since late-2019.
The latest: Gov. Spencer Cox told reporters last week that he was evaluating the state's telework approach as state agencies advise workers to return to the office more frequently.
State of play: Though the return to office push picked up momentum last year, plenty of workers are in hybrid or remote setups, and employers don't quite need as much office space as before 2020.
The firm suggests two adjustments could reduce vacancies:
- Converting offices into residential properties. That's something we are starting to see more often, though often quite tricky to pull off.
- Knocking down office buildings. The idea is to get rid of older, cubicle-era offices firms aren't interested in. That's happening more, too.
- Office demolitions have been ticking up since 2022, per CoStar data.
What they're saying: "A new regime is forming which has led to a permanent reduction in office demand," Thomas LaSalvia, head of commercial real estate economics at Moody's, said in a note last week.
Between the lines: Newer buildings near transport hubs with more coworking space and fitness centers — purposefully designed for a Zoom era — are actually in high demand right now, as the Wall Street Journal recently wrote.
Where it stands: Some companies have called workers back without having enough office space for them.
- AT&T workers told Business Insider that there weren't enough desks and parking was hard to find now that everyone is required to be in the office five days a week. Amazon reportedly had similar problems.
What to watch: Construction activity is below pre-pandemic levels, and the vacancy rate could peak over the next nine to 15 months, LaSalvia tells Axios.