Office Real Estate Overview: Direct vacancy increased slightly from 15.6% to 15.7%, while Multi-tenant vacancy dropped from 20.0% to 19.9% in January. Vacancy continues to decline in Meridian (21.1%) and is at its lowest level since late 2008. Vacancy has been rising in the following submarkets: Central (17.2%), West (20.6%), and Eagle (25.3%). Net absorption was negative in January (-24,000 SF), but leasing activity has improved from the start of 2009. Construction will remain limited this year, but a 132,000 square foot office tower at Portico is nearing completion. Scentsy plans to occupy more than half of that building. Projected months of supply in office (31 months) remains lower than in the retail (39) and industrial sectors (36).
Industrial Real Estate Overview: Vacancy increased slightly from 11.6% to 11.7% in January. While vacancy remains high, it has been flat for most of the year. 28,000 square feet was absorbed in West Boise, lowering this submarket’s vacancy to 11.7%. Positive absorption has also occurred in the Airport, Meridian, and Eagle submarkets. Most negative absorption has occurred in Garden City. Although overall net absorption was negative to begin the year (-11,000 SF), it has stabilized from last year’s first quarter that saw nearly 500,000 square feet vacated. Increased leasing activity has contributed to this, rising 30% from one year ago. Construction activity will continue to be minimal as market rents and demand cannot support speculative development.
Retail Real Estate Overview: Total vacancy increased from 13.1% to 13.7% while Unanchored vacancy decreased from 24.5% to 24.2% in January. Mixed signals continue: this is the third consecutive month that Unanchored vacancy has decreased, but Total vacancy is now at an historical high for the Boise market. The increase in vacancy is mostly due to the closure of the 136,000 square foot Sam’s Club in Nampa. In fact, excluding that vacancy, absorption would have been positive to start the year. Nampa’s vacancy is now 16.8%, its highest recorded level. Southwest (11.6%), Central (17.0%), and Garden City (23.7%) are also seeing their highest vacancy levels in over a year. Vacancy in Meridian has steadily decreased and is at its lowest level in two years (8.0%).
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