2014 q2 report final

COLLIERS IDAHO BOISE | NAMPA

2014 MID-YEAR | REAL ESTATE MARKET REVIEW

http://www.colliers.com/boise

www.colliers.com/boise

20

20

55

55

44

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S P

leasa

nt V

alley

Rd

Eagle

Rd

36th

St

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char

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Eagle

Rd

Chinden Blvd

W Victory Rd

Idaho St19th

St

Blac

k Cat

Rd

Can

Ada R

dCa

n Ad

a Rd

Mcc

derm

ott R

dM

ccde

rmot

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Ustick Rd

Victory Rd

King

s Rd

Roosevelt Ave

10th A

ve S

North

side

Blvd

Roosevelt Ave 22nd A

ve1st St S

11th Av

eGarrity BlvdRailroad St

Cirrus Dr

Midw

ay R

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Homedale Rd

Midl

and

Blvd

Laster Ln

Mad

ison

Rd

11th

Ave

N

17th A

ve N

9th St SS In

diana

Ave

Deer Flat Rd Deer Flat Rd

Midl

and

Blvd

Marble Front Rd

N Kc

id Rd

Look

Rd

Farm

way

Rd

Ustick Rd

Farm

er R

d

S Federal Way

Capit

ol Blv

d

Broa

dway

Ave

Resseguie St

30th

St

Main St

Reserve St16

th St

3rd St

W Gowen Rd

Shaw Mountain Rd

Taft St

Chinden Blvd

Wag

ner R

d

Myrtle St

Myrtle St

88

99

1010

1111

1212

1313

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22

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44

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1414

1616

1717

1818

Star

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77

State St66

1515

Fort StFort St

For Questions or Additional Information, Please Contact:

CHRISTINA TURNER | RESEARCH COORDINATOR208 472 [email protected]

DAVE FERNANDEZ | DIRECTOR OF MARKETING208 472 [email protected]

11

22

33

44

55

66

77

88

99

1010

1111

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Ada County Submarkets Northwest Airport Downtown Peripheral West Bench

North End Central Bench Garden City Eagle

Southwest Downtown Boise Southeast Meridian

Canyon County Submarkets Idaho Center South Nampa Caldwell

Northside Karcher

Downtown Nampa Middleton

1919

1818

1717

1616

1515

1414

1313

2014 MID-YEAR REVIEWCOLLIERS IDAHO

Q2 2014 | COMMERCIAL

All information provided in this report is from sources we deemed reliable. Colliers International makes no representation or warranty as to its accuracy.

GEORGE ILIFF | MANAGING OWNER208 472 [email protected]



P. 3 | COLLIERS INTERNATIONAL

4OFFICE Market Review

7RETAIL Market Review

10INDUSTRIAL Market Review

13INVESTMENT Market Review

15LAND Market Review

MARKET REVIEW | Q2 2014 | COMMERCIAL | TABLE OF CONTENTS

17VALUATION & ADVISORY


OFFICE MARKET REVIEWCOLLIERS IDAHO


MARKET INDICATORS

ADA COUNTY

CANYONCOUNTY

VACANCY RATES

ASKING RATES

The Solitude Building

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

11.3%

7.0%9.3%

11.8%13.3%

16.1%

11.8%

18.9%16.5%

4.7%

13.44%

1.17%

8.28% 8.74%

13.84%

OFFICE VACANCY RATES

Centra

l Ben

ch

Downto

wn Bois

e

Downto

wn Peri

phery

Eagle

Meridia

n

GC/N.End

/NW

Southe

ast

Southw

est

West B

ench

Idaho

Cen

ter

Karch

er

Downto

wn Nam

pa

Norths

ide N

ampa

Caldwell

South

Nampa

OVERVIEWBecause the most desirable submarkets continued to garner the greatest market interest from tenants,

landlords continued to drop concessions, and rental rates began to rise. Lateral movement around the

Treasure Valley continued to prevail, as few new businesses entered the area. With asking rates back at

healthy levels, tenants who signed leases during the downturn did not easily renew at their current locations

and sought alternative sites to remain budget conscious. High building costs meant increased cost for

tenant improvements. NOTABLE TRANSACTIONS

COMPANY Washington Group Plaza

TRANSACTION Sold

SIZE 104,291 SF

LOCATION 720 E. Park Blvd.Boise, ID

COMPANY St. Luke’s Regional Medical Center

TRANSACTION Leased

SIZE 11,080 SF

LOCATION 420 W. Washington St.Boise, ID

TRANSACTION Leased

SIZE 11,468 SF

LOCATION 3501 W. Elder St. Boise, ID

COMPANY Metageek

TRANSACTION Leased

SIZE 10,200 SF

LOCATION 1109 Main St.Boise, ID

COMPANY Boise/Idaho Timber Brokers

TRANSACTION Leased

SIZE 15,000 SF

LOCATION Village at MeridianMeridian, ID

700,000

600,000

500,000

400,000

300,000

200,000

100,000

0

OFFICE INVENTORY - (AS % OF TOTAL AVAILABLE SPACE)

Centra

l Ben

ch

Downto

wn Bois

e

Downto

wn Peri

phery

Eagle

Meridia

n

GC/N.End

/NW

Southe

ast

Southw

est

West B

ench

Idaho

Cen

ter

Karch

er

Downto

wn Nam

pa

Norths

ide N

ampa

Caldwell

South

Nampa

14%

18%

6%

3%

14%

4%

9%

22%

5%

1% 0% 1% 2% 3%1%



MARKET REVIEW | Q2 2014 | COMMERCIAL | OFFICE

Update - Market ComparisonsOffice Market

SUBMARKETBUILDING

COUNTINVENTORY

(SF)DIRECT

VACANT (SF)SUBLEASE

VACANT (SF)TOTAL

VACANTVACANCY

RATE ABSORPTION 2014 YTD (SF)

Central Bench 113 2,239,041 370,543 - 370,543 16.5% 41,558Downtown 101 4,177,362 465,995 7,908 473,903 11.3% (127,089)Downtown Periphery 102 2,115,160 155,048 - 155,048 7.0% 29,141Eagle 62 766,816 71,440 - 71,440 9.3% 1,255Meridian 161 3,225,255 381,169 - 381,169 11.8% 15,062N. End/Northwest/Garden City 60 807,158 107,454 - 107,454 13.3% (38,899)Southeast 54 1,423,104 166,007 63,642 229,649 16.1% 17,073Southwest 56 1,041,867 122,868 - 122,868 11.8% (60,148)West Bench 162 3,112,976 564,034 25,564 589,598 18.9% (105,806)Ada County Total 871 19,019,739 2,404,558 97,114 2,50,672 13.2% (227,853)

Downtown Nampa 65 558,571 27,409 - 27,409 4.7% 18,058Idaho Center 19 227,618 30,595 - 30,595 13.4% 3,190Karcher 44 344,403 4,030 - 4,030 1.2% (2,284)Northside Nampa 9 196,919 16,309 - 16,309 8.3% -South Nampa 48 471,853 41,249 - 41,249 8.7% (15,002)Caldwell 51 500,116 69,195 - 69,195 13.8% (20,157)Middleton 5 83,997 188,787 - - - 2,912Canyon County Total 241 2,413,477 188,787 - 188,787 7.8% (13,283)Market Total 1,111 21,332,218 2,593,345 97,114 2,690,459 12.6% (342,134)

INVENTORY AND VACANCYVacancy for Q2 2014 decreased or was equal to the rate for Q1

2014 in 8 of the 15 submarkets considered in this segment. While

the overall feel in the Office real estate community was that

vacancy rates were tightening, certainly in desirable locations and

“Class A” buildings, new availability as a result of the recently

completed Owyhee Plaza, 8th & Main, and Village at Meridian

caused the total rate to rise slightly in Ada County compared to Q1,

and pushed the overall Treasure Valley amount to 1.2% over last

quarter. In Ada County, submarkets with the greatest decrease in

vacancy were the Central Bench and Southeast, where rates were

16.5% and 16.1% at the end of Q2 2014 respectively. The greatest

increases in vacancy were in Southwest Boise, at 11.8%, and in

Downtown Boise, at 11.8%, where not surprisingly, the

aforementioned new availabilities inflated statistics. In Canyon

County, the biggest deltas were witnessed in the Downtown

Nampa submarket (down to 4.7%), and in Caldwell (up to 13.8%),

where little Office inventory exists and small changes in vacancy

greatly impact the overall total.

With the amount of desirable space shrinking, asking rates

increased across the Treasure Valley. The total average increase

in Ada County was $0.07; and $0.04 in Canyon County. The

60,00040,00020,000

0(20,000)(40,000)(60,000)(80,000)

(100,000)(120,000)(140,000)

Meridian

OFFICE ABSORPTION

Central Bench

Downtown

DowntownPeriphery

EagleMeridian

Southeast

Southwest

West Bench

GC/N.End/NW

CanyonCounty

greatest average asking rate increases in Ada County between Q1

and Q2 of 2014 were experienced in Downtown Boise – at $18.62

FS/FSEJ, all classes – and Eagle – at $15.73 FS/FSEJ, all classes.

In Canyon County, the greatest increases were witnessed in

Downtown Nampa – at $12.36 FS/FSEJ, all classes – and South

Nampa – at $12.29 FS/FSEJ, all classes.


MARKET REVIEW | Q2 2014 | COMMERCIAL | OFFICE

Update - Average Full Service Asking Rates Office Market

SUBMARKETALL

CLASSES A B C

ALL CLASSES ALL ASKING

RATESCentral Bench $9.80 $14.21 $9.59 $8.99 $10.14Downtown $18.62 $20.94 $16.06 $14.00 $17.99Downtown Periphery $16.73 $18.14 $18.07 $10.37 $14.86Eagle $15.73 $15.95 $15.50 - $15.90Meridian $17.29 $17.40 $15.93 - $15.90N. End/Northwest/Garden City $14.83 $15.26 $13.46 - $13.43Southeast $16.29 $16.60 $16.32 $14.50 $15.58Southwest $11.96 $11.96 - - $11.77West Bench $12.22 $15.70 $11.27 $11.72 $11.85Canyon County $12.45 $13.77 $12.45 $10.50 $12.05Averages $13.88 $15.79 $13.88 $11.51 $13.31

MID-YEAR OFFICE VACANCY & ASKING RATES

$18.00

$16.00

$14.00

$12.00

$10.00

$8.00

$6.00

$4.00

$2.00

$0.00

25.0%

20.0%

15.5%

10.0%

5.0%

0.0%MY06

MY07

YE06

YE07

YE08

MY08

MY09

MY10

YE09

YE10

YE11

MY11

MY12

MY13

YE12

YE13

MY14

Office Asking Rate Office Vacancy

OUTLOOKThere is a growing shortage in open layout office space as more

companies outside the high-tech, public relations, and marketing

industries adopt the more collaborative floorplan in the Treasure

Valley. Expect to see opportunities for both redevelopment and new

development to meet the demand. The speculative construction

begun in Q2 2014 will likely continue for both the current small

suburban office type and for the evolving downtown condominium

trend.

One Capital Center

Centra

l

Bench

Downto

wn

Downto

wn

Perip

hery Eag

le

Meridia

n

$25.00

$20.00

$15.00

$10.00

$5.00

$0.00

GC/N.End

/

NW Southe

ast

Southw

est

Canyo

n

County

$20.94

$15.95$17.40

$15.26$16.60

$11.96

$15.70

OFFICE AVERAGE ASKING RATES

$18.14

$14.21


RETAIL MARKET REVIEWCOLLIERS IDAHO


25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

8.6%

0.2%

4.4% 5.5%

23.2%

0.8%2.3%

6.6%8.1%

RETAIL INVENTORY

18.1%

2.0% 1.4%

9.3%

3.0%2.4%

0.5%

Centra

l Ben

ch

Downto

wn Bois

e

Downto

wn Peri

phery Eag

le

Meridia

n

Garden

City

Southe

ast

Southw

est

West B

ench

Idaho

Center

North

End

Karch

er

Downto

wn Nam

pa

South

Nampa

Caldwell

Northw

est

OVERVIEWNationally, the Retail real estate market continued to recover more slowly than the U.S. economy. Big box

tenants continued reducing the size of their stores. Moderate consumer spending was attributed largely to

slow wage growth. In the Treasure Valley, vacancy rates remained low, particularly in Class A locations. As

a result, landlords granted fewer concessions. Because building costs also remained high, landlords faced

higher construction costs to meet tenant improvement demands. Higher costs coupled with limited available

space prompted asking rates to trend upwards.

Middlet

on

3.5%

MARKET INDICATORS

ADA COUNTY

CANYONCOUNTY

VACANCY RATES

ASKING RATES

The Shops on Emerald

NOTABLE TRANSACTIONS

COMPANY Sage International School

TRANSACTION Leased

SIZE 42,453 SF & 1.74 Acres

LOCATION Parkcenter Blvd. Boise, ID

COMPANY Chick-Fil-A

TRANSACTION Sold

SIZE 1.18 Acres

LOCATION 8000 Franklin Blvd.Boise, ID

COMPANY Petsmart

TRANSACTION Leased

SIZE 12,372 SF

LOCATION Treasure Valley Crossing Nampa, ID

COMPANY Collister Shopping Center

TRANSACTION Leased

SIZE 11,683 SF

LOCATION 4602-4780 W. State St. Boise, ID

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

3.3%

9.7%

0.7%

6.7%

10.4%9.2%

6.6%

4.2%

7.6%6.7%

8.6%

3.5%

1.6%

5.0%5.9%

3.5%

8.7%

RETAIL VACANCY RATES

Centra

l Ben

ch

Downto

wn Bois

e

Downto

wn Peri

phery Eag

le

Meridia

n

Garden

City

Southe

ast

Southw

est

West B

ench

Idaho

Cen

ter

North

End

Karch

er

Downto

wn Nam

pa

South

Nampa

Northw

est

Caldwell

Middlet

on

8.6%

4.4%

8.1% 9.3%

3.5%



MARKET REVIEW | Q2 2014 | COMMERCIAL | RETAIL

INVENTORY AND VACANCYThe Treasure Valley vacancy rate decreased from 7.7% in Q1 to

6.5% in Q2 2014. Ada County contributed only a 0.3% quarter-to-

quarter drop, with mixed submarket results. The vacancy

decreases witnessed in the Central Bench (3.3%), Eagle (6.7%),

and Southeast (7.6%) submarkets were met with vacancy

increases in Meridian (9.2%), and in the smaller Garden City

(10.4%) and North End (6.6%) submarkets, where a small vacant

space can have a big impact due to limited inventory. In Canyon

County, vacancy decreases in Downtown Nampa (3.5), Idaho

Center (1.6%), and Karcher (5.0%) submarkets were tempered by

an increase in South Nampa (5.9), for a net -3.1% difference

between Q1 and Q2 2014.

With vacancy on the decline, overall NNN asking rates rose $0.10

between the first and second quarters of 2014. In Ada County, the

Central Bench and Eagle submarkets experienced the greatest

increases, with average NNN rates at $11.54 and $13.75

respectively. Conversely, the Southeast submarket witnessed the

greatest decline, ending the second quarter at $13.39 NNN. In

Canyon County, the Downtown Nampa and Idaho Center

submarkets saw the highest increases, at $9.74 and $18.98 NNN.

The oddly high Idaho Center average was due to $24 and $32

asking rates at Ridgecrest Plaza. The Karcher and South Nampa

submarkets decreased somewhat to $9.38 NNN and $12.76 NNN.

The Treasure Valley negative overall absorption can be attributed

in large part to the C.C. Anderson building becoming available

downtown; the sweeping number of tenants who moved out of the

Meridian Crossroads at Fairview and Eagle and the challenged

Hillcrest Shopping Plaza, which also lost a tenant in Q2 2014.

$20.00

$16.00

$12.00

$8.00

$4.00

$0.00

$11.54

$15.99

$10.00

$13.75

$10.64

$14.21

$17.75

$11.29$13.39

$12.20$13.41

$9.74

$18.98

$9.38

$12.76

$9.54$9.00

RETAIL ASKING RATES

Centra

l Ben

ch

Downto

wn Bois

e

Downto

wn Peri

pheryEag

le

Garden

City

Meridia

n

Northw

est

Southe

ast

Southw

est

West B

ench

North

End

Downto

wn Nam

pa

Idaho

Cen

ter

Karch

er

South

Nampa

Caldwell

Middlet

on

Update - Average Full Service Asking Rates Retail Market

SUBMARKETALL

CLASSES ANCHORED UNANCHOREDFREE

STANDINGCentral Bench $11.54 $14.65 - $11.88Downtown $15.99 - $15.82 -Downtown Periphery $10.00 - - -Eagle $13.75 $18.00 - $13.76Garden City $10.64 - $8.75 $9.17Meridian $14.21 $19.06 $13.97 $13.23North End $17.75 - - $18.25Northwest $11.29 $11.75 - $10.94Southeast $13.39 $10.29 - $15.89Southwest $12.20 $10.31 - $12.71West Bench $13.41 $14.59 $11.23 $12.52Canyon County $11.57 $10.50 $7.79 $14.26Averages $12.56 $13.29 $10.89 $13.49

Eagle Island Marketplace

200,000

150,000

100,000

50,000

0

(50,000)

(100,000)

RETAIL ABSORPTION

Northwest

Southeast

West Bench

Central Bench

Garden City

North End

Eagle

Meridian

Southwest

CanyonCounty


MARKET REVIEW | Q2 2014 | COMMERCIAL | RETAIL

Update - Market ComparisonsRetail Market

SUBMARKETBUILDING

COUNTINVENTORY

(SF)DIRECT

VACANT (SF)SUBLEASE

VACANT (SF)TOTAL

VACANTVACANCY

RATEASKING RATE

(NNN)Central Bench 61 1,477,031 49,465 - 49,465 3.3% $11.54Downtown 52 1,254,180 122,247 - 122,247 9.7% $15.99Downtown Periphery 40 410,793 2,956 - 2,956 0.7% $10.00Eagle 32 925,140 62,198 - 62,198 6.7% $13.75Garden City 31 752,910 78,349 - 78,349 10.4% $10.64Meridian 113 3,584,685 328,864 1,386 330,250 9.2% $14.21North End 8 179,720 2,461 9,420 11,881 6.6% $17.75Northwest 30 800,804 33,399 - 33,399 4.2% $11.29Southeast 39 1,238,070 94,442 - 94,442 7.6% $13.39Southwest 41 1,724,473 115,699 - 115,699 6.7% $12.20West Bench 79 2,990,700 258,557 - 258,557 8.6% $13.41Ada County Total 486 14,927,713 1,148,637 10,806 1,159,443 7.8% $13.11

Downtown Nampa 31 823,928 28,824 - 28,824 3.5% $9.74Idaho Center 22 1,322,811 20,627 - 20,627 1.6% $18.98Karcher 51 2,662,981 132,750 - 132,750 5.0% $9.38Northside Nampa 4 392,841 - - - -South Nampa 22 716,417 42,408 - 42,408 5.9% $12.76Caldwell 28 972,450 34,170 - 34,170 3.5% $9.54Middleton 10 73,571 6,424 - 6,424 8.7% $9.00Canyon County Total 168 6,964,999 265,203 - 265,203 3.8% $11.57Market Total 654 21,892,712 1,413,840 10,806 1,424,646 6.5% $12.56

MID-YEAR RETAIL VACANCY & ASKING RATES

$18.00

$16.00

$14.00

$12.00

$10.00

$8.00

$6.00

$4.00

$2.00

$0.00

16.0%

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%MY06

MY07

YE06

YE07

YE08

MY08

MY09

MY10

YE09

YE10

YE11

MY11

MY12

MY13

YE12

YE13

MY14

Retail Asking Rate Retail Vacancy

OUTLOOKAs unemployment numbers continue to drop and consumer spending rises, expect the Retail market to experience renewed activity. Retailers with both

effective storefront locations and a healthy online presence should continue to prevail, and thus increase the demand for not only Class A buildings, but

locations as well. Expect rental rates to continue to rise.

Collister Shopping Center


Downto

wn

GC/N.End

/NW

20.0%

16.0%

12.0%

8.0%

4.0%

0.0%

Centra

l Ben

ch

Downto

wn Peri

phery Eag

le

Meridia

n

Southe

ast

Southw

est

West B

ench

Airpor

t

INDUSTRIAL MARKET REVIEWCOLLIERS IDAHO


Downto

wn

GC/N.End

/NW

20.0%

16.0%

12.0%

8.0%

4.0%

0.0%

7.1%

Centra

l Ben

ch

Downto

wn Peri

phery

Eagle

Meridia

n

Southe

ast

Southw

est

West B

ench

5.4%

0.3% 0.2% 0.5%

11.4%

5.8%5.0%

10.4%

19.1%

Airpor

t

OVERVIEWTraditional Industrial warehouse space leveled out around the $0.45 NNN asking rate at the 2014 mid-year.

While, local companies were seeking to expand into bigger spaces, vacancy rates remained low and meeting

both buyer and tenant requirements remained challenging. Not surprisingly, the limited available space led

to landlords granting fewer concessions. Although there was more competition for product, and asking

rates had increased since the 2012 year end, developers did not begin the much anticipated speculative

construction. Building costs remained high in the first half of 2014, together with a continuation of labor

shortage in key trades. To date, 2014 asking rates have not increased enough to justify building risk.

However, evidence of planning activities did begin in the owner-user sector. Although none of the projects

have yet broken ground, the planning alone is significant because speculative development activity of any

kind has been flat for years.

4.9%6.1%

3.8%0.9%

3.9%

8.2% 7.9%

2.5%

16.7%

INDUSTRIAL VACANCY

INDUSTRIAL INVENTORY

1250 E. Iron Eagle Dr.

MARKET INDICATORS

ADA COUNTY

CANYONCOUNTY

VACANCY RATES

ASKING RATES


TRANSACTION Sold

SIZE 6.34 Acres

LOCATION 3680 W. Ustick Rd, Meridian, ID

TRANSACTION Leased

SIZE 12,500 SF

LOCATION 925 N. Franklin Blvd. Nampa, ID

TRANSACTION Leased

SIZE 9,980 SF

LOCATION 801 W. Amity Rd.Boise, ID

TRANSACTION Leased

SIZE 17,648 SF

LOCATION 1250 E. Iron Eagle Dr. Eagle, ID

7.6%



MARKET REVIEW | Q2 2014 | COMMERCIAL | INDUSTRIAL

$0.60

$0.50

$0.40

$0.30

$0.20

$0.10

$0.00

$0.47$0.52

$0.57

$0.40

$0.59

$0.51

$0.41

$0.48$0.45

INDUSTRIAL AVERAGE ASKING RATES

Centra

l

Bench

Downto

wn

Downto

wn

Perip

hery Eag

le

Meridia

n

GC/N.End

/

NWSou

theas

t

Southw

est

West

Bench

Airpor

t

$0.48

INVENTORY AND VACANCYThe Treasure Valley vacancy rate fluctuated very little in the

second quarter of 2014. Ada County increased 1.0% while Canyon

County decreased 1.8% for a net rate of 4.8% – equal to the

vacancy rate at the end of the first quarter. The Airport submarket

showed a jump from 3.3% to 4.9% due largely to the bankruptcy

of private companies and the abandonment of 36,000 square feet.

The West Bench and Southwest submarkets also saw mild

increases, from 8.6% to 10.8% and 5.2% to 6.8%, respectively. In

Canyon County, the Northside submarket retained the highest

vacancy rate at 8.7%.

Asking rates also remained steady. At both the mid-year and year-

end of 2013, the Treasure Valley average was $0.47; a mere one

cent year-to-year and year-to-date difference between the $0.46

NNN average for the first half of 2014. While the Airport and

Garden City/North End/Northwest Boise submarkets exhibited

the largest increases in Ada County, the Central Bench and West

Bench submarkets both showed an $0.08 decrease. In Canyon

County the average rate also dropped slightly by $0.3. The South

Nampa submarket witnessed the greatest increase between

quarters and ended Q2 2014 at $0.46 NNN.

Update - Market ComparisonsIndustrial Market

SUBMARKETPROPERTY

COUNTINVENTORY

(SF)DIRECT

VACANT (SF)SUBLEASE

(SF)TOTAL

VACANTVACANCY

RATEASKING

RATEAirport 112 4,297,818 210,624 - 210,624 4.9% $0.47Central Bench 85 2,630,435 159,562 - 159,562 6.1% $0.52Downtown 13 230,032 8,833 - 8,833 3.8% $0.57Downtown Periphery 34 770,663 7,184 - 7,184 0.9% $0.40Eagle 11 351,896 15,758 - 15,758 4.5% $0.63Meridian 157 4,102,439 181,739 - 181,739 4.4% $0.51N.End/Northwest/Garden City 142 2,191,634 112,870 - 112,870 5.2% $0.43Southeast 97 5,891,114 146,999 - 146,999 2.5% $0.48Southwest 95 1,843,844 196,302 3,104 199,406 10.8% $0.45West Bench 201 7,458,951 478,528 27,567 506,095 6.8% $0.49Ada County Total 947 29,768,826 1,518,399 30,671 1,549,070 5.2% $0.50

Downtown Nampa 22 470,293 - - - - -Idaho Center 72 2,040,907 37,659 - 37,659 1.8% $0.41Karcher 42 2,051,079 16,440 - 16,440 0.8% $0.43Northside Nampa 123 6,051,775 528,064 - 528,064 8.7% $0.41South Nampa 26 817,751 11,728 - 11,728 1.4% $0.46 Caldwell 179 4,951,252 78,390 6,300 84,690 1.7% $0.29Middleton 2 89,824 - - - - -Canyon County Total 466 16,472,881 672,281 6,300 678,581 4.1% $0.40Market Total 1,413 46,241,707 2,190,680 36,971 2,227,651 4.8% $0.46

1,000,000

800,000

600,000

200,000

0

(200,000)

INDUSTRIAL ABSORPTION

SoutheastGC/N.

End/NW

Central Bench

CanyonCounty

West Bench

AirportDowntown

Meridian Southwest

DowntownPeriphery


MARKET REVIEW | Q2 2014 | COMMERCIAL | INDUSTRIAL

OUTLOOKWhile national activity to adjust supply chains in

preparation for the completion of the Panama Canal

expansion this year will undoubtedly create positive

consequences in the Industrial segment for port cities

and other inter-modal hubs, it remains to be seen if

markets without major transit industries will be affected.

Because the Treasure Valley provides satellite distribution

centers for both Portland and Salt Lake City, it will be

interesting to see if activity at the national level will trickle

down to the Boise MSA. Additionally, demand from

e-commerce and third-party logistics providers, as well

as from traditional retailers and manufacturers has

generated increased activity across the U.S. in the

Industrial segment in a wide range of markets – including

secondary and tertiary metros [Marcus & Millichap]. Again,

it remains to be seen whether or not the Treasure Valley

will benefit.

Locally, continue to look for low vacancy rates to push

asking rates up and potentially stimulate speculative

construction. With more opportunities for new site

selection, Canyon County should experience increased

activity.

Update - Average Full Service Asking Rates Industrial Market

SUBMARKET ALL FLEX WAREHOUSEINDUSTRIAL/

MANUFACTURINGAirport $0.47 $0.38 $0.38 $0.43Central Bench $0.52 $0.51 $0.35 $0.45Downtown $0.57 $0.57 - -Downtown Periphery $0.40 - - $0.40Eagle $0.63 $0.63 - -Meridian $0.51 $0.63 $0.44 $0.46N.End/Northwest/Garden City $0.43 $0.45 $0.38 $0.45Southeast $0.48 - $0.46 $0.48Southwest $0.45 $0.59 $0.42 $0.41West Bench $0.49 $0.57 $0.49 $0.42Canyon County $0.40 $0.47 $0.38 $0.37

Averages $0.46 $0.53 $0.40 $0.42

MID-YEAR INDUSTRIAL VACANCY & ASKING RATES

$0.60

$0.50

$0.40

$0.30

$0.20

$0.10

$0.00

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%MY06

MY07

YE06

YE07

YE08

MY08

MY09

MY10

YE09

YE10

YE11

MY11

MY12

MY13

YE12

YE13

MY14

Industrial Asking Rate Industrial Vacancy

1.3%

0.6%

29.7%

0.4%2.9%

INDUSTRIAL INVENTORY

IdahoCenter

Karcher Northside Nampa

SouthNampa

Caldwell

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

1.8%0.8%

14.5%

1.4% 1.7%

INDUSTRIAL VACANCY

IdahoCenter


SouthNampa

Caldwell

16.0%

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

$0.41 $0.43 $0.41$0.46

$0.52

INDUSTRIAL ASKING RATES

IdahoCenter


SouthNampa

Caldwell

$0.60

$0.50

$0.40

$0.30

$0.20

$0.10

$0.00


INVESTMENT MARKET REVIEWCOLLIERS IDAHO


OVERVIEWGlobally, in the first half of 2014, commercial real estate sales totaled $294 billion*, a 27% increase over the

first half of 2013. The Americas represented the greatest growth. The increase in transactional levels nearly

reached a point last seen in 2006. The contributing factor in 2014 versus prior years was more equity targeting

direct commercial real estate [JLL, Global Capital Flows Report Q2 2014 *preliminary statistics].

Nationally, favorable interest rates and the improved lending environment continued to drive new development

and investment activity. The NREI Investor Sentiment Index held steady at 176, equal to the rate reported at

the end of 2013, which exceeded the previous market high in 2005. The first half of 2014 showed a consistent

decrease in Office, Retail and Industrial vacancies, while the Apartment rate held steady. As expected, rental

rates increased and should continue to rise steadily over the next year in all four segments. Capitalization rates

continued to drop as investors seeking better returns in the real estate market encountered a lack of quality

product to purchase.

Locally, the Treasure Valley continued to experience steady growth, adding over $450 million in new and

completed projects during the first half of 2014. Completed projects included 8th & Main, Trader Joe’s, and the

Owyhee Plaza. Newly approved and under construction projects included: City Center Plaza, JUMP, Simplot

Headquarters , the 951 Apartments, the Depot Lofts, and the Lusk Street neighborhood apartment complexes

– Boise Heights, Rivers Edge, West Sherwood , and Lusk Place. In fact, year to date construction on new

apartment units totaled over 1, 500; over half of which will be located in the Lusk Street neighborhood. Other

projects such as the Owyhee Plaza, the 951 Apartments, and the Depot Lofts will provide additional housing

opportunities in the downtown Boise submarket. The City of Boise also awarded the RMH Company their bid

on the property at 9th and River streets, where plans to bring twenty-six residential condominiums to the

market are underway.

John Alden Building


COMPANY Orchard Place Apartments

TRANSACTION Sold

SIZE 8.57 Acres

LOCATION 450 Orchard Pl.Nampa, ID

COMPANY St. Luke’s Surgery Center

TRANSACTION Sold

SIZE 21,430 SF

LOCATION 520 S Eagle Rd.Meridian, ID

COMPANY John Alden Building

TRANSACTION Sold

SIZE 50,030 SF

LOCATION 1005 W. Main St.Boise, ID

COMPANY Boulder Creek Apartments

TRANSACTION Sold

SIZE 136 Units on 7.18 Acres

LOCATION 5661-5713 N. Garrett St.Garden City, ID

COMPANY IHOP NNN leased restaurant

TRANSACTION Sold

SIZE 4,900 SF

LOCATION 1420 Caldwell Blvd.Nampa, ID

11.010.09.08.07.06.05.04.03.02.01.00.0

Year-Over-Year Unemployment Change

National Unemployment Rate (June)

Idaho Unemployment Rate (June)

18,000

13,000

8,000

3,000

-2,000

-7,000

-12,000

ANNUAL UNEMPLOYMENT MID-YEAR

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

*201

4

*May preliminary figuresSource: U.S. Department of Labor - Bureau of Labor Statistics



MARKET REVIEW | Q2 2014 | COMMERCIAL | INVESTMENT

CAPITALIZATION RATESThe national average capitalization rate was around 6.25% at the close

of the second quarter of 2014, which was largely skewed due to heavier

volume in Apartments and Retail. The decreasing trend in cap rate values

was attributed to an expectation that rising rental rates will increase

income. [National Real Estate Investor]

In the Treasure Valley, building costs remained high in the first half of

2014, along with a continuation of labor shortage in key trades. Interest

rates remained low. These factors together created a year-to-date market

that was favorable to sellers. “New money” continued to chase the local

market in search of opportunities for both redevelopment and new

development.

SEGMENT TREASURE VALLEY CAPITALIZATION RATES

Industrial: Very little activity. Averages around 7.5%

Office: Relatively high averages, around 8.25%

Retail: Strong retail centers average in the mid 6% range, The lowest single tenant NNN national credit at 6% or lower

Multi-Family: Average for the period was 6.25%

OUTLOOK• The demand for quality investment properties along with favorable interest rates will continue to keep capitalization rates low. However, an improving job market may push interest rates up.

• The development momentum generated in the last nine months should continue with a surge of more residential housing options in the downtown neighborhood. The submarket remains under-served and demand continues to increase.

• The addition of more Class A office space and the redevelopment of existing Class B office space may attract new tenants looking to move.

• Rental rates may experience a nominal increase in all asset types.

8.0%

7.0%

6.0%

5.0%‘10 ‘ 1 1 ‘ 12 ‘ 13 ‘ 14

APARTMENTS

MID-YEAR AVERAGE CAP RATES

8.0%

7.0%

6.0%

5.0%‘10 ‘ 1 1 ‘ 12 ‘ 13 ‘ 14

RETAIL

8.0%

7.0%

6.0%

5.0%‘10 ‘ 1 1 ‘ 12 ‘ 13 ‘ 14

OFFICE

8.0%

7.0%

6.0%

5.0%‘10 ‘ 1 1 ‘ 12 ‘ 13 ‘ 14

INDUSTRIAL

Source: RC Analytics


LAND MARKET REVIEWCOLLIERS IDAHO


OVERVIEWTreasure Valley new home building slowed over the first half of 2014. A total of 1,589 single-home permits

were issued in Southwestern Idaho from January through the end of Q2 2014. The permit totals were down

greatly compared to the first half of 2013, when 2,039 permits were issued through the first week of June

– a 22% difference. However, the issuance of new home permits over the last six years remained high.

In Ada County, the six year peak in issued new home permits occurred in Q2 2013, with a 26.8% increase

over the previous quarter, and an 86.1% increase over Q1 2008. In contrast, the 2014 Q2 to Q1 quarterly

increase was merely 1.6%, and only a 40.6% increase over Q1 2008; indicating new home construction

activity slowed compared to the same time last year, but was still strong compared to the depressed activity

six years ago. In Canyon County, while obtained new home permits did not peak in Q2 2013, they were still

the highest they had been since Q1 2008. The trend decreased from Q2 2013 to Q1 2014, but jumped an

impressive 46.4% from Q1 to Q2 2014.

The total number of new and existing homes sold in Q2 2014 vs. Q2 2013 was greater at least slightly in

every select city except Meridian and Kuna, which were down by 133 and 10 respectively. The drop in home

sales in Meridian was great enough to negate the nominal gains in other cities for a net loss of 73 home

sales compared to the same time last year. While the total number of home sales was down compared to

Q2 2013, the level remained much higher than years past.

The mid-year 2014 median new home prices in Ada County were down 11.4% compared to mid-year 2013;

however, they were up from $180,000 in Q1 2014 to $195,000 in Q2 2014 – an 8.3% increase. In Canyon

County the median new home prices at the mid-year 2014 rose 4.6% compared to mid-year 2013, but

dropped from $137,470 in Q1 2014 to $124,900 in Q2 2014 – a 9.1% decrease.

Snake River near Melba


COMPANY Walter’s Butte

TRANSACTION Sold

SIZE 620 Acres

LOCATION 7830 Warren Spur Rd.Melba, ID

COMPANY Knight Sky Subdivision

TRANSACTION Sold

SIZE 10 Acres

LOCATION 6555 N. Linder Rd.Meridian, ID

Update - Median Home Price by Selected Cities Land Market

ADA COUNTY CANYON COUNTYTREASURE VALLEY

MEDIANBoise Garden City Eagle Star Kuna Meridian Nampa Caldwell Middleton

Q2 2006 $226,541 $224,034 $389,900 $239,000 $193,230 $256,005 $168,125 $148,998 $199,669 -Q2 2007 $238,902 $211,136 $375,000 $285,900 $186,918 $257,427 $164,518 $153,026 $195,000 $225,019Q2 2008 $215,205 $204,815 $378,500 $201,000 $160,000 $220,693 $149,481 $131,686 $176,800 $202,907Q2 2009 $184,397 $160,533 $264,000 $178,522 $137,500 $182,689 $117,396 $101,835 $146,000 $169,527Q2 2010 $159,557 $141,784 $253,500 $145,000 $122,500 $168,949 $99,270 $90,161 $130,000 $143,392

Q2 2011 $150,501 $130,962 $290,000 $134,500 $93,000 $158,392 $80,713 $68,841 $110,000 $132,731Q2 2012 $179,936 $142,929 $312,100 $168,200 $116,250 $174,154 $101,222 $79,148 $140,500 $155,565Q2 2013 $207,821 $175,944 $343,500 $198,190 $146,471 $208,076 $129,980 $109,454 $170,750 $187,067Q2 2014 $223,759 $175,986 $330,000 $249,900 $147,750 $221,479 $138,491 $116,819 $189,246 $198,732



MARKET REVIEW | Q2 2014 | COMMERCIAL | LAND

$240,000

$220,000

$200,000

$180,000

$160,000

$140,000

$120,000

$100,000 Q2

2006 Q2

2007 Q2

2008 Q2

2009 Q2

2010 Q22011

Q22012

HOME SALES VS. MEDIAN HOME PRICENumber of Homes Sold Median Home Price

Q22013

Q22014

1600

1400

1200

1000

800

600

400

200

0 2008 Q2

2009 Q2

2010 Q2

2011 Q2

2012 Q2

2013 Q2

2014 Q2

Q2 NEW HOME PERMITS VS. MEDIAN HOME PRICESAda County

PermitsCanyon County

PermitsMedian Home Price

Ada CountyMedian Home Price

Canyon County

SUPPLY & DEMANDLand development activity was focused on larger retail, multi-family and

single-family detached projects, as well as smaller infill projects –

particularly in Ada County. In Canyon County, some single-family

detached development activity was seen especially in North and West

Nampa.

OUTLOOKThe national housing recovery is expected to continue. However, capital

regulations on bank lending and failure by Congress to reform Fanny Mae

and Freddie Mac, or to provide a bail out for the FHA will translate into

fewer new housing construction starts. Going forward, in the Treasure

Valley, expect to see continued demand for residential and retail

development land, both on the edge of town and especially infill.


VALUATION & ADVISORY SERVICESCOLLIERS IDAHO


OVERVIEW

INTEREST RATES

The Federal Reserve announced the end of the third round of quantitative easing (QE3) will occur in October 2014, and as a result, most economists now expect interest rates to increase in 2015. The bond market will likely be ahead of the Federal Reserve announcement and it appears increasingly likely that the market will push 10-year yields above 3% by year-end.

ORIGINATION VOLUME

In commercial real estate, debt outstanding increased in Q1 2014 by $11.1 billion. Banks led the way with 36% of total debt outstanding, followed by Commercial Mortgage-Backed Securities (CMBS) at 21.7%, and Government Agency at 15.3%. Total debt outstanding continued to increase but at a slower rate than the previous two quarters [MBA, Federal Reserve, and FDIC]

COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) VOLUME AND UNDERWRITING

Issuance for the first half of 2014 was $25.8 billion, down 2.8% from the first half of 2013 and on-pace to

exceed $50 billion for the year. Credit quality in the majority of 2014 CMBS issuances continued to deteriorate.

As loan-to-value (LTV) ratios increase, debt service coverage ratios (DSCR) fall, and interest-only loans gain

greater market share.

CONSOLIDATION

Continuing the recent local consolidation trend, two banks were acquired by regional competitors: Syringa

Bank was acquired by SunWest Bank for less than $10 million via an FDIC and Idaho Department of Finance

transfer; and Idaho Banking Co. was acquired by DL Evans Bank for $10 million via Bankruptcy court auction.

DL Evans outbid both Banner Bank and SunWest Bank for the business.

VALUATION & ADVISORY SERVICES

New to the Boise Office! Valuation and Advisory Services deliver insight into a property’s fundamentals, its

competitors and the overall market dynamics which, affect value, both now and in the future and include the

following:

• Appraisal Review/Management

• Arbitration and Consulting

• Discounted Cash Flow Analysis

• Feasibility Studies

• Highest and Best Use Studies

• Insurance Valuation

• Investment Analysis

• Lease and Cost Analysis

• Litigation Support

• MHC Practice Group

• Portfolio Valuation

• Single Asset Valuation

• Tax Appeals


PG. 17

INVESTMENT BROKERAGE

LINCOLN [email protected]

BRYANT [email protected]

MIKE CHRISTENSENRetail [email protected]

LEW GOLDMANRetail [email protected]

BROOK BLAKESLEERetail [email protected]

JOHN [email protected]

JIMMY [email protected]

MIKE PEÑ[email protected]

INDUSTRIAL BROKERAGE

GEORGE ILIFFManaging Owner & Office [email protected]

MANAGEMENT

STEVE [email protected]

DEVIN OGDEN, [email protected]

RICK [email protected]

CLAY ANDERSON CPA,MBA [email protected]

MATT PALMER [email protected]

SHANNA RONDEAUTransaction Coordinator208.472.2854 [email protected]

SCOTT [email protected]

GREG MACMILLAN [email protected]

JAMIE [email protected]

OFFICE BROKERAGE LEW MANGLOS CCIM,[email protected]

LAND BROKERAGE

RETAIL BROKERAGE

PROPERTY MANAGEMENT

MIKE ATTIANI, CCIMDirector of Property [email protected]

PETER DRAPERSr. Project [email protected]

DAVE FERNANDEZDirector of [email protected]

LINDA KINGBroker Assistant [email protected]

CHRISTINA TURNERResearch [email protected]

ROBIN RICHARDSBroker [email protected]

ALEXA SAKOLSKYBroker [email protected]

MARKETING & RESEARCH

CANYON COUNTY BROKERAGE

MARKET REVIEW | Q2 2014 | COMMERCIAL | COLLIERS IDAHO

TRACIE HOLSTINEGraphic Designer [email protected]

VALUATION & ADVISORY SERVICES

ANDREW BOESPFLUGSr. Valuation Services [email protected]

2014 q2 report final

Documents

Transcript of 2014 q2 report final