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Summit/Wasatch Regional Outlook
So much of what we did over a 10-year period was a lot of real estate speculation and lending. And then that obviously crashed. What are the banks seeing now?
GARLAND: There is a lot of psychology that’s going into what people are looking at because people are wondering, “Are we at the bottom? Should I take the chance and buy something at Red Ledges—or could it go lower? Could it go higher?” We don’t know. We’re seeing a lot of people taking their cash, because banks aren’t paying great interest rates, and trying to invest in Promontory or other speculative type of things.
FLORANCE: Are you seeing any applications or are you approving lot loans or construction loans or speculative homes in projects like the Red Ledges?
TAYLOR: On a small number of applications, but a lot more than we’ve seen in the last two or three years. The green shoots are starting to come through. And yes, we’re anxious to make the loans if we think they can pay them back.
FLORANCE: Is there any speculative building that you know of or a little builder out there who’s bought a lot and got a construction loan?
BURNS: I know of one. He put up some homes and we’ve actually sold them over the winter.
GARLAND: Four or five years ago, anyone that bought a lot and could throw up brick and mortar could flip it. And those are the guys that have walked away. So unless you’re really strong, that market’s dried up a lot.
NELSON: I deal with a lot of small businesses in Wasatch County and they are lagging way behind. We’ve talked about the luxury market picking up and doing a little better, but there are a lot of small businesses in both valleys that have not started to see that pick up. It’s still very flat for them. A lot of them are really struggling or have gone out of the market. There’s an inordinate percentage of small businesses that deal with this luxury second home market that just has not started to pick up. That’s still completely flat.
What kind of businesses are you talking about?
NELSON: These would be people that do stonework, fireplaces, windows—all kinds of construction things. But many of these small businesses dealt with these luxury second homes that are primarily in Summit County. Hundreds of those small businesses have gone under or are lying almost dormant
Tim, what are you seeing in the realm of commercial real estate and small business?
ANKER: We’re seeing actually a lot of activity in sort of these small, mom and pop, local companies. Not that a lot are coming in, but a lot of moving around to take advantage of better deals. We’re not seeing a lot of new companies come into the market.
The last year especially has been tough for a lot of these companies. With everyone related to the homebuilding industry, we don’t have a whole lot of industrial in the market, but we haven’t needed much lately. And that’s been a segment of the market that’s been almost completely flat. Our industrial vacancy right now is about 7.5 percent, which is a pretty healthy vacancy rate for industrial. Of course, we have entitlements to double the size of our market in place today, but that will probably take some time to happen.
We’re hearing about the Boyer’s Tech Park—do you see any signs that that’ll get built anytime soon?
ANKER: I think it will be built slowly. Over the last several years, if we had a 10,000-foot company that wanted to occupy in Summit County, we couldn’t accommodate them. We couldn’t put 10,000 feet of class A space together. And so even in the first Boyer Tech Center building, they’re 90 percent pre-leased or sold. The third Cottonwood building, a 52,000-foot, class A office building, is being built totally on spec. So that will provide some good opportunities to draw those larger tenants.
Are there some of those people out in the wings that would want to come here? Build it and they’ll come?
ANKER: We’ve always had such a spread between occupancy costs for class A commercial space in Summit County over what you could get in Salt Lake County for the same class A product. We’ve been in sort of the high twenties per foot, per class A product. And now what we’re seeing, because the class A market is so tight in Salt Lake County, those rates are in the $26 to $27 a foot range. So it’s no longer that much more expensive for a company who is in Salt Lake County to relocate.
The biggest challenge is the workforce they would bring with them. A lot of its principals already live here. It’s just getting the rest of their company here.
What’s happening with the new economic development committee that is working to bring businesses into the community?