When one thinks of Salt Lake City, what likely springs to mind is its spectacular mountain views, world-class ski resorts or namesake Great Salt Lake.
What may not occur to you is the city’s booming tech industry and evolving startup culture. But Utah’s capital is one of the fastest-growing cities in the nation fueled by a business-friendly environment, robust job market, well-educated workforce and entrepreneurial spirit.
In his May 2023 Forbes Post, KBS CEO Marc DeLuca described the greater Salt Lake City area as one of the country’s most unique business districts, a “suburban/urban node” that bridges the gap between central business district (CBD) and suburb — offering walkable, less population-dense environments than traditional primary urban markets, such as New York, Chicago and San Francisco. He says these markets “appeal to younger workers magnetized by the energy and vibrance of urban environments as well as to maturing millennial workers interested in raising their children in less dense areas.”
The Crossroads of Livability and Commerce
Founded in 1847, Salt Lake City has long shed its reputation as a pioneer settlement and mining town. Today, the moniker “Crossroads of the West” reflects Salt Lake’s emergence as a world-class tourist destination, highly livable community and hub for international business, which has transformed the city into a diverse mix of cultures, religions and ethnicities. The city is home to more than 201,000 people with approximately 1.2 million residents occupying the larger metropolitan area.
There’s plenty to entertain, enlighten and experience in Salt Lake City, including countless outdoor sporting activities, the annual Sundance Film Festival, Utah Museum of Fine Arts, NBA professional basketball and a crème de la crème culinary scene. And getting around to them all has been made exponentially more convenient with the region’s recently added 150 miles of light and commuter rail — a transit system that also links Salt Lake International Airport to downtown Salt Lake, the greater valley and local ski resorts.
Salt Lake’s economy is on the upswing with the healthcare, education, finance and tech industries taking center stage. The escalating need for legal services has also ignited an increase in law firms expanding or setting up shop in Salt Lake.
According to Bankrate, Salt Lake is the sixth-best U.S. city to start a career based on analysis of the 50 largest metro areas in the U.S. and considering such factors as local job market, potential for long-term career building, affordability and everyday life.
Located between Salt Lake City and Provo, the Silicon Slopes region is flourishing due to its well-planned internet infrastructure and the growth of major tech companies, like SanDisk, IM Flash Technologies, Adobe Systems, Cisco, Qualtrics and many others.
Benefiting from what Forbes calls Utah’s “tech ecosystem,” Salt Lake is served by a large, interconnected network of people who have close personal and professional relationships from working and collaborating together, willing to help someone out in order to create a stronger ecosystem.
Evaluating the 50 highest- and lowest-cost North American markets in which to operate a tech company, CBRE ranked Salt Lake City as the 15th most affordable. The study shows that a business can potentially save $16 million to $33 million in combined wage and real estate expenditures by steering clear of higher profile areas, such as Seattle, San Francisco Bay and New York Metro, in favor of Salt Lake City.
For years now, KBS has experienced a bullish leasing market in Salt Lake City. Tim Helgeson, senior vice president for KBS and asset manager Salt Lake City, notes that “leasing strength of the assets in our Utah portfolio reflects the innovative and entrepreneurial spirit that defines Salt Lake City. It’s why Utah has been one of the leading occupancy markets for KBS.”
In addition to a new multifamily project in development, KBS has several well-positioned properties in the area, including Salt Lake Hardware Building, 222 South Main Street, Second + State and Millrock Park. All are benefiting from the market’s consistent growth.
Salt Lake Hardware Building
Described as “one of the coolest buildings in the KBS portfolio,” Salt Lake Hardware Building has experienced consistently high demand from office tenants seeking a creative workspace. The five-story, 210,938-square-foot building has gone through an exterior redesign featuring an unmistakable exposed brick and timber design. Originally built in 1909, the Class A office property has also been infused with significant interior amenities that include a new fitness center and a business/conference lounge.
“The Hardware Building is a very differentiated product that not only resonates with tech outfits but with many cutting-edge financial firms,” said Helgeson.
Location is a prime, highly attractive feature of the Hardware Building, which is a short walk from the Delta Center and home of the Utah Jazz, the Delta Arena. It’s also close to The Gateway, a mixed-use development billed as Salt Lake City’s downtown hot spot for dining, entertainment, urban living and creative office space.
Salt Lake Hardware Village II Luxury Apartments on the Horizon
In mid-2016, KBS began ground-up construction on the highly amenitized 453-unit Salt Lake Hardware Village Apartments, a mix of penthouse, loft, studio, one-bedroom and two-bedroom apartments, townhomes and brownstone row houses — all strategically situated next to the Salt Lake Hardware Building.
Just four years after its groundbreaking, the immensely popular, fully leased Hardware Village Apartments was sold by KBS, which immediately turned its attention to additional opportunities in the growing Hardware District that could match its tremendous success.
As a result, KBS is now in the development phase to build a complementary multifamily building right next door to the first phase Hardware Village I. The new eight-story project, Hardware Village II, will cover 2.4 acres and feature commercial space as well as provide more than 330 residential units that rest atop a four-story parking structure and include amenities such as an inner courtyard, fitness and yoga center, dog run and spa, sky lounge and convenient ground-floor retail space.
“While KBS focuses mostly on office,” says Helgeson, “when we see an opportunity like this one that will add to such a vibrant market, we do everything in our power to make it happen.”
Blending into the already distinguished character, design and architecture of the local community, Hardware Village II apartments will further evolve the elevated experience of Salt Lake City’s downtown and the Hardware District.
222 South Main Street
Known as one of downtown’s most exclusive office developments, 222 South Main Street is a newer Class A building with 433,346 square feet of leasable space. It has experienced a higher level of return-to-work compared to other buildings in the area.
“Historically, leasing activity in downtown Salt Lake has been mostly from businesses that primarily deal in finance and insurance,” notes Helgeson, “but for a time now, we’ve seen several major law firms relocate to the city.” Among them are Kirkland and Ellis, Greenberg Traurig, and Mayer Brown, which is just one of the latest firms to join the market.
Following an expansion by Greenberg Traurig and adding a new state-of-the-art fitness center, 222 South Main Street is 100% leased. “To have a building fully leased in this environment is pretty unique when you look at other downtown metros,” said Helgeson. “It was a challenge before the pandemic, but in this environment, it’s just outstanding and why we really like the Salt Lake market.”
Second + State
Located in the heart of Salt Lake’s Central Business District, the 13-story Class A office building Second + State serves as the ideal home for Mayor Erin Mendenhall’s campaign headquarters. Having served Salt Lake City since 2020, she runs on a platform of “We’re moving forward together.”
Second + State offers stunning panoramic views of the mountains, city and valley, and it has helped KBS effectively reposition the property, which has undergone recent enhancements that include a new conference center, tenant lounge and an expanded fitness center designed with outdoor-loving locals in mind.
Explains Helgeson, “When building a fitness center in Salt Lake City, we wanted to incorporate the outdoor lifestyle for which the community is famously known. Since so many people bike to work, we included a lot of bicycle storage and a workstation where they can make repairs to their rides.”
Millrock Park
Southeast from Salt Lake is Millrock Park, KBS’ beautiful four-building office park in Cottonwood Heights. Situated at the base of the Wasatch Mountains, it offers unobstructed 360-degree views from every building and underground parking. This unique 22-acre property site features 37% green space and won the Building Owners and Managers Association (BOMA) International Utah Kilowatt Cup and Highest Performing Building awards in 2017.
Millrock is home to a diverse group of tenants that include Magnum Development. The advanced clean energy company was purchased by Chevron in September 2023. As a result of the acquisition, Magnum is expanding its space by an additional 8,000 square feet, effectively doubling its size within the building.
In marking the occasion, Governor Spencer Cox commented, “People look to Utah as the place where we work together to find solutions addressing today’s biggest challenges. This announcement demonstrates that our state has fostered a landscape where clean energy innovation is possible.”
Conclusion
Salt Lake’s tourism slogan is “Different by nature” — a phrase that suits it well — given the endless array of natural wonders that surround the city. Coupled with a highly livable community and an equally bright business outlook, Salt Lake and its denizens can count on KBS to be there for whatever the future has in store.
Learn more about KBS and the commercial real estate industry at kbs.com/news-and-insights/.
