The University of Utah will soon acquire a 10-story office building and acreage in downtown Salt Lake City for the “opportunistic price” of $38 million, a university official told higher education officials on Friday.
“Right now, we’re purchasing it for $38 million and the previous owner several years ago purchased it for about $75 million. For those of you in the construction world, it’s post-tensioned concrete. It’s a very well built building that, over time, will only need interior tenant improvements and things to keep it a relevant building,” said John Creer, the university’s chief real estate officer.
Post-tensioned concrete is a method of strengthening concrete by adding tension after it has cured.
The Utah Board of Higher Education approved the university’s purchase of the building and adjacent parking lot. Built in 1986, the building has over the years housed the Salt Lake Chamber, Social Security Administration offices, law offices and more recently, computer gaming companies.
No state money will be used to purchase the office building and an adjacent parcel of 1.8 acres at 175 E. 400 South. Funding will come from the University of Utah’s internal bank and be repaid through lease payments from current tenants. The university plans to consolidate university operations currently housed in other downtown office space into the building.
A surface parking lot west of the building generates about $600,000 in revenue “just being a downtown, prominently located surface parking lot that we’ll keep running like that for a while, until we need the land,” Creer said.
Presently, the 238,805 square foot office building is about 52% vacant, which has left the current owner unable to cover the debt, necessitating their need to dispose of the property,” Cathy Anderson, the university’s chief financial officer, wrote in a letter to the higher education board.
Anderson wrote that the location — north of the City-County Building and near the Matheson Courthouse — “is highly desirable due to its proximity to a TRAX/UTA light rail stop, green space, restaurants, the Salt Lake City Public Library, and many other city amenities. Users at this location are four to five TRAX stops from the University of Utah main campus.”
Creer said many of the existing tenants are compatible with the university functions that will take place in the building.
“The good thing is, it has some really unique full-floor opportunities that the university can take advantage of,” he said.
The university will need to spend $3 million to $4 million for “refreshing. We know we need to upgrade some elevators. Is our biggest ticket item, just to bring them into the 21st century,” he said.
Common areas and lobbies were upgraded by the previous owner.
Amanda Covington, chairwoman of the Utah Board of Higher Education, complimented the university’s team for securing the property and building at a competitive price and plans to exit leases at other office buildings in the city and move into a central location.
“Well done. It’s a great get, you guys, from a real estate perspective. So way to be on your toes with this one,” she said.