The year 2024 has been a pivotal one for Utah’s commercial real estate, particularly in the office sector. A dramatic shift in work culture, economic pressures, and a renewed focus on what “the office” truly means have created a market of stark contrasts. While headlines may focus on high vacancy rates and empty buildings, a deeper look reveals a more nuanced story—one of adaptation, innovation, and a flight to quality that will define office rental trends in 2025 and beyond.
The Great Divide: Class A vs. the Rest
If there is one defining trend of 2024, it’s the widening chasm between premium, Class A office spaces and their older, less-amenitized Class B and C counterparts. As companies navigate the hybrid work model, their strategies have become crystal clear: if we’re going to bring people back to the office, it has to be for a reason. That reason, it turns out, is to offer a workspace that employees actually want to be in.
In 2024, Class A properties across the Salt Lake City-Provo metro area saw a surge in demand, driven by tenants seeking high-quality, amenity-rich environments. These spaces offer more than just a desk; they provide a collaborative and inviting atmosphere with features like on-site fitness centers, cafes, and easy access to public transit. This “flight to quality” has been the primary driver of positive net absorption in the market, with top-tier office buildings experiencing a resurgence in leasing activity.
Conversely, older Class B and C properties have struggled. With an abundance of available space, tenants have the upper hand in negotiations, and many are opting for discounted subleases or moving to newer, more attractive buildings. This has led to a significant increase in vacancies for these properties, and in some cases, a reevaluation of their very purpose.
The Vacancy Conundrum: A Closer Look
The overall office vacancy rate in the Salt Lake City-Provo market was a headline-grabber in 2024, reaching historic highs. However, this number can be misleading. It’s not just about empty buildings; it’s about the type of empty buildings. Much of the vacant space is in the older, outdated stock.
In 2024, the Salt Lake City office market saw an overall vacancy rate of around 27.68%, with some submarkets experiencing even higher rates. For example, the Salt Lake City-West Central submarket had a staggering 43.62% vacancy rate. In contrast, submarkets like Holladay-Millcreek showed a much healthier 6.38% vacancy rate, reflecting the preference for well-located, high-quality spaces.
While comprehensive data on “empty meeting space” specifically is difficult to isolate, it’s clear that the overall vacancy figures paint a picture of underutilized corporate real estate. The sheer volume of vacant square footage suggests that not only are entire office floors sitting empty, but so are the countless conference rooms, huddle rooms, and collaborative areas within them. As companies right-size their footprints to match their hybrid work schedules, the amount of unused space—both in individual offices and communal areas—remains a significant challenge for landlords and a major opportunity for tenants.
Heading into 2025: A Landscape of Recovery and Reimagination
Looking ahead to 2025, the outlook for Utah’s office market is cautiously optimistic, marked by two key trends: the continued recovery of Class A properties and the urgent need for a new identity for Class B and C buildings.
Trend 1: The Class A Comeback Continues
The positive momentum for Class A spaces is projected to continue into 2025. With limited new construction in the pipeline, the demand for best-in-class assets is expected to outpace supply. This will likely lead to further decreases in vacancy rates for these properties and a stabilization, if not a modest increase, in asking rents. Tenants will continue to prioritize locations that are connected, amenity-rich, and offer a premium experience for their employees. This means we can expect to see more lease renewals and new leases signed for these high-performing buildings.
Trend 2: The Adaptive Reuse Revolution
The most significant and creative trend for 2025 will be the “adaptive reuse” of older office stock. With high vacancies and a lack of demand for traditional B and C offices, many building owners are exploring new possibilities. The conversion of outdated office buildings into multifamily residential units is gaining significant traction. This not only helps reduce the office vacancy rate but also addresses the ongoing demand for housing in Utah’s rapidly growing population centers. We’ve already seen examples of this in downtown Salt Lake City, and this trend is expected to accelerate in 2025 as a viable solution for underperforming assets.
The future of these spaces isn’t limited to residential conversions. We can also expect to see some of them repurposed for other uses, such as life science labs, educational facilities, or co-working spaces that cater to the evolving needs of the modern workforce. This trend of reimagining real estate will be crucial for the long-term health of the entire commercial market.
The Bottom Line
For tenants in 2025, the market offers a unique opportunity. The high availability of space—particularly in the B and C classes—provides leverage for negotiating favorable lease terms, whether it’s for a traditional office or a discounted sublease. However, for those seeking the premium experience of a Class A building, the competition for the best spaces will remain stiff.
For landlords, the message is clear: the days of a one-size-fits-all office are over. To succeed, you must either offer a top-tier, collaborative environment that justifies a physical presence or be prepared to reimagine your property for a new purpose. The office market is not dead; it is simply in the midst of a profound transformation. As Utah continues to grow, the way we use and value our commercial spaces will be redefined, creating a more dynamic and diversified real estate landscape for years to come.