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.
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.
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