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Utah County Symposium 2022

Hero Image Symposium

This year's symposium discussed continued growth and its impact on Utah's infrastructure, and the challenges of rising costs in the post-pandemic economy

 

Provo, UT — On June 1, Colliers Utah partnered with the Utah Valley Chamber of Commerce for the 8th annual Utah County Commercial Real Estate Symposium at the Utah Valley Convention Center. Local community and business leaders gathered for presentations and panel discussions regarding the continuous growth of Utah, specifically Utah County, and the impacts on the infrastructure and economic development. 

Dejan Eskic, Senior Research Fellow at the Kem C. Gardner Institute, kicked off this year’s symposium with the latest Utah economic and demographic data showing that Utah had the most balanced COVID responses in health, education, and economy in the nation. Utah County, our economy’s current anchor, has added 141,000 jobs since 2010, and its unemployment rate is the lowest in the state at 1.7 percent. While unemployment rates are low, inflation is high, impacting the real estate market with double-digit construction cost increases and a record number of housing construction permits with no force to build. There is also concern over the affordability of homes as wages in Utah have not kept up with the market. Adding to this issue is the migration of remote workers from larger markets who maintain their large-market wages. Housing inventory is dramatically low – only about a month or less of inventory – and likely to stay that way for the next 12-18 months.

With all the increased growth, Utah faces challenges to its infrastructure.  Addressing these challenges was an infrastructure panel made up of Lew Cramer, CEO of Colliers Utah, Eric Ellis, Executive Director of the Utah Lake Commission, and Brian Steed, Executive Director of the Utah Department of Natural Resources.  Lew Cramer, who is also a commissioner for the Utah Department of Transportation, emphasized the importance of long-term strategies to connect Salt Lake and Utah Counties to the west to help relieve congestion on I-15. Eric Ellis presented the Utah Lake Commission’s goal for unifying Utah County to care for and restore Utah Lake, one of the largest and closest lakes to many Utah cities, often underutilized due to the condition of the lake – notably the algal blooms and murky water. They are currently using short-term treatments as they develop long-term solutions for restoration, and plan enhancements and improvements on beaches and marinas for recreation. Brian discussed water as drought and growth become bigger concerns, calling for a need to get more serious with water system meters that monitor usage and over-usage, and even reevaluating the relinquishment of allotted water surplus as assigned by the 1922 Colorado River Compact. 

Colliers Utah managing director Lana Howell led the next panel of area developers Daniel Thomas, Partner at St. Johns, Bryan Flamm, Partner of DAI, and Lance Bullen, Founder of the Colmena Group. Challenges they are experiencing as developers are supply chain issues and cost increases causing development to shrink. Lance stated that development caps on costs are needed at healthy levels. Daniel noted that as costs increase week-over-week and are passed down to tenants and rents, demand remains. Industrial rental rates increased but we still have comparatively low overall cost in rents. Bryan identified challenges with labor rates, reactant to blips in work, and contractors are now starting to pay laborers weekly to stay competitive. While there are few solutions besides getting buyers to make decisions on costs almost immediately to lock in rates, purchasing materials for long-term perspectives in master-planned communities is an option, though could be an issue if one lacks space for storage. 

Colliers Utah’s chairman, Brandon Fugal, led the real estate panel which comprised of Jarrod Hunt, Executive Vice President of Industrial Services, Brandon Goodman, Executive Vice President of Investment Sales, and John Peterson, Executive Vice President. When asked about the challenges faced in their respective areas of focus, John Peterson noted rates and supply chain issues impacting office construction. While preordering has been successful, there is a certain amount of forethought needed during planning to do so. Brandon Goodman stated that retail is experiencing 20-30 percent increases in goods, rent increases, and labor shortage. Jarrod Hunt offered that supply chain issues are perceived as a disguise for bad policy. It is important, more now than ever, to scrutinize state and federal, specifically federal, policies which are having rippling effects on production capacity – a resounding sentiment with many in the audience.

With high supply costs, panelists addressed the question whether to buy or build. While industrial is still cheaper to build, except for single-tenants, retail is cheaper to buy and expected to more than double in price. Offices are reported to have a very narrow margin between building or buying. Valuable advice for clients to heed is to “plan for expectations.” In office, if tenants see a decent rate, they should lock them in. In retail, they are currently trailing rents in other industries, but there is a need to be smart and charge appropriate rents – scarcity drives pricing, and scarcity of product will probably hold. For the foreseeable future, inflation is here to stay, and structural changes are being accounted for in rates. Utah is still relatively cheap when compared to bigger markets. 

It will be essential for brokers to communicate builder rates and manage expectations with developers. There is a lack of equilibrium in housing that is rippling and affecting everything else. The key to the sales pitch will still be to relay the value of Utah living.

Steig Seward, Director of Research of Colliers International, closed things off with an overall state of the post-pandemic economy which kicked off with massive shutdowns. Shutdowns trickled down to affect supply chains, prompting federal policies to ease the burdens on people and businesses, and interventions by the Federal Reserve to prevent financial market disruptions. The good news is that both employment and GDP declined but not to destabilizing levels, and both are projected to grow in the next couple of years. 

While there is a strong demand for skilled and professional workers and service jobs have recovered, there is still a large demand for hospitality, retail, and restaurant jobs. With increasing industrial activity and anticipated industrial production growth as recovery matures and service spending revives, other industries must face one of the biggest disruptions from the pandemic – remote working. Working from home changed the landscape for employees as they navigated learning a work/life balance. Some moved out to the suburbs or even across the country, challenging the role of office and working norms, and creating significant employment strain. Another big disruption was the “Great Resignation” as 29 percent, or 47 million, Americans quite their jobs in 2021. Workers became increasingly more concerned with lingering virus concerns, childcare, early retirement, and the disincentive to work due to federal benefits. 

Looking forward, Utah is in a great position for moderate, employment and GDP recovery. The Utah County area is expected to grow at 2.4 percent over a five-year annual average, but we will need to address the issue of housing affordability, specifically multifamily housing. This will be integral to continuous growth in desirable areas, and to additionally support the anticipated growth of international and in-migration.

Dejan had closed his keynote speech with an important takeaway as we navigate this bear market – “We must prepare for an economic re-sorting period, and we must take care of ourselves and our people while showing care for those who have been left behind.”


Related Experts

Brandon Fugal

Chairman

Salt Lake City - Millrock

Brandon D. Fugal is a prominent business leader, recognized as a market leader nationwide, previous EY Entrepreneur of the Year – Western Region and Chairman and co-owner of Colliers International in Utah.

Before merging and partnering with Colliers International, Brandon was co-founder and owner of Coldwell Banker Commercial Advisors, where his leadership was critical to the firm being recognized for 14 years in a row as the number one operator internationally with 30 offices in 11 states, and where he was recognized as the #1 agent globally. Colliers International is the number one commercial real estate firm in the Intermountain West, and one of leading commercial real estate firms in the world. Brandon was recently named 2022 CCIM Utah Office Broker of the Year, for which he has been recognized for the majority of the past decade.

Brandon has developed a sterling reputation as a trusted advisor, entrepreneur and business infrastructure expert on a national, regional and localized basis. Recognized as an authority in business, he has been interviewed and featured in numerous publications. In addition to his commercial real estate endeavors, Fugal is an active entrepreneur and investor, co-founding and leading companies including Cypher, Axcend and Texas Growth Fund. His special projects include the development and master planning of 1,250 acres on the North Shore of Oahu, the 512 acre Skinwalker Ranch in Utah, Evermore Park in Pleasant Grove and the 120 acre Thanksgiving Development in Lehi.

A  lifelong  resident of Pleasant Grove, Brandon both attended Utah Valley University (leadership scholarship recipient) and served for a decade on the Utah Valley University Foundation Board. He also serves on the Board of Trustees of the Utah Symphony | Utah Opera, formerly on the Governor’s Economic Council (GEC) and the board of Junior Achievement. Brandon has four children, and he and his wife Kristen are active philanthropists and serve in the community.

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Lew Cramer

Managing Director

Salt Lake City - Millrock

With decades of experience within the international business and real estate sectors, Lew Cramer is one of the more well-connected economic development professionals in the Intermountain West helping Colliers clients grow, expand and succeed. Since 2013, he has helped lead the largest full-service commercial real estate company in the Intermountain West as CEO of Colliers | Utah. For the past five years, he has also served as a Utah State Transportation Commissioner, with responsibilities to assist and review the Utah Department of Transportation activities and its almost $3 billion annual budget to plan, build and operate Utah’s growing multi-modal transportation systems.

Earlier and as founding president and CEO, Lew led World Trade Center Utah from 2006 through 2013 at the request of Utah Governors Jon Huntsman and Gary Herbert. With his talented colleagues and strategic partners, he enhanced Utah’s international expansion by assisting Utah firms in connecting with global business opportunities, a method he employs today at Colliers. The success of Lew’s vision and efforts is shown in Utah’s position as the only state in the nation with positive export growth every year for the past decade, including tripling Utah’s global exports during that time. He also currently serves as one of three Americans on the international board of the World Trade Centers Association, comprising 300+ World Trade Centers in about 100 countries around the world.

During the George H.W. Bush administration, Lew served as Director-General of the U.S. Commercial Service, leading the activities of 1,400 commercial officers at over 100 embassies worldwide and 65 offices throughout the United States with the main focus of increasing U.S. exports and expanding international trade opportunities for American companies overseas. In the Reagan Administration, Lew served as a White House Fellow, as well as a sub-cabinet officer in the U.S. Department of Commerce, including as U.S. Deputy Assistant Secretary of Commerce and then as U.S. Assistant Secretary of Commerce for International Trade, involved in numerous international trade negotiations worldwide.

During his many years in Washington, D.C., Lew was also international Vice President of US WEST (a Regional Bell Operating Company) as part of the senior-level team that developed major telecommunications projects in over 20 countries that were valued at over $15 billion with 5 million customers when merged with AT&T in 2000. Lew has also practiced real estate law in Los Angeles and in the San Francisco Bay area. For many years, he taught real estate law at the University of Southern California and international business at Georgetown University.

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Lana Howell

Managing Director

Salt Lake City - Millrock

Lana Howell is the Managing Director for Colliers Utah. She has been in the commercial real estate business for over 20 years.  She is a creative thinker, with years of analytical and marketing experience.  Lana is responsible for building and maintaining strong relationships with current and new business opportunities while overseeing capital and technology management.  She manages administrative and regulatory accountability while developing and leading the overall strategy for the organization. She cultivates a work environment that facilitates recruitment, retention, and development of high-quality team members.

Lana has years of experience in maximizing business and operational efficiencies while leading a positive culture and work-life climate.  She is a dedicated and tenacious market expert who is passionate about leadership and is skilled at building top-performing teams focused on accuracy, impeccable service delivery, and accountability. 

With an extensive work history in the real estate industry, she consistently provides real estate expertise and hands-on support to Colliers International. She also maintains strong client relationships and encourages the expansion of engagements; contributes expertise, where appropriate, to the provision of client services.

Howell’s past work experience includes positions at major companies like Coldwell Banker Commercial Advisors, CBRE, Champion Safe, KT Tape and NAI Global.

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