A June meeting brought forward some great news about West End development plans, but it also brought to light some concerns with long term connectivity and parking solutions. By 2020, there is over $150 million of planned development in the West End and the need for over 1500 parking spaces, which could amount to over 10 acres if it were all surface parked. In the coming months and years, these developments need a cohesive strategy to realize a synergistic vision.
As one of the nation’s fastest growing community colleges since its inception, CWI is investigating how to best handle the demand for educational services. Part of this plan is likely to include expansion on its current campus in Canyon County and also ideas on how to best grow an Ada County campus. In the next several months we will be learning more on how CWI plans to finance its growth and become a catalyst for further development within the West End.
We read lots of headlines on how our real estate market is doing great downtown, but being a numbers guy, I want to the know the facts! Our good friends at Thornton Oliver Keller and Colliers put out great market research reports, and I take particular interest in the bi-annual publications. Both 2013 mid-year reports came out in July, and I thought I would share some of the highlights I pulled from the reports.
Interesting Downtown Facts
Now going forward, what do we see or can we predict anything? Here a couple things I foresee happening:
We're small time.
In a world that seems to be moving away from the personal touch and attention to detail, I am predicting a "swing to real" where people interact with people, bigger doesn't always mean better, and quality over quantity will have meaning again. I have been working with Rizen Creative, and I knew they had figured out Story Commercial when they came up with this ad for me. Cheers to small time!
There are several new developments in the downtown office market relevant to your downtown property. With cranes in the sky and recent shifts in tenants, it is wise to make some educated guesses as to what may happen in the next couple years.
First of all, the downtown Boise office market is comprised of about 5.5M square feet with a current vacancy in the 6 – 8% range (TOK and Colliers year-end reports). Since those year-end reports, there has been another ~100,000sf of downtown office space that has gone vacant or will go vacant this year (~2% vacancy).
In 2014, the 8th and Main project will add ~237,000 square feet of office, with the vast majority of that occupied space pulling tenants from neighboring properties. Using current net absorption numbers (~50,000 square feet / year) and the added inventory, this building could push vacancy up by an additional ~3%.
Also relevant, the Simplot Company is planning a ~300,000sf headquarters for 2015. When they vacate their current location, and if downtown offices absorb (net) another 50,000 square feet, the vacancy by the end of 2015 may jump another ~3%.
Just using these rough estimates, it is quite possible office vacancy could jump by ~8% in the next 3 years sending vacancy to 14 – 15%. In addition, some of this vacant space is due to tenants leaving the downtown market. This means fewer employees giving money to our retailers for lunch or happy hour beers, and this could impact our retail market as well.
Right now people are very optimistic about our downtown real estate market because of new projects (8th & Main, Whole Foods, JUMP, Trader Joes, 10 Barrel Brewing), which is great. I hope more employment comes to downtown so this rise in vacancy doesn’t occur, but I’m a realist.
I am reading “The Intelligent Investor” by Benjamin Graham (a mentor to Warren Buffet), and he says, “Sell to optimist and buy from pessimist.” With our current state of the downtown real estate market, this quote is very fitting.
If you would like to discuss your situation, give me a call anytime, and we can chat about some of the options.