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Salt Lake City's office market continues to be divided by building quality, with 4- and 5-Star properties attracting most leasing activity while older 3-Star and lower-quality buildings continue to lose tenants. Vacancy remains elevated at approximately 11.7% despite very limited new construction, as many occupiers continue to right-size their office footprints. Leasing activity has stabilized but remains roughly 20% below pre-pandemic averages, and demand is expected to stay relatively flat in the near term, keeping vacancy in the 11% to 12% range. The strongest leasing performance is concentrated in newer, amenity-rich submarkets such as Sugar House, while downtown and surrounding areas continue working to improve occupancy. Limited new development should help prevent a significant increase in available space, but landlords still face a tenant-favorable market. Outside of premier Class A properties in the most desirable locations, rental rate growth is expected to remain modest at around 2%, with generous tenant improvement allowances continuing to be a key incentive. Salt Lake City's solid economic fundamentals provide some stability, though evolving workplace trends and AI-driven productivity gains could temper future office demand.
Salt Lake City's retail market remains fundamentally strong, supported by continued population growth, rising household incomes, and resilient consumer spending. Demand is strongest for newer retail centers, particularly those anchored by grocery stores, fitness users, restaurants, and automotive services, while recent vacancies have primarily resulted from national retailer bankruptcies and store closures. Quality retail space remains in short supply, especially in affluent, high-growth areas, as much of the available inventory consists of older properties and very little new speculative development is underway. Limited new construction is expected to keep the market undersupplied for high-quality retail space, although rent growth has moderated after several years of strong gains. Average asking rents have softened slightly over the past year but remain significantly higher than five years ago, creating opportunities for landlords to achieve higher rents upon lease renewals. Looking ahead, retail demand will depend largely on consumer spending trends, with slower economic growth and retailer consolidation posing risks, while improving wage growth and lower interest rates could support stronger leasing activity and continued rent growth in Salt Lake City's tight retail market.
Salt Lake City's industrial market has softened as new deliveries continue to outpace tenant demand, pushing vacancy rates near record highs. Leasing activity has slowed, tenants are taking longer to make decisions, and available space is remaining on the market significantly longer than in recent years. Asking rents have largely leveled off, with annual growth slowing to approximately 1.5%, while both small-bay and large distribution facilities have experienced rising vacancy rates as supply has increased. Despite current challenges, the long-term outlook for the industrial market remains positive due to Salt Lake City's strategic location, strong transportation infrastructure, growing population, and regional distribution advantages. With new construction starts at historically low levels, the development pipeline is shrinking, which should help stabilize vacancy rates and support modest rent growth through the remainder of 2026. However, demand will continue to depend on broader economic conditions, including consumer spending, interest rates, and trade activity.