A new whitepaper released by Mountain West Commercial Real Estate (MWCRE) shows that retail space is undergoing a transformation, as the greater downtown Salt Lake City continues to densify. Market wide, a noticeable and significant trend is older one- and two-story retail buildings being demolished and replaced with multifamily developments, many of which incorporate retail space into the ground floor of the development. The shift to mixed-use retail space is experiencing varied success, and developers will need to make important considerations to ensure retail spaces thrive in the changing landscape.
According to Andy Moffitt, senior commercial real estate specialist at MWCRE, “Developers should proactively plan retail spaces to reduce retrofitting costs and consider parking, tenant mix, and neighborhood consumer needs.”
In Salt Lake City’s Granary District, Post District is a good example of strong retail lease-up. It includes 580 apartment units, over 55,000 square feet of retail space, and 144 on-site retail parking stalls. BCG Holdings and the Lowe Property Group, the developers, prioritized retail parking to boost foot traffic.
Moving forward, the recently passed Downtown Heights and Street Activation Ordinance in Salt Lake City encourages more ground-floor retail in various zones and areas throughout the city, signaling Salt Lake City’s intent to include more retail elements in developments.
MWCRE’S Study Finds:
- Since 2018, more than 450,000 sq. ft. of retail space in downtown Salt Lake City (600 N to 1300 S, I-15 to 1300 E) has been demolished, primarily consisting of one- and two-story buildings with an average year built of1952.
- In the same period, 293,680 square feet of new retail space has been added, with 97.2% of the total square footage being added in mixed-use developments.
- Pre-2018 retail spaces have a 4.5% vacancy rate, while those built from 2018-2022 face an 18.6% vacancy rate, highlighting the challenges mixed-use retail landlords face in attracting and retaining tenants compared to traditional retail landlords.
- Retail tenants, primarily food and beverage businesses, occupy 58.6% of the leased space in the new developments added since 2018.