Suburban Salt Lake Office Project Breaks Ground

Scott Gifford and Daniel Thomas, Regional Partners for St. John Properties Utah, attend Valley Grove III groundbreaking. Image courtesy of St. John Properties Inc.

St. John Properties Inc. continues to build out Valley Grove, the commercial real estate firm’s $1 billion mixed-use business community in Pleasant Grove, Utah, with the recent groundbreaking on the Valley Grove III office building. The project will add approximately 140,000 square feet of Class A space to the Greater Salt Lake City area.

During the late-September groundbreaking ceremony for Valley Grove III, St. John revealed that the construction of the property will transpire on an accelerated timeline. “Even though we’ve been building constantly in Utah since 2017, we are at over 90 percent occupancy with companies lining up for space,” Daniel Thomas, regional partner with St. John Properties Inc. in Utah, told Commercial Property Executive.

Baltimore-based St. John made its entrée into the Utah commercial real estate market in 2014 and commenced development of the 130-acre Valley Grove community three years later. Sited in Utah County’s tech hub roughly 35 miles south of Salt Lake City’s central business district, Valley Grove has become a prominent destination for tenants seeking premier suburban office space in a centralized location.

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Valley Grove III, the 22nd building at Valley Grove, will take shape along Interstate 15 at 1333 S. Valley Grove Way. The five-story property is designed to achieve LEED certification and will feature such coveted design elements as floor-to-ceiling glass. The project is a welcome endeavor in Pleasant Grove; the Pleasant Grove City Planning Commission and the Pleasant Grove City Council approved the site plan with unanimous votes in November 2021 and March 2022, respectively. Valley Grove III will be ready for occupancy in the third quarter of 2023.

Office sector is alive and well here

While the national office market has yet to regain its pre-pandemic health, there are pockets sprinkled across the country that are experiencing notable demand for Class A workplace accommodations, and Utah County is one such pocket. The total vacancy rate for Class A assets in North Utah County, home to Valley Grove, was just under 8 percent in the third quarter of 2022, according to a report by JLL. The submarket is benefiting from the substantial addition of new jobs in Utah over the last year and a few other statewide factors.

“Utah is experiencing the most rapid growth in the nation, that includes business and population growth,” Thomas noted. “The state has been on that upward trajectory for some time, and we forecast that it will continue well into the future. Low business tax rates, low regulation and an educated multi-lingual workforce are among contributing factors. The environmental beauty of the region is also a huge contributor to quality of life.”

Utah County’s office market is also experiencing a boost from the country’s growing return-to-office trend, according to a second quarter 2022 report by Colliers. And with many employers requiring employees to work multiple days in the office, some Utah County tenants are upgrading their locations in an effort to provide a more desirable environment. “Also, over the past few quarters, there has been a trend of larger tenants leaving larger markets—such as Los Angeles—and coming to Utah to enjoy lower rental costs and the outstanding economy, further contributing to the decreasing vacancy in the Utah County market.

With Valley Grove III underway, St. John is looking ahead to how it may continue to respond to the growing demand for premier office space in North Utah County and beyond. “We still have significant acreage to develop in Valley Grove and we are in active discussion with future tenants. Stay tuned,” Thomas said. “We are in Utah for the long term and are pleased to be so welcomed by community leaders.” Once Valley Grove III reaches completion, St. John’s Utah portfolio will exceed 1 million square feet.