Park City dealing with the ‘Vail effect’ pushing up real estate prices on Main Street
Toward the southern end of Main Street in Park City, the owner of the building at 268 Main St. hopes to sell the property for nearly $11 million.
And toward the northern end of the shopping, dining and entertainment strip, the owner of the building at 660 Main St. wants $10 million for the property.
The building at 268 Main St., where the tenants include the J Go Gallery and the nightclub O.P. Rockwell, is one of the largest along Main Street, while the building at 660 Main St. occupies a high-profile location steps from the Main Street-Heber Avenue intersection and once housed Robert Redford’s Zoom restaurant.
The two eight-digit listings essentially bookend the commercial real estate market this ski season on Main Street, long one of the most desirable locations in the state for investors. The $10 million mark for an asking price, though, is notable. It is believed there have been few deals over the years along Main Street to reach that figure. The $10 million or more asking prices represent broad confidence in the future of Main Street and Park City itself.
The Park City-area economy enjoyed a strong emergence from the recession and, in more recent years, has strengthened with the arrival of Vail Resorts as the owner of Park City Mountain Resort and the linking of PCMR and the former Canyons Resort into a single property. Vail Resorts is seen as the industry leader and its season-pass product, known as the Epic Pass, offers skiing across the Colorado-based firm’s portfolio of mountain resorts. Epic Pass holders have arrived in Park City in large numbers since the Vail Resorts acquisition of PCMR in 2014, spending time and money on Main Street during their visits.
‘Still dealing with the Vail effect’
Main Street has risen alongside the wider strength of the Park City area. Lease rates have increased and there are a dwindling number of vacant buildings when compared to the depths of the recession. The limited supply of Main Street commercial real estate coupled with the high demand has pushed the prices of buildings up, leading to listings at $10 million or more.
“We’re still dealing with the Vail effect,” said Paul Benson, a veteran commercial real estate agent in Park City.
He said retailers follow Vail Resorts, opening stores in places where the firm owns mountain resorts. The retailers, generally national or international, are in a position to pay higher lease rates than locally owned businesses. Benson said the lease rates on Main Street are “much higher” nowadays than they were prior to the Vail Resorts acquisition of PCMR.
Benson is the listing agent for 660 Main St. and said a deal could be reached by the middle of March after it was put on the market early in 2020.
“Getting a showing a day right now. I’m pretty optimistic on that one,” Benson said.
He is also the listing agent on another Main Street building, 692 Main St., priced at $3 million. Both are generating significant interest with 660 Main St. drawing the most, Benson said.
“Location, location, location,” he said about the building at 660 Main St. “That’s ground zero.”
It has been a decade of deals along Main Street, some involving buildings that were put on the market or otherwise sold amid the recessionary troubles and others during the economic recovery. The building that houses the Eating Establishment and the Claim Jumper building are two examples. The Kimball Art Center, meanwhile, sold its property along Main Street in 2015 to a developer, amid disputes with City Hall about the designs for a major expansion of the art center. Real estate sale prices are not considered public information in Utah, as they are in some other states, shielding the dollar figures. In the case of the Kimball Art Center, though, the $7.5 million sale price was made public through an annual IRS filing required by not-for-profit organizations like the art center. The asking price was $8 million, meaning the property sold for just a 6.25% reduction from what the organization sought.
At least two other commercial buildings along Main Street are either listed or believed to remain available. The building at 324 Main St. is priced at $2.5 million while The Church of Jesus Christ of Latter-day Saints building at 531 Main St. was listed without an asking price.
Tim Anker, another veteran commercial real estate broker, is listing the building at 268 Main St., noting that lease rates on Main Street have reached a record. The rates, he said, have prompted the building owners to consider whether the timing is right to sell. Anker said owners are seeing the possibility of capitalizing on the high lease rates, a result of a low vacancy rate on Main Street. The building at 268 Main St. was listed in early 2020. The price per square foot hits a little more than $594. There has been significant interest, Anker said, describing Park City as a rising destination for skiers.
“Most prominent street in Utah,” Anker said.
Ron Whaley, the agent who is listing 324 Main St., said people in the industry “all agree the prices are high.” Whaley has been selling commercial and residential real estate in Park City since the mid-1970s, a run that covers more than four decades as the community rose to become one of North America’s elite skiing destinations.
Whaley contended Main Street in the mid-1990s entered what he describes as “boutique status.” Owning a Main Street building became a “prestige statement” for some while others saw ownership as an entrepreneurial move, he said. Whaley said some are “willing to pay for a property in excess of its economic value” while others decline to pursue a deal at those levels.
“Not every property sells to a boutique buyer at a boutique price,” he said.
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