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The Retail, Industrial, And Commercial Sectors Are Thriving In The Boise Valley. Experts Weigh In On The Economy’s Current And Future Growth – As Well As Whether Or Not It Is In A Bubble

The annual Building Owners and Managers Association conference in Boise brought together a large portion of the state’s commercial real estate business on Tuesday, with the main panel focusing on the consequences and dynamics of the city’s rapidly expanding market.
The panel consisted of professionals in retail, office, multi-family, and industrial real estate, among other areas of expertise. What is the theme? The Boise region has experienced significant expansion, and everyone is bracing themselves for even more.

‘On the map’ is an abbreviation.

According to Devin Ogden of Collier, who was speaking about industrial demand but was also summarizing the prevailing feeling, “We are on the map.” In the past, when I went to conferences, people would say things like, ‘Boise?’ ‘All right.’ and move on. When I returned from the most recent conference I attended in Nashville, developers and brokers from all across the country said, “Tell me more, I’ve been hearing a lot about it,” and they wanted more information.”

According to Ogden, the industrial space market has been on a rollercoaster ride in recent years, with demand greatly outstripping supply. TOK Commercial has reported that the vacancy rate for industrial space is only 1.3 percent, according to the most recent numbers available.
“It’s not just about the increase that we’ve experienced, but also about the trajectory of our growth,” Ogden explained. “(Investors) perceive us as a good long-term investment.” It had previously been underserved. When you look at the ratio of industrial space to population and competing markets in the Western Hemisphere, we’re at the bottom of the heap.”

Colliers is hearing from firms that are dissatisfied with the regulatory environment in places such as California or Washington and are considering to relocate to the Treasure Valley, according to Ogden. Even while they are keeping their headquarters in coastal states, they are relocating their other operations to Idaho, which will result in the need of significant quantities of industrial space.

The COVID-19 epidemic has assisted in the acceleration of long-term trends in client e-commerce usage.

“There is a significant increase in demand for e-commerce fulfillment.” “COVID alleviated the anxiety that some consumers experienced when placing an online order.”

In addition, there has been a large increase in out-of-state investment in the sector.
“This market used to be dominated by a couple of developers,” Ogden said. The list continues on and on with names like Adler and Boyer and LDK Ventures and Bow River and AT Industrial and Trammel Crowe and so on.”
Ogden stated that the pipeline for new industrial buildings – which we have covered extensively here at BoiseDev – is strong.

“Get used to the sight of tall skyscrapers going up in your neighborhood. No one is constructing anything smaller than 100,000 square feet. The number of buildings is expected to increase.”

There will be more retail. More food is always welcome.

Retail space is likewise growing at a rapid pace — and changing.

“Retailers have their foot on the gas, and they aren’t going to let up anytime soon.” The economy is not going to slow down, even with labor concerns,” LeAnn Hume, a representative from Cushman & Wakefield, told the breakfast throng. “Retailers are growing in number. We’ve found ourselves on a map. They are aware of the presence of the individuals. There are numerous obstacles to overcome – but it all boils down to supply and demand. Because of the population, there is a demand for this product.”
She stated that, predictably, the food and restaurant industry is one of the most frequent users.

“Those who consume food are the ones who are growing the fastest. Everyone is clamoring for a drive-thru right now. Pickup windows are becoming increasingly popular – you purchase online, pull up to the window and don’t even have to get out of your car. A demand for designated pickup spots is also specified in leases.”

Hume mentioned two new shopping centers that will open in the near future, both of which will be anchored by Albertsons stores. One is in Star, and it opened just a few weeks ago; the other is in South Meridian, and it should open later this year.

“We were able to lease them out within six months.”

The rising traffic in the valley – albeit it is nothing compared to the problems experienced in Seattle or California – is changing the calculus for shops.
“The idea of driving from East Boise to Eagle Rd… ” It’s not something you do on the sly any longer, either. “You have to plan ahead,” she explained. “I believe that people will begin to gravitate toward their homes. ” People are likely to want to live closer to shops, with more neighborhood-y options, so that everyone has access to services close to their home,” says the author.

Multi-family housing is rapidly expanding.

Owner of local multi-family developer Roundhouse Casey Lynch ran over a fast breakdown of apartment unit figures that illustrated the rise of the local multi-family sector. The numbers were as follows:

There were 24,000 apartment units in the city in 2000.
By 2010, the number had increased to 29,000.
Between 2000 and 2010, there was a compound annual growth rate of 1.8 percent.
By 2020, the valley will have 44,000 housing units.
That represents a compound annual growth rate (CAGR) of 3.7 percent.
Even more so, the majority of the rise between 2010 and 2020 occurred between 2015 and 2020.
In this area, “multifamily housing has historically been undersupplied,” Lynch explained. “Last year, we completed a project in Eagle (The Clara) that included 277 units. Each month, you should expect to absorb between 12 and 15 units of sodium chloride. We leased 70 units in a month in March of last year, which was a record for us. It was completely unbelievable.”

In recent years, Lynch and his colleagues have noticed a major shift in the types of people who rent apartments — with 75 percent of all renters earning $150,000 or more in annual household income.

The renters “have different wants and different desires, and because they have disposable cash, they are looking for flats that are more fully amenitized,” the landlord explained.

Prior to 2010, he claimed that the Boise valley was “lagging behind” in terms of the quality of apartment development.

“It was considered to be the most cost-effective way (a developer) could construct multifamily housing – and those were the tenants.” “Everyone else was in the process of purchasing a home.”

However, as the cost of multi-family housing fluctuated in tandem with the fluctuations in the economy, the sorts of complexes being developed began to shift.

According to Lynch, “now there are dog wash facilities and bike racks, as well as a space to keep kayaks and canoes.”
He stated that newcomers are searching for apartments in more urban places, which is where Roundhouse has concentrated its efforts, with six projects currently under construction in Downtown Boise and more on the way.

The desire to live in metropolitan surroundings with food and retail is widespread. “They expect a greater quality of service from us.”

The skyline shifts.

The industrial market is booming right now. The retail market is thriving right now. The housing market is booming right now.

Is there a place to work?

“Office buildings are a little bit of a wild card,” Al Marino, a TOK representative, explained.

Marino claims that, in contrast to other industries, the recent year has been dominated by local enterprises expanding rather than regional or national firms.

“Local companies expanding were the driving force behind nine of the top 10 office purchases we saw last year.” Increasingly, firms managed by municipal and regional governments have been able to (lease) space, according to the trend we are seeing. Some of the national players haven’t returned their staff to their places of business.”

He pointed out that there is just one structure in downtown Boise that has been formally proposed with office space in it – the new ICCU Building, which is slated for 4th St. and Idaho St.

After all of this expansion in downtown, there’s (virtually) no new goods coming online in downtown,” says the author. It’s possible that we’ll reach a point in the workplace environment when we are under-built.”
While there aren’t many new business buildings planned for downtown, there are a number of multi-family and hotel developments in the pipeline. (See the BoiseDev Project Tracker for more information.)

In urban growth, particularly multi-family housing, “there’s a renaissance,” Lynch explained. “You’ll need to be in urban areas where high-income earners desire to dwell if you want to succeed. My wife is originally from the city of Austin. Take a look at the skyline of the city from 2010 to 2020 and you’ll see that it’s completely different. I believe you will see a number of high-rise buildings constructed in downtown Boise. It’s transitioning from being a 12-hour city with tumbleweeds in the streets at night to now being a city where you can live downtown, shop downtown, and eat downtown.”

Is it a bubble?

The panelists debated whether the current situation is a bubble — a rapid rise that will eventually burst — or a period of decline.

“As the finance guy, I always say ‘yes there’s a bubble and we need to stop it,'” said panel moderator Ryan Cleverly of BVA Development, who has a degree in accounting and currently serves as the company’s chief financial officer, setting the tone for the conversation. This drink is overly foamy.’ There are, however, counter-arguments on both sides,” he stated.

In response to one of those counterarguments, Lynch stated, “There is so much liquidity in the market at the moment.” “We’re not living in a bubble at the moment. People are looking to commercial real estate, multi-family housing, and industrial properties as a hedge against inflation.”

“Demand is enormous, and there are folks who aren’t really concerned about numbers,” Hume explained. “Right now, there’s a massive land grab taking place.”
Wes Jost, a financial analyst with Zions Bank, believes that changes are on the way — albeit not necessarily a bubble.

“It’s going to come down to who can afford those (more expensive) goods and services, as well as the home,” he explained. “One of the things to consider from a conservative perspective is how much longer can rents or housing expenses rise before people become unable to afford them?” It is going to be necessary to modify. It’s going to slow down or maybe come to a halt. How many households with incomes in excess of $75,000 will relocate here? It’s going to slow down at some point – but I’m not sure when that will be exactly. “It may be 2023 or 2024, but no one knows for sure.”

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