Even as local commercial real estate vacancies are mounting because of rising unemployment and the ongoing recession, a silver lining has emerged.

Microsoft, one of the computer industry's dominant players, is opening a software development office at Thanksgiving Park, a proposed five-building office park near Thanksgiving Point in Lehi, company officials announced Wednesday.

The Redmond, Wash.-based company, which is bringing up to 100 high-paying jobs to Utah, is scheduled to move this August into a 24,000-square-foot Class A office space in the business park. Existing tenants at the 140,000-square-foot building at 3400 N. Ashton Blvd. include Sorenson Capital, Propay, Agel Enterprises, Vucci Technology Solutions, Private Capital Group and Thanksgiving Park Management LLC.

Landing Microsoft as a tenant for the Lehi business park is especially significant in light of the current economic downturn and the company's first significant layoffs in its 34-year history. In January, Microsoft announced layoffs of up to 5,000 employees, or about 5 percent of its work force, because of a rare decline in sales of its Windows operating system for personal and business computers in the second fiscal quarter.

"Negotiating the deal took 15 months. Microsoft announced downsizing and layoffs earlier this year, but we felt lucky that they are still coming to the Thanksgiving Park," said John Petersen, vice president of Coldwell Banker Commercial in Salt Lake City.

"The decision to have layoffs is a difficult one for us, but we're continuing to expand and invest in key technologies and our business," said Paul Mayfield, Microsoft's director of engineering. "This is a continuation of Microsoft's investment in Utah."

Microsoft already has a development center in Draper, a sales office in downtown Salt Lake and a call center near the Salt Lake International airport.

"One of the key components to Microsoft's success is having really strong talent," he said. " The state has great engineering schools, a very supportive government and a unique pool of existing talent. There's a lot of hi-tech presence here and the state has done a great job creating a climate that's productive for us to do business."

To date, the company has hired 20 workers for its new Lehi office including four from local universities. Microsoft is looking to hire up to 100 workers including software development engineers and program managers for the office, which will focus primarily on creating products and solutions in desktop management and Windows virtualization.

"Virtualization is one of the key enablers to technological innovation," said Mayfield, a computer science graduate from the University of Utah. "It's is a disruptive technology that's reshaping the data center and ways applications are deployed."

This is a remarkable announcement in light of the economic downturn, said Lt. Gov. Gary Herbert. "Microsoft will employ up to 100 people in very high-paying jobs. The average household income in Lehi is around $45,000 per year, but the Microsoft jobs are paying significantly more than that."

Centrally located between Salt Lake and Utah counties, Thanksgiving Park is located near the proposed site of Utah County's first commuter rail station from Salt Lake County and three Thanksgiving Point hotels including Marriott's 94-room SpringHill Suites Hotel, Hampton Inn and a planned Marriott Residence Inn.

"People can park here and take the train to the airport. That's a big draw for Microsoft," Ricks said.

Having a LEED-certified business park scored big points with Microsoft, said Nathan Ricks, managing partner of Thanksgiving Park. LEED, which is an acronym for Leadership in Energy and Environmental Design, was created as a system for rating green building.

"Almost every Fortune 50 company would require that leased spaces nationwide have some kind of green certification. They want to be seen as doing everything they can for the environment," he said.

To make Thanksgiving Park LEED-certified, the company spent an additional $500,000 to $1 million to install high-efficiency boilers, chillers and lighting systems that are designed to reduce the amount of electricity consumed by 20 percent a year and save 600,000 gallons of water a year, he said.

Other sweeteners for Microsoft include rent abatement and a generous tenant improvement allowance, said Brandon D. Fugal, a principal broker of Coldwell Banker Commercial.

"There was a lot of free rent," he said. "We also offered multiple fiber-optic providers for backup. And Thanksgiving Park is backed up by three different substations in the event there's a loss of power."

Ricks said he is in negotiations with Lehi City and other government agencies for the creation of an economic development authority (EDA) to help pay for additional infrastructure and other enhancements Thanksgiving Park paid for up front to secure Microsoft as a tenant.

"The EDA is basically a property tax incentive for Thanksgiving Park. We're hoping to get back $500,000 from the city," he said.

"Microsoft is starting to see Utah as an emerging technology center, whereas in the past, people would have just focused on Silicon Valley; Austin, Texas; and Research Triangle Park in North Carolina," said Ron Heinz, general partner of Canopy Ventures, a Lindon-based early-stage venture fund backed by the Noorda family of Novell fame.

"The message it sends to Utah is that we are increasingly on the map of the technology market, and the fact that Microsoft set up an office here confirms it," said Jon Anderson, partner and principal broker of Commerce CRG.

When completed, the $150 million Thanksgiving Park will comprise five, five-story Class A office buildings and 30,000 square feet of retail space. Phase one, or the building that's now 80-percent occupied, was completed in October, and about 40,000 square feet of space remains to be leased.

Meanwhile, plans for a 1 million-square-foot regional mall called Thanksgiving Station are now on hold because of the retail slump, Petersen said. Thanksgiving Park and Woodbury Corp. are joint venture partners for the mall, which will be located on a 140-acre site south of the Museum of Ancient Life and Megaplex 8.

"We'll let the infrastructure grow up around it first, such as transportation roads -- access from 2100 North -- and the FrontRunner site that's now being built. All this will add to the retail site. We'd like to see more rooftops in Lehi too," Petersen said.

Related

• Alpine School District supports Lehi business development