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The Idaho Satesman reported on some upticks in vacancy rates in the Boise Valley Commercail Real Estate Market today. When you analyze the article in light of the fulfillment process and existing vacancies, you'll see that we are in a great investment and tenant situation. Once again, the Boise Valley proves to be a great investment and business location. shhhhhh, don't tell anybody........ On the heels of my earlier blog on suspicious CAP rates, the idaho Statesman discusses higher vacancy rates, particularly in the retail & office segments.
Okay, so I got a little joy over being right about someone pushing their product just a little too hard. I think the term "Buyer Beware" comes to mind.
Other than just gloating for a moment, what else can we learn from today's article?
There does seem to be some uptick in the vacancy rates. Now, sit back, take a breath and analyze what is being said.
When you sit back and actually consider all the moving parts, the reality is that there is a tremendous amount of strength in the Boise Valley Commercial Real Estate Market.
Sure, the activities related to Albertson's has created some temporary weakness in the office segment and the retail segment has seen vacancies rise as well - for other reasons (e.g.; new construction), but that is the nature of the beast isn't it?
What we are seeing is the normal business cycle. Developers see market needs, they fulfill those needs, sometimes causing temporary oversupply. The rule of thumb is: Concept to Conception takes 18 months, so once a shortage in a market segment is recognized, it takes about 18 months to fulfill that need. In the meantime / during that process, anomalies come & go creating short-term market swings.
One interesting point that was obvious by its absence is that the industrial / flex market vacancy rate is still under 6%. That's a great sign for the Boise Valley and greater still for investors & developers in that market segment. The other good news for tenants is that, even with that low vacancy rate, lease rates still continue to be affordable and that's Great News for tenants and tells us that investors / building owners in the industrial / flex market segment are more interested in having a healthy market than trying to take advantage over short term product shortages!
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