Our observations, for the Treasure Vally, confirm that "commercial real estate follows roof tops."
With the increase in the overall population of the area, there has been steady growth in the commercial real estate market in the Boise SMSA throughout 2007 with a particularly up-tick in the 4th Quarter which has continued into 2008. There has been a notable shift from building acquisition (purchasing) to leasing with options to purchase and / or lease options to grow within the same commercial complex.
Empirically, our observation is that the commercial market is healthy and growing over all; most likely a “commercial follows roof tops” observation. Boise Valley Commercial Real Estate (http://www.BVCRE.com ) is an example of the healthy market as we just teamed up to form this new commercial real estate company this week to better serve the growing market. BVCRE does have one case study (an office building on the bench) where we can show you that we’ve increased the tenant base by 25% in the last 6 months alone after the building sat dormant for the previous 6 months to a year prior to our client’s acquisition.
Property searches & placements during the last half of 2007 (and continuing into 2008) have been for more “proven / core” locations. What that means is that Tenants / Buyers are looking for properties in the Meridian – Boise – Garden City – Eagle areas now more than in the outlaying areas. Put another way, during late 2006 & through the first half of 2007 we had more searches in the outlaying areas than we do now. Also notable is that the majority of our recent placements have been for out of state companies with a smattering of companies moving from within the state to the core Boise – Meridian – Nampa markets.
Another trend we see is for leasing rather than buying since mid-2007. We commonly get feedback along the lines that the client would like to buy, but wants to watch to see how the economy does over the coming year. We are often asked to find properties with lease-options (to buy). Very often, that is an initial search criteria.
Yet another trend we are seeing is in the start-up sector. We are working with a number of clients who are now pursuing new careers. As a group, this segment tends to be cautious, but excited to break out on their own.
During the later part of 2007 and continuing through now, the commercial market seemed to become intensified. Our general observation is that tenants seemed to shrug off the perceived negativity of the housing market and lean towards a general confidence in the commercial real estate market, while not over committing themselves by acquiring (purchasing) properties and they are looking for properties where they can potentially grow into contiguous space.
In summary, during the latter part of 2006 & continuing into 2007, Tenant seemed to have a general perception that they needed to be conservative, then began to shrug off those concerns to the point where they began committing to leases, without over committing to purchasing their own commercial properties. That led to an uptick in searches for lease-options; to hedge their bets, so to speak.
Scott Nicholson
890-3939