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Food For Thought: Part One

group of people eating at a table

On April 16th -18th, Holly Chetwood, a member of our retail brokerage team attended the ICSC “Food For Thought” conference in New Orleans, LA. 

The conference focused on the evolution of retail real estate and its impact on food and dining.  Holly was able to connect with national thought leaders and industry experts in discussions centered on emerging concepts and trends in this retail sector. 

Food Processing Industry Grows in the Magic Valley

Magic Valley Food Processing

The Magic Valley is becoming a hot spot for food processing technology, as more and more food companies expand in the area. According to the Idaho Business Review, Gem State Dairy Products is building a 200,000 square foot asceptic milk plant in Twin Falls, which is set to be completed in 2020. The plant is expected to be three times the size of an average fluid milk plant.

Unanchored Retail Occupancy Rates Setting Records

Boise MSA Retail Vacancy Dropping

At the close of Q1, unanchored retail vacancy dropped below total vacancy for the first time on record. Unanchored vacancy has been on a downward trend for the last 2 years and is currently the lowest level since 2002.

Total retail vacancy saw an increase in March after the closure of Shopko (95,400 SF) on Fairview Avenue in Boise.  Total vacancy is expected to increase even higher over the next couple of months with the closure of the last two remaining Shopko stores – on Boise's Broadway Ave. and in Nampa.

Industrial Market Welcomes Ravenswood Solutions

Ravenswood Solutions opens in Boise Idaho

A new company is coming to the Boise market. Ravenswood Solutions, a California-based company that specializes in GPS-based mobile instrumentation systems for the military, is expanding its operations to the Airport submarket, where industrial vacancy is currently 2.6%.

The company is moving into 105,000 square feet of industrial space at 645 East Gowen Road and plans to use the facility to maintain and test equipment. Tenant improvements at the site are currently underway.  Ravenswood Solutions expects to be hiring throughout 2019.

Evaluating the "Shopko Effect"

Shopko Fairview and Milwaukee Boise Idaho

The overall retail vacancy has oscillated in the mid-7 to mid-8 percentage range for the last 2 years. However, the next two months will witness large back-to-back vacancy increases with the closure of the three Treasure Valley Shopko sites. The 95,000 SF Shopko on Fairview will close this March.  In April, the Nampa and Broadway Shopkos are also expected to close, totaling 191,000 SF.

In addition to increasing the vacancy rate, these large vacancies will also dramatically decrease net absorption which is currently -83,000 SF for 2019.

Industrial Net Absorption Hits Record-High

Industrial space for lease in Boise Idaho

Industrial net absorption ended 2018 at a record high level of nearly 1.4 million square feet, up 39 percent from 2017. As a result, vacancy ended the year at 2.9 percent. Many large move-ins occurred in 2018 including, Fresca Foods occupying 183,000 SF in Caldwell and FedEx leasing a newly constructed 237,000 SF building in the Airport submarket. The Airport submarket was the strongest market in 2018 and accounted for nearly 30% of total net absorption.

Office Space Design Driven By Demand

Demand drive the design of this office space

Overall supply of office space in the Boise area is within a healthy range (13.4 months), despite the lowest vacancy rates since 2002 (7.23%).  To put it simply, tenants are able to find space within a reasonable time regardless of the tight market.

While the supply is projected to continue its decline, there has been an increase in demand for spaces over 10,000 square feet.  Transactions over 10,000 square feet had a 40% increase from 2017 to 2018, and the demand for these spaces is increasing. 

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