Data Center Investment in Salt Lake City
Salt Lake City's data center market is having a moment. Silicon Slopes tech expansion, Mountain West population growth, and strategic positioning between California and Colorado are driving serious demand. The market's seeing institutional capital chase anything with clean power and fiber connectivity. That said, this isn't Denver or Phoenix yet - deal flow remains tight and assets rarely hit market.
Market Context
Cap Rate Range
4.2% to 5.8% for stabilized facilities, with newer hyperscale pushing lower end and older enterprise colocation at premium
Current Vacancy
Sub-5% across all product types, with most facilities at 85%+ capacity and waitlists for premium space
Rent Trend
Power costs up 15-20% annually, driving $18-25/kW monthly rates for retail colocation, wholesale holding $8-12/kW
Absorption
24 months average lease-up for new facilities, with pre-leasing hitting 60-70% before construction completion
Price Per Unit Trend
$4.5M to $8.2M per MW for stabilized assets, with development land trading $200-400K per acre in target zones
Transaction Volume
Limited - maybe 6-8 meaningful trades annually, mostly portfolio deals or sale-leasebacks rather than traditional investment sales
Submarket Analysis
West Jordan Tech Corridor
4.4% to 5.1% capVacancy
2-4%
Avg Rent (1BR)
$22/kW retail, $9.50/kW wholesale
Strongest fundamentals with Facebook, Adobe proximity driving enterprise demand
OM Tip
Emphasize fiber density and tech tenant mix - this is where hyperscalers want to be
Airport/Industrial Corridor
4.8% to 5.6% capVacancy
3-6%
Avg Rent (1BR)
$19/kW retail, $8.75/kW wholesale
Strong logistics connectivity, lower power costs, good for edge deployment
OM Tip
Play up transportation access and power grid redundancy from airport infrastructure
Murray/Midvale
5.1% to 5.8% capVacancy
5-8%
Avg Rent (1BR)
$20/kW retail, $9.25/kW wholesale
Secondary but stable, good for smaller enterprise users
OM Tip
Focus on established operations and proven utility relationships
Lehi Point of Mountain
4.2% to 4.9% capVacancy
Under 3%
Avg Rent (1BR)
$24/kW retail, $10.50/kW wholesale
Premium pricing justified by Silicon Slopes concentration
OM Tip
Premium market - emphasize proximity to major tech employers and fiber infrastructure
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What Your OM Needs to Address
Power Infrastructure Detail
Rocky Mountain Power rate structure, backup generator capacity, and UPS specifications
Data to Include
Current utility rates, demand charges, backup power runtime hours, power density per rack
Cooling System Redundancy
N+1 vs 2N cooling configuration and efficiency metrics
Data to Include
PUE ratings by season, cooling capacity per MW, redundancy level documentation
Fiber Connectivity Mapping
On-net carriers and latency to major markets
Data to Include
List of fiber providers, latency benchmarks to Denver/Vegas/SF, cross-connect pricing
Tenant Concentration Risk
Lease rollover schedule and credit quality breakdown
Data to Include
Tenant roster with credit ratings, lease expiration dates, expansion option details
Expansion Capacity Analysis
Available power and space for future growth
Data to Include
Unused power allocation, white space availability, zoning for additional phases
Operating Cost Benchmarking
Utility costs and maintenance expenses vs market
Data to Include
$/kW operating costs, utility escalation clauses, maintenance contract details
Investment Outlook
Short Term
Continued tight inventory with institutional buyers competing aggressively. Expect cap rate compression to continue as more REITs and pension funds target the market. New development penciling but constrained by power allocation waits.
Medium Term
Market maturation with more frequent trading as early investors take profits. Power infrastructure investments should improve supply dynamics. Edge computing demand from population growth creates secondary opportunities.
Long Term
Establishment as legitimate secondary data center hub serving Mountain West region. Climate advantages and business-friendly environment should attract hyperscale investment. Risk is California power issues getting resolved and reducing migration pressure.
Buyer Profile
REITs and institutional buyers dominating $50M+ deals. High-net-worth and family offices active in $10-30M range. Very few opportunistic buyers - this is income-focused capital looking for steady returns with upside from market growth.
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