Commercial Real Estate

May 6, 2013

The sector that sticks out to me is multi-family. In Utah County, where we have two universities that are growing rapidly, we have multi-family projects sticking their head up all over the place.

SHIELDS: In addition to that, we’ve got probably a thousand new hotel rooms in various stages of planning in the downtown Salt Lake area, and more coming. In suburbia they are slow and a little hard to put together. And that’s in addition to wherever the convention hotel ends up.

Do you see the hotel interest just in Salt Lake County or is it elsewhere?

SHIELDS: It starts here but it is going out elsewhere and picking up. Almost everybody is up. It bleeds down. The better properties do better first. The B and C properties are starting to see upswings finally. They were more hit by the recession. But it’s expanding out, and sites are hard to come by again. Entitlements are difficult. But it’s continuing to expand, and we will probably see more new developments outside of Salt Lake coming on line in the next 12 months. Most of them in the last 12 months that are in process are here in Salt Lake City.

GRIFFIN: We will certainly see more in Salt Lake City, maybe even another super luxury product in the next couple of years. Pretty much everyone is looking, the Who’s Who. We have a lot of national companies who aren’t there that are looking.

The super luxury would go into Park City?

GRIFFIN: Yes. We may see a third player there. But the number of inquiries we have had for hotel sites is far more than we can deliver.

There was recently an effort around a convention hotel. Anybody want to throw their hat in the ring on that question?

PRISKOS: We had a very, very strong effort by many people, including the city and county government, to help with the construction of an 850- to 1,000-room convention hotel adjacent to the convention center. The market does need a convention hotel. And since we spoke last year, what we said was true: a thousand rooms did come in the market or are coming on the market.

We came three votes away from getting something passed at the state legislature this year, and we will keep pushing forward. Not since the RTC days has a convention hotel been built in this nation without a subsidy. It’s a problem and we need to decide if Salt Lake City wants to be a national player in the convention business or not. So it’s frustrating but we will push forward and hopefully we will get it, and we will have a good hotel market in downtown Salt Lake.

When Outdoor Retailer comes, you have guests staying from Ogden to Provo. Imagine going to a convention and having to drive 45 minutes to get to your destination every day. It’s not a good thing.

EDWARDS: We chose to support that project, primarily because we see a very strong link between a successful convention business and economic development opportunities. Outdoor Retailer is just one example of that. Were they not here in our market twice a year, we would never have created the relationships with the CEOs and the players in that industry that we have been able to do.

Our view is anything we can do to make the convention center more successful to bring in larger-scale shows that are global-quality trade shows, that just points right back to us if we are smart enough to know how to take advantage of that. I’d love to see that happen.

SHIELDS: One of the things that’s difficult with it—and Vasilios and I have discussed this a bunch—is much of the discussion on the convention hotel is taking place from a city and a convention standpoint: how much it would help the city and how much it would help us get conventions.      

I was at the American Lodging Conference in January with a major franchisor, one of the big names, and I sat with them and said, “We are talking about this convention hotel in Salt Lake City. What kind of subsidy would this have to have in order for you guys to approve a deal here?” They came up with a number, but the number is not as important as the fact that no one has had this discussion with these guys before me sitting there. In order for this to move forward, these major franchisors have got to be involved because they have to ultimately approve the deal. It’s amazing that they had never been approached by anyone asking, “What would you approve and how much of a subsidy would you have to have to do this?” This is one of the big three franchisors in the country.

It’s important that we involve the hotel side, because that’s eventually who is going to have to borrow the money, put the deal up. Regardless of how good we see it from the city’s standpoint, somebody has actually got to do that project, and a franchisor is going to have to endorse it.

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