Market Overview 2020
Events that shake the world and heighten fear often alter consumer behavior and impact real estate.After 9/11 demand for space closer to the bottom floor of buildings increased while demand for spaces near the top floor fell. The trend eventually wore out as fears subsided over time, and we predict the same will happen when the virus is contained.
The effects of an economic downturn are often most acute in primary markets. Utah has fared better than the nation and should face a less severe and lengthy downturn in it’s economy. According to the US Bureau of Labor Statistics Utah’s unemployment rate is the second-lowest of any state at 5.1% compared to 11.1% nationally.
Utah Retail Market
For May, Utah was up 12.5% year over year, and the nation was only down (6.9%). So long as we continue to make progress suppressing the virus, we should see retail sales continue to climb. In June Utah’s Revenue Assumptions Working Group forecast an 8.1% increase in 2020 and a 5.9% increase for 2021.
Utah Office Market
Many companies were able to continue operations with their employees working from home and have not experienced crippling revenue losses as many retailers have. However, there are many companies that have struggled and the combined impact of lower GDP and increased unemployment will certainly be felt across all commercial real estate sectors.
Utah Industrial Market
Industrial has been the strongest sector and will be least impacted by COVID-19. E-commerce sales have been on the rise for years and have soared since the start of the pandemic. If the trend continues, it will foster demand for greater distribution and warehousing.