Utah's Economy: December 2009

We are beginning to see signs that the Utah economy is beginning to stabilize; monthly losses in employment are shrinking, unemployment claims are dropping, and permits for new homes are up. At the national level the stock market had an incredible year in 2009, the Christmas retail season was better than expected, and housing prices have managed slight increases in many urban areas. It still appears, however, too early to call it bottom for the commercial real estate sector, nationally or locally. The cycle for this sector generally lags other economic indicators by one to two years and it is no different in this recession.

One of the best indicators of market conditions for the commercial real estate sector is new construction activity. The level of new construction declines as vacancy rates, leases rates and job growth weaken. In 2009, nonresidential construction in Utah dropped 37 percent, falling from $1.9 billion in 2008 to $1.2 billion in 2009 (real dollars). This drop is the largest single-year decline for nonresidential construction since nonresidential record keeping began in the 1950s.