Last week, I wrote about the condo drought Utah is experiencing. Well, this week I have some good news and some bad news to start off the new year. First the good: Utah was ranked third for commercial real estate investment in the PricewaterhouseCoopers and Urban Land Institute "Emerging Trends in Real Estate for 2018" poll. This is a big deal considering we aren't a major city like Seattle (No. 1) or Austin (No. 2). The report states that we have plenty of job growth and lots of young workers, and that the cost of doing business in Salt Lake City is 12 percent below the national average. In other words, we've been discovered by out-of-state investors.
The bad news—I sound like a broken record these days—is there's no inventory for investors to buy. And what is out there is priced at top dollar. You might not be a person with millions in your bank account, but you might be someone hoping to buy a brick-and-mortar store in 2018—maybe for a restaurant, shop or retail space. It's possible your folks or small-business backers are willing to help you buy something, but good luck with the hunt!
Let's say you've had a food booth at a farmers market and want to expand to include a food truck. According to specialty site roaminghunger.com, you could make an average of $240,000-$290,000 a year in gross revenue just off one truck. You have to lay down at least $50,000-$100,000 for a used vehicle or $100,000-$150,000 for a new one. That's certainly different from trying to buy a building for an eatery. Even small restaurants with working kitchens in the Salt Lake Valley can sell for hundreds of thousands of dollars, and leasing a space could run $50 a square foot. Buying a cute, small building and converting it to a restaurant depends on A. being zoned correctly and B. most likely having to have an expensive grease trap and a fire retardant/sprinkler system installed. Trust me, I've owned a bakery and a private club and didn't budget for those things in my initial plans. Talk to Jorge Fierro—who started out by simply selling beans at the Downtown Farmers Market and who now owns Rico Brands and Frida Bistro—about finding investors and buying commercial property. He has a wealth of experience in working with the good and bad sides of real estate possibilities.
Salt Lake City is the least populous city to ever break into the Top 10 of the "Emerging Trends" poll. Investors are swooping in and rents and prices are going up in 2018 for large and small commercial properties alike.