OFFICE
Despite talk of a residential slowdown, the Boise area Office market continues to demonstrate significant inventory growth. This growth is occurring despite the ever rising land cost and the fluctuating costs in construction materials and labor.
The office market has experience a flat vacancy rate through the first part of 2007 at 10.4% overall. However the market experienced a steady absorption of existing office space which caused a continued increase of new building projects. Such as, the six-story Idaho Independent Bank Building in Downtown Boise (80,478 SF); the three-story Owyhee Building near the Airport (50,520 SF); the five-story Stevens Henager Collage Building near the corner of Overland and Cole Roads (80,000 SF); several single-story buildings in El Dorado Business Park which is located at the corner of Eagle Road and Overland Road (65,000); the two-story Eagle River Building in Eagle, Idaho (42,000 SF) and a multiple of new smaller owner occupied office building. Lease rates fluctuated from being relatively flat to a slight increase ranging from $14.50 per SF to $25.00 per SF for full service annual rates . The average rate for this full service annual rate category was $17.00 per SF.
Reasonable interest rates offer office users the opportunity to own their own space, as such the number of user/owners has increased significantly over the last two years. This demand has also been fed by numerous developments that have offered multiple small building lots and buildings for sale. Developments of this type include, View Pointe Business Park located on Federal Way near Overland Road (17 lots totaling 50,000 SF of buildings), Rocky Mountain Business Park located in Eagle, Idaho (16 lots totaling 70,530 SF of Buildings) and Fairview Lakes Office Park on Fairview and Lakes Avenue in Meridian, Idaho (28 lots totaling 60,500 SF of Buildings), Sales prices ranged from $150.00 per SF to $215.00 per SF with an average sales price of $192.00 per SF.
Projections for the end of 2007 and the beginning of 2008 appear to be steady and encouraging for the Boise area Office market pushing growth in the office market upwards.
Though the office market isn’t booming, it is healthy with the steady growth in inventory with lease rates and vacancy rates remaining steady.
- Craig Wagstaff is an Office Broker for NAI Kowallis & Mackey, Commercial Real Estate Services
The Boise industrial market has become tight after over 1,100,000 square feet was absorbed in 2006. This is more than double the amount absorbed in 2005, and is the main driver for vacancy rates dropping to where they are now. Absorption in 2007 will most likely decrease to what it was in 2005. Vacancy is holding at about 5.7% on the existing industrial inventory, compared to the national average of around 8.4%. There has been an increase in construction activity, which can be attributed to a healthy demand and a lack of supply. This construction activity has been curbed by increased expenses. Continue Reading »
“In the past 20 years, there have been four other times when fear has defeated greed, triggering a capital markets crisis — the 1987 stock market crash, the S&L debacle of the early 1990s, the 1998 Russian ruble crisis, and the 9/11 2001 terrorist attack,” said Linneman in a report titled “Making Sense of the Current Capital Markets Disarray.” “We are now experiencing the fifth credit crisis in the past 20 years, with sub-prime debt as the trigger.”
While most assets are long-term in nature, most available capital is short term. As long as people believe in the rising values and liquidity of long-term assets, this fundamental mismatch is ignored. But in the eternal struggle between fear and greed, fear occasionally wins.
What is occurring today in global capital markets is the combination of two fundamental problems. The first is that most assets are long-term in nature, while most available capital is short-term. As a result, there is a fundamental bias toward asset-liability mismatches. As long as people believe in the rising values and liquidity of long-term assets, this is not a problem. However, when people lose faith this mismatch is exposed, causing short-term illiquidity and asset prices to tumble.
More great news about Idaho. USA today reports that there is “No end in sight for Idaho’s growth” in a recent article about the Gem state. Commercial real estate continues to grow in leaps and bounds throughout the valley. Deals of note include WinCo, which plans to build a new 700,000-square foot distribution center in Boise.
We’ve all heard the pending doom and gloom reported by the media regarding the over inflated housing market. Homes are certainly sitting on the market longer and there are more of them on the market, but is the housing market as bad as it is being reported? At least one source doesn’t… Realty Times reports that housing in Boise has actually appreciated by 7 percent this year.  You can read the rest of the article here.
More great news about Idaho.