Adobe Expanding & Adding Jobs in Utah

Software giant Adobe Systems Inc. plans to significantly expand its presence in Utah by investing $100 million to build a new facility and hire as many as 1,000 people during the next 20 years.

The announcement came Thursday, immediately after Utah offered the California-based Fortune 500 company a $40.2 million incentive to expand in the state.

The expansion involves Adobe’s Orem-based Omniture business unit that it acquired last October. Adobe makes design and graphic arts-oriented software tools; Omniture is a provider of Web software that tracks and analyzes Web page traffic.

“We’re hiring right now,” said Mark Garrett, Adobe executive vice president and chief financial officer. He said the jobs being added involve a mix of software technology, sales, marketing, engineering and administrative positions. Adobe already employs 620 people in Utah who work at the Omniture business unit; worldwide Adobe employs nearly 8,500.

Industry and state officials say the decisions by companies like Adobe to invest in Utah give even more weight to the critical mass of high-tech companies whose presence helps the state attract a skilled work force. In turn, more companies are attracted here to access that work force.

Companies such as Microsoft, IM Flash, Oracle, eBay and Disney— and social networking site Twitter, which just announced it would build a huge data center here — contribute to that momentum.

To get the state’s incentive money, Adobe agreed to pay at least 75 percent more than the average county wage in which it expands. That would work out to an average wage of at least $60,000 annually, not including benefits, if it builds a facility in Utah County, state officials say.

If the facility is located in Salt Lake County, the average wage would need to be nearly $75,000, not including benefits.

The incentive was approved Thursday morning by the Governor’s Office of Economic Development board, which is comprised of private-sector business people who review requests by corporations for incentive money.

Adobe will not receive the money it was offered all at once; the incentive is payable over 20 years in the form of a tax credit on corporate, payroll and sales taxes. The incentive allows the company to pay less taxes over 20 years — as long it keeps the Utah facility in operation and maintains the work force as agreed with the state.

Whether Adobe — or any other company receiving taxpayer money — would have expanded in Utah without an incentive, may never be known. But state-offered multimillion-dollar incentive packages for corporations are fairly commonplace. Most states offer sizable incentive packages to lure employers, especially during recessions.

Adobe CFO Garrett wouldn’t directly comment on whether it would have expanded here without the $40.2 million, and he wouldn’t say whether the company was even looking at locating in any other states.

He would only say the company had plenty of “options” and that the incentive was part of what swayed it toward expanding in Utah. Other factors he cited include the state’s pool of technology talent and the fact that the Omniture business unit already was located here.

GOED board officials said the incentive — among the larger of state-offered amounts — is justified given the quality of the company, the sizable $100 million investment in a new facility scheduled to open in 2012 and the large number of jobs being added. Board member Jerry Oldroyd, a Salt Lake City attorney, said the capital investment and high paying jobs will greatly benefit a state battered by recession.

Currently, the Omniture business unit operates out of leased space in Orem. As part of the expansion, the company will break ground on a new facility next year in either Salt Lake County or Utah County and consolidate operations there. Adobe officials said they haven’t yet finalized a land purchase and had no additional information to provide about the facility they plan to build.

(By Lesley Mitchell with The Salt Lake Tribune)

An upcoming housing shortage in Utah?

The Basics

Believe it or not, a housing shortage

Yes, even with months of inventory languishing on the market, some real-estate experts see a day coming when demand for new homes will exceed supply.

[Related content: homes, home buying, real estate, housing, home selling]

By SmartMoney

With all the talk of excess inventory and a flood of foreclosures, the idea of a looming housing shortage sounds unrealistic, if not downright fanciful.

After all, data from the National Association of Realtors showed a 5.1% decline in existing-home sales in June. Meanwhile, total housing inventory increased 2.5%, to 4 million homes available for sale — an 8.9-month supply, up from an 8.3-month supply in May.

Foreclosures, too, are an issue, with a vast backlog of distressed properties and “underwater” loans sitting just below the surface, according to RealtyTrac, an online foreclosure marketplace. The company forecasts that more than 3 million properties will get hit with foreclosure filings by the end of the year.

But if you step back from the doom and gloom of foreclosures and declining sales and focus on the low construction levels of the past few years, some economists say a housing shortage might be in the offing. A 2009 report by Massachusetts Institute of Technology economics professor William Wheaton says that despite the glut of existing homes, with current depressed levels of construction, there might be “excess demand” for new homes.

How could there be too few?

In the past seven years, housing starts first exceeded — but then fell short of — the historical norm of 1.6 million, according to the National Association of Realtors, with a deficit expected to grow into 2011. The chief economist of the Realtors group said last month that the big drop in home construction suggests a shortage could become an issue later.

Longer-term demographics support this theory, says Ross DeVol, the executive director of economic research at the Milken Institute, an independent think tank in Santa Monica, Calif. The U.S. is adding only about 600,000 housing units a year now, and the long-term growth in new households is 1.3 million to 1.4 million per year, DeVol says.

Rumors of a recovery

That household formation rate has fallen off somewhat because of the recession. But that decline is misleading because many college graduates have chosen to live with their parents while they find their financial footing, and some couples have deferred getting married.

But long term, that household growth says that “if we build substantially less than that amount, which we’re doing now, in four, five or six years, if we don’t ramp up housing starts, we could see a shortage,” DeVol says.

We’re still growing

There’s a tendency in any market that when you overshoot on the upside — which the U.S. did through 2007 in real estate — you undershoot on the downside, DeVol says. But underlying growth in population demographics — namely, how many people will enter the work force — is somewhere in that range of 1.3 million to 1.4 million, he says. One risk is that so many homebuilders will leave the field during the current downturn that there could be “capacity constraints” in the long term as the U.S. population continues to grow, says John Vogel, a professor of real estate at the Tuck School of Business at Dartmouth.

Consider that at the peak of the housing bubble, in 2005, nearly 2.1 million new housing units were built. In 2006, that number dropped to 1.81 million; in 2007, as the bubble deflated, new units fell to 1.34 million. By 2009, only 550,000 new units were built, DeVol says.

There won’t likely be constraints in overbuilt places such as Las Vegas, Phoenix, Miami or Riverside, Calif. But if the pace of home construction doesn’t pick up, “we are going to begin to see some tightness in some areas of the country that didn’t have the boom and bust occur,” DeVol says.

The regions most likely to be undersupplied by mid-2012 are those where supply and demand are now in balance, says Celia Chen, a senior director of housing economics at Moody’s. Chen includes Washington state, Oregon, New Mexico and Utah in this group. This is where strengthening demand, combined with construction that will remain below trend, is likely to result in undersupply, she says.

This article was reported by Lisa Scherzer for SmartMoney.

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