Vacancy reached its highest point in over five years this April at 9.5 percent but dropped to 8.6 percent due to a few large vacancies being filled. Most of these transactions involved strong regional retailers: Albertsons announced they will occupy the former Shopko space in Meridian and D&B Supply leased the former Hastings/Sports Authority at Eastgate Shopping Center. Over 55,000 square feet will be occupied by multiple retailers, including Ace Hardware, in a former KMart at Fairview & Five Mile. Other vacancies were filled by new tenants to the market, including CircusTrix and Fly High Trampoline Park.
It was anticipated that some of these big-box vacancies would take months or even years to backfill so this was an encouraging sign for a retail sector that is in a state of transformation. Due to this recent flurry of activity, the 2nd quarter produced positive absorption for the first time in over a year. Leasing activity improved throughout the market with over 75 percent of submarkets experiencing positive absorption year-to-date. West Boise leads the way with 87,300 square feet of net absorption.
A new WinCo on Garrity Boulevard in Nampa comprised the majority of the 124,000 square feet of new construction in 2017. Most construction that is currently underway is tied to stand-alone retail buildings such as Dollar Tree and Advance Auto Parts.
Class A asking rates have been steadily increasing since 2014, reaching an eight-year high of $17.25 per square foot. Overall rates appear to have stabilized in the $14 range, increasing only $0.50 at the same time that Class A rates rose by $2 per square foot. The Downtown and Meridian submarkets continue to demand the highest rents for new space in the $20 to $30 range. New product at the Karcher interchange has driven rents up in the Caldwell Boulevard submarket as well.
Historically, Boise has been viewed as a tertiary market for many franchises and overlooked in comparison to larger markets. Recently, Boise has been attracting new retailers at the same time and, in some cases, before other competing markets.
*Above is an excerpt from Thornton Oliver Keller's Mid-Year Market Watch. For a free copy, email email@example.com.