We are five years post-Covid and it seems as though the major damage has already been done to the Salt Lake City office market. Companies have adjusted to their new normal by implementing hybrid and remote schedules, and most tenant leases already expired where companies have had the opportunity to right-size and reset their footprint accordingly.
Despite this, there’s still more volatility as some large professional service firms still have another two or three years left on leases that were signed pre-Covid. These companies will mark the end of the rightsizing that sent the office market into a tailspin over the past half decade. Notwithstanding, the worst occupancy effects of Covid are in the past.
Downtown Salt Lake City—Tenant Upside
Downtown was one of the hardest hit submarkets, as the pandemic served as a catalyst for professional services firms and technology companies to evaluate the size and location of their office space. Many groups, like Carta and Workday, have left downtown upon lease expiration and moved to surrounding suburban office properties.
Buildings that were once considered stable are now facing sales, foreclosures, debt restructuring and ownership turnover. Just in the past year, 257 Tower, 56 E Broadway and the Judge Building have all changed hands to new owners. Most notably, City Centre I, which sold for $74 million in 2018, was purchased by the University of Utah in 2024 for just $38 million. This sale typifies the ongoing upheaval of downtown, which is amid a significant transformation.
This shift has created an exceptionally tenant-friendly environment, making it a rare and valuable moment for companies to act. While availability has declined somewhat since its peak, it’s still at over 18% today, making it an opportune time to capitalize on the above average vacancy rates.
Pre-Covid to Present Availability
When considering the other major Salt Lake County office submarkets, every submarket is up from their prior 2020 availability rate, and some dramatically so. South Valley (Draper/Sandy) rose from roughly 7% to 15% availability (+109%), while Research Park jumped from 5% to 15% (+200%). By contrast, Cottonwood Heights climbed more modestly, from 8% to 11% (+37%), making it one of the more stable submarkets. Overall, concessions remain high, as almost all of these office submarkets have availability rates above 13%—a level above which the market has shifted beyond equilibrium and into tenant-favorable territory. Any submarket above 18% availability is especially advantageous for tenants, as in the case of Downtown, Draper and Sandy.
Sublease Opportunities Hit a New Peak
In response to Covid, Salt Lake Valley saw a dramatic uptick of sublease space available from 2020 to 2021 as tenants concluded they would not be coming back to the office, or they would be coming back much smaller. By the start of 2022, employers began to understand that remote and hybrid working was here to stay, as many employees had refused to come back into the office, resulting in record high levels of office sublease space being put on, and then lingering on the market. After peaking in 2021, sublease space briefly declined, but in late 2024 and early 2025, more than 150K SF of additional sublease space hit the market, raising sublease space available back up to almost 2M SF. This wave reflects companies still unwinding pre-Covid commitments. As a result, tenants today have access to unprecedented discounted subleases at some of the most aggressive rates in the market.
Looking ahead, office space availability will remain high and prices will remain soft, as the availability rates and number of choices tenants have are just too large to conclude anything else. Landlords are still reticent to drop their lease rates however, tenants are going to enjoy some of the lowest overall effective office rents they have seen in a while, given the free rent and tenant improvement concessions being offered in today’s market.
Market statistics provided by CoStar Group.
