Economic Overview
In Q3 2026, the Salt Lake City market reported an employment level of 858,500 jobs and the unemployment rate decreased slightly from 3.7% a year ago to 3.6%.1 The Salt Lake City economy of $124.7 billion, as measured by 2026 gross metro product, is forecasted to climb to $128.3 billion in 2027 and $132.2 billion in 2028.2
Supply And Demand
The overall office vacancy rate, including sublease space, declined to 21.9% during the quarter, improving 150 basis points (bps) year-over-year (YOY) from 23.4% in Q3 2025. Direct vacancy fell to 18.4% from 19.9% YOY, reducing available direct space to approximately 9.5 million square feet (msf). Sublease vacancy also decreased, to 3.5% (1.8 msf) from 4.1% YOY. Direct vacancy has remained below 20% for six consecutive quarters following its peak of 20.2% in Q1 2025. Sublease vacancy has also continued its downward trend, declining from a high of 6.4% in Q2 2023.
Class A direct vacancy continued to improve, declining to 12.7% from 14.1% YOY as demand remained concentrated in the market's most desirable office locations. Utah County North recorded the lowest Class A direct vacancy rate at 9.5%, while the CBD and Periphery also maintained relatively tight conditions at 15.1% and 15.7%. In contrast, South West and Utah County South reported vacancy rates of 21.1% and 23.3%, highlighting the ongoing preference for premier office environments. Continued leasing momentum in the market's highest-demand locations is expected to further reduce Class A availability through year-end.
Notable additions to direct vacancy during Q3 2026 included approximately 43,500 square feet (sf) at 265 E. 100 S. in the CBD and 35,000 sf across multiple floors at 7181 S. Campus View Dr. in the Central West submarket. The largest new sublease block to hit the market was an 85,000-sf space at 136 Center 2 (13697 S. 200 W.) in the South East, formerly occupied by Bill.com. Despite the addition, the market continues to offer a limited supply of large, high-quality office spaces, particularly those capable of accommodating larger tenant requirements.
The office market maintained its positive momentum in Q3 2026, recording 169,000 sf of net absorption and bringing the year-to-date (YTD) total to more than 800,000 sf. This performance reflects the market's continued recovery, which began gaining traction in early 2025. Direct occupancy gains accounted for approximately 234,000 sf of net absorption, while sublease net absorption totaled negative 65,000 sf. In addition to the quarter's largest sublease transaction, notable move-ins include Canopy Tax, taking 50,000 sf at Vista Station 3 in the South East, Utah Housing Corporation, occupying over 44,000 sf of space at Soleil Tech Park - Building 2 (2783 S. Leadership Ct.) in the North West, and Clicklease, moving into 40,000 sf at Vista Station 10 (12921 S. Vista Station Blvd.), in the South East.
Pricing
Overall average asking rents across all office classes increased in Q3 2026 to $26.64 psf on a full-service annual basis, up from $26.32 in Q2 2026. Class A asking rents also increased $0.75 QOQ to $30.56 psf, supported by sustained tenant demand and limited availability. Class B properties averaged $24.78 psf, while Class C space averaged $22.27 psf. Looking ahead, asking rents for Class A and best-in-class Class B properties are expected to remain firm as high-quality space continues to lease quickly. However, elevated vacancy within portions of the broader Class B and Class C inventory may exert downward pressure on market wide rental rates, resulting in more modest overall rent growth in the near term.
Leasing Activity
Leasing activity remained strong in Q3 2026, with over 1.1 msf of new leases executed across the market. The South East led all submarkets with 489,000 sf of leasing volume, representing 43% of total activity, followed by Utah County North at 25%. Demand remained concentrated in Class A properties, which accounted for 75% of leasing activity (846,000 sf), while Class B and Class C assets captured 21% and 4%, respectively. As competition for tenants intensifies, landlords are increasingly investing in speculative (SPEC) suites to attract smaller occupiers seeking turnkey, move-in-ready space. SPEC suites are helping drive demand in Class B properties, while reduced Class A availability and concessions are encouraging some tenants to consider Class B alternatives. Consequently, demand for quality Class B product remains strong, supporting continued absorption of available inventory.
Leasing activity during the quarter was led by Swire Coca-Cola's 106,000-sf sublease at Jordan Valley Tech I in the South East, which occupied in Q2 2026. The majority of notable transactions completed during the quarter were renewals, totaling approximately 738,500 sf (excluded from new leasing totals). Notable renewals included Fidelity Real Estate Company's 230,000-sf renewal at Four Gateway in the Periphery submarket, Pattern Inc. renewing 141,000-sf at Innovation Pointe III in Utah County North, and Progressive Financial’s 70,000-sf renewal at Vista Station 3 in the South East. As availability within the market's most sought-after Class A assets continues to tighten, many large occupiers are opting to renew or expand in place, limiting turnover and further constraining premium space options across the market.
Inventory
No new office completions were recorded in 2026, compared with the market's 10-year annual average of 1.1 msf of deliveries. With no projects under construction and limited large-block availability, especially in the CBD, supply constraints are expected to intensify, leaving the market several years away from meaningful inventory growth. Meanwhile, adaptive reuse projects and owner-user acquisitions continue to remove space from the competitive inventory. Since 2022, more than 1.0 msf of office space has been redeveloped for multifamily use, while additional properties have transitioned to owner-user and institutional occupancy. Notable examples include the acquisition of the Franklin Covey Portfolio by the State of Utah, Fairbourne Station by Intermountain Healthcare, and 175 S. West Temple by Drury Development Corporation. Collectively, these conversions and acquisitions are expected to further reduce available office inventory, supporting tighter market conditions through 2026.
