Office Real Estate Overview: Direct vacancy increased slightly from 15.7% to 15.8%, while Multi-tenant vacancy remained flat at 20.2% in May. Both vacancy rates are at their highest recorded levels. Submarkets with rising vacancy rates include Downtown (8.7%), Central Boise (19.2%), Garden City (21.2%), and Caldwell (12.5%). Vacancy is declining in Meridian (19.4%), and Nampa (16.0%). Net absorption has been negative year-to-date at -31,000 square feet. Most negative absorption has occurred in Central Boise (-53,000 SF) and West Boise (-32,000 SF). Meridian has the strongest absorption at 38,000 SF. Transaction volume is on the rise, however, and the 2nd Quarter is on pace for the most lease transactions since the 2nd Quarter of 2008.
Industrial Real Estate Overview: Vacancy remained flat at 11.8% in May. 44,000 square feet was vacated on Maple Grove, resulting in West Boise’s vacancy rising to a new historical high of 15.6%. The Airport submarket has also seen an increase in vacancy, now at 8.4%. Scentsy purchased a 56,000 square foot warehouse in Meridian. Vacancy in Meridian is now 7.4%, its lowest level in the past year. Although net absorption remains negative at -129,000 square feet year-to-date, leasing activity continues to show promise. Lease transactions in the 2nd Quarter are on pace to be the highest since 2008. The contrast between transaction and absorption trends is due to the volume of large warehouses that have been vacated.
Retail Real Estate Overview: Total vacancy decreased from 13.9% to 13.7% in May, reaching its lowest level of the year. Unanchored vacancy declined for the seventh consecutive month, falling from 23.6% to 23.0%. Four lease transactions of 3,000+ square feet were completed along Fairview Avenue, dropping West Boise vacancy down to 10.5%, its lowest level since early 2009. Vacancy has also been declining in Central Boise (12.0%). Pristine Pools occupied a new 22,900 square foot building at Eagle & Ustick in Meridian. Lease rates have declined slightly this year. Overall average asking rates are now $14.00 per SF, while average actual rents have fallen to $12.05, down from a peak of $16.40 in 2007. Asking rates for Class A centers average $15.00.
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