Last winter the Murray Journal ran a photo of geese gathered on the vacant former City Hall site at 5025 South State Street. The lot runs about six acres along State Street, close to Intermountain Medical Center and Murray Park. It is cleared and ready for construction, and it has been sitting empty for most of a year. In 2023 the plan was 180,000 square feet of medical office space, plus restaurants and housing. Later, the developer swapped the condominiums for more medical office space. Murray's Community and Economic Development Director Chad Wilkinson said the change was made "in response to market conditions."
Then the project stopped. The developer had until October 3, 2025 to submit a complete building permit application for the medical office building on State Street, and it did not. The city sent a notice of default. On January 6, 2026, the board of Murray's Redevelopment Agency voted 5-0 to end its agreement with Triumph Group Murray, LLC. The termination notice invited Triumph to compete in the new selection process.
This outcome looks odd next to the headline numbers. Medical office space across the Salt Lake market is nearly full. Yet a medical-office-led project next to the state's largest hospital campus could not get to a permit. The medical office market itself explains why, and that explanation matters to any practice deciding where to lease in Murray over the next two years.
The terms the RDA put on the table
On July 30, 2026, the RDA issued RFP 26-32 for the site. Proposals were due September 24 and the solicitation is now closed. The RFP document sets terms any bidder, tenant or lender would need to price in:
- Commercial use is required. Every proposal must put active commercial uses on the State Street frontage. It must also include a sizable commercial component that generates meaningful property tax revenue. Medical office is one of the listed uses, along with retail, hospitality, restaurant, service, office and entertainment.
- Housing is optional and cannot carry the project alone. Proposals with only residential development will not be considered. If housing is included, for-sale units score better, and rental housing is acceptable only as part of a broader mixed-use project.
- Tax increment financing is limited. The site sits inside the Central Business District Urban Renewal Area but outside its collection area. The project area collects tax increment only through about 2034. The RFP itself says this "may affect financing strategies."
- Zoning can be changed. The parcel is in the Boulevard District of the City Center Form Based Code, Chapter 17.171. The city and RDA say they are willing to consider code amendments for a preferred project, and proposers are expected to list any amendments they need.
- Links to the hospital are encouraged. Connections to Murray Park, Intermountain Medical Center and nearby transit are "highly encouraged."
Items one and three together set the economics. The RDA needs a building that pays property tax, and the tax increment that could have subsidized that building runs out in about eight years. The project therefore has to work mostly on its own rents. Whether medical office rents can support new construction in this market is the real question behind the bids.
A market that is nearly full and still losing tenants
Cushman & Wakefield's medical office report for mid-year 2026 covers the greater Salt Lake market. It shows a market with very little vacant space, and also one where occupied space has been shrinking for years.
| Metric, Salt Lake medical office, mid-year 2026 | Figure |
|---|---|
| Overall vacancy | 4.5% |
| Average asking rent, full service | $27.92/SF, up 4.3% year over year |
| Class A vacant space | None, so no Class A rent is quoted |
| Class B / Class C asking rent | $28.82 / $25.58 per SF |
| Class C vacancy | 10.0% |
| Net absorption, first half of 2026 | About 52,000 SF negative |
| Space under construction | Zero, market-wide |
| Leasing activity, first half | 44,500 SF, up 61.8% from mid-year 2025 |
Net absorption is the change in occupied space. It has been negative every year since 2023: about 70,000 square feet in 2023, 64,000 in 2024 and 40,000 in 2025. Vacancy stays low because nobody is adding space. Landlords have raised rents into a market with no new competition, and tenants have taken slightly less space overall each year.
Nearly every deal is small. About 94.4% of medical office transactions in the first half of 2026 involved spaces under 5,000 square feet. The largest lease was 10,000 square feet, signed by Utah Cancer Specialists at Center Square, 3838 South 700 East. A new medical office building on State Street could not open on 3,000-square-foot clinic leases alone. It would need committed anchor tenants before construction starts. A market where the biggest lease of the half-year was 10,000 square feet offers few of them, and that helps explain why a plan that made sense on paper never reached a complete permit application.
Conventional office space looks very different. Newmark Mountain West reported 17.2% total vacancy for Salt Lake County office in Q2 2026. Medical space is nearly full, but a developer building it on spec would carry the same lease-up risk as any office building: paying for a structure before tenants have signed.
Where Murray practices can find space today
Murray practices usually want to be near the hospital, and the on-campus numbers are the most useful part of the report for them.
At mid-year 2026, on-campus medical office buildings were 6.4% vacant, down from 6.8%. Off-campus buildings were 3.8% vacant, up from 3.5%. On-campus space still costs more, at $29.24 per square foot versus $26.60. The gap is closing, though. Off-campus asking rents rose from $24.28 at year-end 2025, a jump of more than $2 in six months.
For a practice owner, this means on-campus buildings have the most available space, and off-campus rents are rising toward on-campus levels. On-campus landlords also carry more vacant suites, which can give a tenant more room to negotiate. These are metro-wide figures. Cushman's submarket map does not clearly assign Murray to one submarket, so treat them as the regional backdrop for a Murray search and not as a Murray-specific rate.
Class A is the problem. Cushman found no vacant Class A medical office space anywhere in the market, and no new medical office space is under construction. A practice that wants a new Class A suite near Intermountain Medical Center has none to choose from right now. Even if the City Hall site ends up with medical office space, it will not be available for a lease starting in the next couple of years.
The calendar between now and construction
The RFP lays out the next steps.
- September 25 to October 16, 2026: proposal evaluation.
- November 17, 2026: anticipated RDA board vote to select a developer and authorize negotiation.
- After selection: an exclusive negotiation agreement, a development agreement, a participation agreement if public money is requested, and a purchase and sale agreement. Each one needs RDA board approval.
The November date is a target, not a commitment. After that come four separate agreements, then design and permitting, then construction. The last agreement fell apart at the permit stage. The new RFP lets bidders request public participation, including land terms or tax increment, as long as the request is "clearly justified and proportional" to the public benefit. For investors, the most informative part of the selected proposal will be how much public support it asks for. That figure shows how far the developer thinks rents fall short of construction costs.
The demolition has also drawn criticism. Some residents and downtown advocates have questioned leaving such a visible lot vacant and have asked whether a heavier medical office program would deliver the street-level activity that was originally promised. The RFP addresses those concerns with its requirements for pedestrian-oriented frontage and connections across the site.
The 245 acres across State Street
The City Hall site is one of two major medical office questions in Murray. The second is much larger. Murray's planning division has asked the City Council to adopt a development vision for 245 acres around Murray Central Station, roughly 4800 South to 5300 South between State Street and I-15. That is where FrontRunner, TRAX and the Mid-Valley Express meet beside Intermountain Medical Center. The Planning Commission recommended approval in September.
The draft plan calls for 500,000 to 510,000 square feet of new office and hospital-related space in the transit-oriented district at the station. Across the full plan area it envisions 605,000 to 645,000 square feet of hospital facilities. The entire Salt Lake medical office inventory tracked by Cushman is about 4.77 million square feet.
The plan does not yet connect to the hospital's own planning. Intermountain Health is updating its master plan, and the city has said it intends to align with that plan once it is released. As of Building Salt Lake's September 23 report, Intermountain had not said when the plan would be ready for review. On the existing campus, new activity has taken the form of programs inside current buildings. A Pregnancy After Loss Clinic opened at Intermountain Medical Center in July.
The two sites compete for the same tenants. A developer bidding on the City Hall site has to consider that hundreds of thousands of square feet of hospital-adjacent space are planned across State Street. That nearby space is closer to transit, and its timing depends on a hospital master plan with no release date. A developer who expects that space to eventually be built will have trouble justifying a large medical office building at 5025 South State. This helps explain why the RFP lists retail, hospitality and entertainment alongside medical office as acceptable uses.
FAQ
Is there new Class A medical office space available near Intermountain Medical Center right now? Cushman & Wakefield's mid-year 2026 report found no vacant Class A medical office space in the Salt Lake market and none under construction.
Will the former City Hall site definitely include medical office space? No. Medical office is one of several acceptable commercial uses in RFP 26-32. The RDA's choice of developer, anticipated November 17, 2026, will set the program.
Did Triumph Group drop out? The RDA voted to end the agreement on January 6, 2026. The termination notice dated January 7 invited Triumph to compete in the new process. The bid portal has not named the proposers.
Is the Murray Central Station plan approved? As of September 23, 2026, the Planning Commission had recommended it and the City Council had not yet adopted it.
If you are planning a practice relocation, a lease renewal near the Murray hospital campus, or a bid on State Street redevelopment, the RDA vote and the Intermountain master plan will affect your options and your timing. Dan Rip has worked on both sides of public-private development agreements and can help you compare on-campus space, off-campus space and future pipeline space under one lease strategy. Schedule a free consultation.
