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.
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.
National tenants are expected to continue popping up in the Valley as local population growth and Boise’s accumulation of national accolades and attention are piquing the interest of out-of-state retailers. Multiple planned projects are on the horizon with the possibility of breaking ground in 2019 or 2020 - including Costco at Chinden & Ten Mile, Winco at Linder Village, and Winco on Overland.
Boise-based Episciences has built a new skin care facility located at 367 Ancestor Place in Boise. The company is relocating and expanding manufacturing operations from its previous 5,536 square foot building to a new 18,446 square foot facility (read more about the Episciences expansion in the Idaho Business Review). The Episciences building is one of many new industrial projects throughout the Boise Valley.
Some of our brokerage team's recent transactions were featured in articles written by BoiseDev. If you're looking for some good reading material, we'd recommend these!
October's industrial vacancy rate in the South Meridian submarket fell from 16.0% to just 1.3% - the lowest vacancy rate for that area since 2009. The significant drop in vacancy is primarily due to UPS leasing 98,200 square feet in Sunstone Place, located just off Eagle Road, at 2100 S. Silverstone Way. The projected months of industrial supply in the South Meridian submarket now hovers near the 2 month mark and lease rates have remained in the range of $0.65 to $0.75/SF, NNN through 2018.
Vacancy in Treasure Valley strip centers reached a 13-year low in October when the overall vacancy rate hit 10.7%. This is a significant decrease from rates during the peak of the recession, when over 25% of strip center space was vacant. Examples of new strip centers which are leasing quickly (in some cases before construction has even been completed), include Northpointe Retail in Meridian, Treasure Valley Pointe in Nampa, and 4363 Gray Fox in Eagle.
The overall supply of office space in the Boise area has been steadily declining over the past three years and in September, vacancy rates hit a new 15 year low of 8.13%.
According to Forbes, Boise is listed #28 on the list of 200 Best Places for Business and Careers. As the employment rate continues to decrease and more companies open up shop in Boise and the surrounding cities, it is highly likely that office space vacancy will continue to decrease at a proportionate rate.
Furniture store growth across the Treasure Valley has been a defining characteristic of 2018's retail market. Meridian Home Furnishings expanded into an additional 14,300 square feet in September, only months after moving into their new location at Stonehenge Plaza in Meridian. Likewise, DeMeyer Furniture & Mattress built a nearly 40,000 square foot addition to their property on Franklin Road.
Holly Chetwood and Laurie Reynoldson of Thornton Oliver Keller recently received the highly coveted CCIM designation for their excellence and experience in commercial real estate. CCIM stands for Certified Commercial Investment Member and is a global community of 13,000 members comprised of 50 chapters in 30 countries. Members are considered leading experts in financial & market analysis and investment strategy.