Market Name Office QX 2018 · 2019-03-06 · Cushman & Wakefield (NYSE: CWK) is a leading...
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Q4 17 Q4 18 12-Month Forecast Vacancy 9.2% 7.04% Under Construction (sf) 395,000 241,948 Average Asking Rent* $17.10 $17.33 paccra.com BOISE Office Q4 2018 MARKETBEAT Economy The Boise MSA continues to be a significant market that attracts new businesses, with several 10,000+ square feet (sf) tenants moving to the valley over the course of 2018. This year also marked eight years of positive job growth, now at 2.6%, and a decreasing unemployment rate, currently at 2.5% (5 consecutive years below national average). Population growth has gradually increased, now at a rate of 1.8%, almost 3 times the U.S. growth rate. Growth in Boise’s economic sectors have increased competition in the labor market, driving wages up and leading towards greater human capital migration. Established Boise companies have not remained stagnant, they continue to expand and improve their workplace in order to retain market power. Market Overview The Boise Office Market remains strong. Jacobs Engineering, Vacasa, Office Evolution, and Kount Inc., all leased large office spaces in Downtown Boise. Construction of a new 826 car parking garage at the Pioneer Crossing development has relieved pressure on downtown parking and provided pre-leasing success for the Pioneer Crossing office building. The proposed project at 11th & Idaho already has sufficient parking in their existing structure to meet the demand of the new building. Tenants who relocate to new areas have created opportunities for redevelopment and releasing in secondary markets. Overall rental rates remained steady in 2018 with only a slight increase, $17.33 for Q4 2018 on a per square foot (psf) full service basis. Stagnant rates were compromised with less landlord discounts on asking rents and less free rent than in years past. We are seeing a shift from hospitals to private practices in the medical field. Physicians are looking to purchase or lease space separate from hospitals throughout the valley. The Investment market has limited available inventory, yet Boise still has attracted Investors nationwide. Cap rates average around 7%, with the stronger tenant and fully leased buildings averaging closer to 6.5% Construction costs are a variable threatening speculative builds in the area, and has increased the amount of proposed build-to-suit developments. Nonetheless, in Q1 2019, two major office buildings (Brighton & Pioneer Crossing), over 200,000 square feet (sf) of office, will finish construction. With vacancy at a low 7.04%, the demand for space is soaring, allowing for developers to stomach some construction costs in hopes to achieve pro-forma rents once delivered. Rafanelli & Nahas will start construction on 11 th & Idaho that will consist of 191,000 sf on 10 floors, and are currently working with tenants for the building. The Village in Meridian has plans to expand 225,000 sf of Office and Retail as well, and will begin construction as soon as mid-year 2019. Outlook The Boise market will continue to see growth with expanding existing tenants and potential new companies coming to enjoy the great lifestyle and low costs of living. Office development and new construction will persist in the CBD and along the I-84 freeway with currently planned projects having the inside lane on landing new, larger tenants to the market. Rents will continue to rise as a result of increased construction costs, limited second generation inventory, and new inventory that will require higher rental rates. BOISE OFFICE Overall Vacancy Average Asking Rate by Class Q4 Asking Market Indicators (Overall, All Classes) Economic Indicators Q4 17 Q4 18 12-Month Forecast Boise Employment 321k 329k Boise Unemployment 2.8% 2.5% U.S. Unemployment 4.1% 3.7% *Rental rates reflect full service asking$psf/year for buildings 5,000 s.f. and up. 5% 7% 9% 11% 13% 15% 2014 2015 2016 2017 2018 Overall Vacancy 5-yr Average Historical Avg 9.9% $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00 $24.00 Boise Eagle Meridian Nampa/Caldwell Class A Class B Class C
Transcript of Market Name Office QX 2018 · 2019-03-06 · Cushman & Wakefield (NYSE: CWK) is a leading...
Q4 17 Q4 1812-Month Forecast
Vacancy 9.2% 7.04%
Under Construction (sf) 395,000 241,948
Average Asking Rent* $17.10 $17.33
paccra.com
BOISEOffice Q4 2018
MARKETBEAT
EconomyThe Boise MSA continues to be a significant market that attracts new businesses, with several 10,000+ square feet (sf) tenants moving to the valley over the course of 2018. This year also marked eight years of positive job growth, now at 2.6%, and a decreasing unemployment rate, currently at 2.5% (5 consecutive years below national average). Population growth has gradually increased, now at a rate of 1.8%, almost 3 times the U.S. growth rate.
Growth in Boise’s economic sectors have increased competition in the labor market, driving wages up and leading towards greater human capital migration. Established Boise companies have not remained stagnant, they continue to expand and improve their workplace in order to retain market power.
Market OverviewThe Boise Office Market remains strong. Jacobs Engineering, Vacasa, Office Evolution, and Kount Inc., all leased large office spaces in Downtown Boise. Construction of a new 826 car parking garage at the Pioneer Crossing development has relieved pressure on downtown parking and provided pre-leasing success for the Pioneer Crossing office building. The proposed project at 11th & Idaho already has sufficient parking in their existing structure to meet the demand of the new building. Tenants who relocate to new areas have created opportunities for redevelopment and releasing in secondary markets.
Overall rental rates remained steady in 2018 with only a slight increase, $17.33 for Q4 2018 on a per square foot (psf) full service basis. Stagnant rates were compromised with less landlord discounts on asking rents and less free rent than in years past. We are seeing a shift from hospitals to private practices in the medical field. Physicians are looking to purchase or lease space separate from hospitals throughout the valley. The Investment market has limited available inventory, yet Boise still has attracted Investors nationwide. Cap rates average around 7%, with the stronger tenant and fully leased buildings averaging closer to 6.5%
Construction costs are a variable threatening speculative builds in the area, and has increased the amount of proposed build-to-suit developments. Nonetheless, in Q1 2019, two major office buildings (Brighton & Pioneer Crossing), over 200,000 square feet (sf) of office, will finish construction. With vacancy at a low 7.04%, the demand for space is soaring, allowing for developers to stomach some construction costs in hopes to achieve pro-forma rents once delivered. Rafanelli & Nahas will start construction on 11th & Idaho that will consist of 191,000 sf on 10 floors, and are currently working with tenants for the building. The Village in Meridian has plans to expand 225,000 sf of Office and Retail as well, and will begin construction as soon as mid-year 2019.
OutlookThe Boise market will continue to see growth with expanding existing tenants and potential new companies coming to enjoy the great lifestyle and low costs of living. Office development and new construction will persist in the CBD and along the I-84 freeway with currently planned projects having the inside lane on landing new, larger tenants to the market. Rents will continue to rise as a result of increased construction costs, limited second generation inventory, and new inventory that will require higher rental rates.
BOISE OFFICE
Overall Vacancy
Average Asking Rate by ClassQ4 Asking
Market Indicators (Overall, All Classes)
Economic Indicators
Q4 17 Q4 18 12-Month Forecast
Boise Employment 321k 329k
Boise Unemployment 2.8% 2.5%
U.S. Unemployment 4.1% 3.7%
*Rental rates reflect full service asking$psf/yearfor buildings 5,000 s.f. and up.
5%
7%
9%
11%
13%
15%
2014 2015 2016 2017 2018
Overall Vacancy 5-yr Average
Historical Avg 9.9%
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
$22.00
$24.00
Boise Eagle Meridian Nampa/Caldwell
Class A Class B Class C
BOISEOffice Q4 2018
MARKETBEAT
Key Sales Transactions 2018
Key Lease Transactions 2018
SUBMARKET
INVENTORY(SF)
OVERALL VACANT (SF)
DIRECT VACANT (SF)
SUBLET VACANT (SF)
DIRECT VACANCY
RATE
OVERALL VACANCY
RATE
UNDER CONSTR
(SF)
OVERALL AVERAGE
ASKING RENT
FULL SERVICE AVERAGE
ASKING RENT
Airport 258,721 13,454 13,454 0 5.20% 5.20% 0 $13.00 $13.50
Central Boise 2,665,228 249,908 247,626 2,282 9.29% 9.38% 0 $13.46 $13.45
CBD 6,372,444 549,329 497,139 52,190 7.77% 8.59% 127,559 $20.05 $20.91
Eagle 956,575 37,383 37,383 0 3.91% 3.91% 0 $17.38 $18.50
Meridian 4,073,138 301,284 275,692 25,592 6.77% 7.40% 114,389 $18.25 $19.06
Nampa/Caldwell 2,172,773 122,725 122,725 0 5.65% 5.65% 0 $14.38 $16.14
North Boise 762,120 69,657 69,657 0 9.14% 9.14% 0 $15.43 $17.08
Southeast Boise 2,173,659 83,995 80,172 3,823 3.69% 3.86% 0 $18.16 $18.75
Southwest Boise 966,322 71,039 71,039 0 7.35% 7.35% 0 $17.25 $17.25
West Boise 4,871,685 280,102 255,646 24,456 5.25% 5.75% 0 $14.01 $14.96
BOISE TOTALS 25,272,665 1,778,876 1,670,533 108,343 6.61% 7.04% 241,948 $16.30 $17.33
TYPE INVENTORY(SF)
OVERALL VACANT (SF) DIRECT VACANT
(SF)SUBLET VACANT
(SF)
DIRECT VACANCY
RATE
OVERALL VACANCY
RATE
UNDER CONSTR
(SF)
OVERALL AVERAGE ASKING
RENT
FULL SERVICE AVERAGE
ASKING RENT
Class A 7,621,619 574,024 566,379 7,645 7.43% 7.53% 241,948 $20.87 $21.30
Class B 14,248,722 1,035,364 942,572 92,792 6.62% 7.27% 0 $15.57 $16.42
Class C 3,402,324 169,488 161,582 7,906 4.75% 4.98% 0 $13.07 $14.12
*Reflects data from buildings 5,000 s.f. and above, in all classes.
Under Construction 2018
PROPERTY SF BUYER/SELLER PRICE / $PSF SUBMARKET
720 E Park Blvd 552,490 St Luke’s Health System/ City Office REIT $86,400,000 / $156.38 Southeast
5777 Meeker 98,574 WAFD/ Hopkins Real Estate Investments $15,250,000 / $154.70 West Boise
Sonoma Square 24,758 Sonoma Square Associates LLC/ BumhamFarms
$4,286,000 / $173.12 Meridian
PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
One Capital Center 34,308 Vacasa New Lease CBD
John Alden Building 33,432 Kount, Inc New Lease CBD
One Capital Center 27,900 Jacobs Engineering New Lease CBD
PROPERTY SF DEVELOPER COMPLETION DATE SUBMARKET
Pioneer Crossing 127,559 Ball Ventures Q1 2019 CBD
Brighton Building 85,000 Ball Ventures Q1 2019 Meridian
Statistical Methodology: Cushman & Wakefield Pacific tracks all properties in the market; however, only for-lease properties 5,000 square feet and larger are used for the provided statistics.
BOISEOffice Q4 2018
MARKETBEAT
OFFICE SUBMARKETSBoise
Cushman & WakefieldPacific398 S 9th StBoise, ID 83702paccra.com
For more information, contact:Isaac Avila, Brokerage Research AdministratorTel: +1 [email protected]
About Cushman & WakefieldCushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value by putting ideas into action forreal estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees inapproximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and projectmanagement, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWakeon Twitter.
©2019 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed tobe reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.
