boise meridian eagle kuna nampa caldwell q3 2020 …€¦ · despite a worldwide pandemic, the...

Q1 2021 OFFICE

MARKET REPORT

B O I S E M E R I D I A N E A G L E K U N A N A M PA C A L D W E L L

YOUR GUIDE TO THE BOISE VALLEY’S OFFICE MARKET

Information deemed reliable, but not guaranteed. © 2021 TOK Commercial. All rights reserved.

CALDWELL

NORTH

NAMPA

EAGLE

MERIDIAN

SOUTH MERIDIAN

WEST

SOUTHWEST

AIRPORT

CENTRAL

DOWNTOWN

SOUTHEAST

MIDDLETON STAR

KUNA

SUBMARKET MAP

250 S . 5th St reet , 2nd Fl r Bo ise , Idaho | 208 .378 .4600 | tok commerc ia l .com

To subscribe to our Market Reports, email us: info@tokcommercial.comContributors: Kristi Larson, Taylor Hill & Savannah Willits

Q1 2021 OFFICE

MARKET REPORT

OFFICE MARKET

MARKET SNAPSHOT

563,000 SQ. FEETNET ABSORPTION

7.3%TOTAL VACANCY

$18.00AVERAGE FLSV LEASE RATE (ANNUALLY)

ANNUAL QUARTERLY

ANNUAL QUARTERLY

ANNUAL QUARTERLY

tokcommercial.com

MARKET SUMMARYThe way in which some companies use office space underwent a seismic shift in 2020 due to COVID-19. The year began with total vacancy at just 5.8 percent and some businesses, especially in or near Downtown, looking for

parking spaces for their increasing headcount. However, with the shift of many employees working from home, the Office market saw a substantial uptick in sublease space. Prior to the pandemic, there had been 150,000

square feet of sublease space available. By the end of 2020, that amount had grown to nearly 360,000 square feet.

Couple this newly available sublease space with the 1,026,000 square feet of new construction (a record year), and office tenants suddenly had significantly more choices in where to lease space. Of the new construction,

nearly half of it was speculative, though many of the newly completed Class A projects had seen strong pre-leasing. Total vacancy ended the year at 7.3 percent, still at a very healthy level. Projected office supply is 14

months, within the market range of 6 to 18 months. Meridian and South Meridian saw the largest amount of new product delivered, yet they also remain within the healthy supply range (11 and 17 months, respectively).

Net absorption for 2020 was 563,000 square feet, with nearly 80 percent of absorption occurring in the fourth quarter alone. A sizable portion of the Q4 activity occurred in newly completed buildings in Meridian and

Downtown Boise. This new product also had an impact on Class A lease rates for the market, which rose over $2.00 per square foot since the end of 2019 to $22.00. Overall asking rates also increased from $17.40 to $18.00

per foot (annual, Full Service).

Similar to what has been seen for years in the residential market, the Boise MSA remains high on the list for many companies looking to relocate from coastal markets. Calls from out-of-state companies looking to relocate back

office/administrative support continue to be commonplace. With the new construction that has been delivered, and the available sublease space, the Boise market finally has options for such relocations. In 2020, 29 percent

of the space leased in the Boise MSA was from businesses new to the area. Another 30 percent of deals were local companies that were expanding with additional locations or growing into larger spaces.

Lease rates will likely remain flat for the first part of 2021 as the new product is being absorbed. Class B office rates could get more competitive as they compete with sublease availabilities, however new construction rates

will remain near record highs as the cost of tenant improvements has not seen any decline. Tenants may seek a slightly lower rate, or higher improvement allowance, in exchange for longer lease terms.

New construction will remain strong in 2021, though it will likely slow from the record high volume of 2020. More buildings will be completed at the Ten Mile Crossing project in Meridian, as well as new projects in Eagle

such as the PetIQ headquarters and Intuit’s second building at Lakemoor.

OFFICE CONDITIONS

OFFICE OUTLOOK

OVER ONE MILLION SQUARE FEET OF NEW CONSTRUCTION WAS DELIVERED IN 2020.

NEARLY 30 PERCENT OF TRANSACTIONS IN THE PAST YEAR WERE WITH NEW TO THE MARKET TENANTS.

TAKEAWAYS:

5 t o k c o m m e r c i a l . c o m

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

2013 2014 2015 2016 2017 2018 2019 2020

Class A Asking Rates Class A Actual Rates

Overall Asking Rates Overall Actual Rates

OFFICE MARKET STATS

 ‐

 100,000

 200,000

 300,000

 400,000

 500,000

 600,000

 700,000

 800,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

SQU

ARE

FEE

T

TOTAL VACANCY increased from 5.8 PERCENT in 2019 to 7.3 PERCENT at the end of 2020.Vacancy in DOWNTOWN BOISE (11.5%) reached an HISTORICAL HIGH.

*Annual Full Service Lease Rates

Overall ASKING RATES are the HIGHEST on record.MERIDIAN CLASS A asking rates rose to $24.50/SF, their highest level.

DOWNTOWN had the the LOWEST net absorption in 2020, with NEGATIVE 212,100 SF. PROJECTED SUPPLY increased to 14 MONTHS in 2020, primarily due to NEW CONSTRUCTION.

NET ABSORPTION

LEASE RATE TRENDS VACANCY TRENDS

VAC

AN

CY

RATE

0%

5%

10%

15%

20%

25%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total Vacancy: Includes All Buildings

Multitenant Vacancy: Excludes Single‐Tenant Buildings

LEA

SE R

ATE

S

In 2020, 35% of deals were with HEALTH SERVICES | MEDICAL tenants, up from 17% in 2019. FINANCIAL and INSURANCE tenants leased nearly 55,000 SF of space.

TRANSACTION BY BUSINESS TYPE

35%

24%

11%

8%

8%

6%5% 3%

Health Services, Medical Financial, Insurance, Real Estate, Legal Services

Technology Architecture/Engineering

Government Business Services

Other Education

*Based on transactions in 2020

6 t o k c o m m e r c i a l . c o m

OFFICE MARKET ACTIVITY

SOUTH MERIDIAN78,000 SFLEASED TO PILLPACK

SOUTHEAST BOISE29,200 SFLEASED TO MARVELL SEMICONDUCTOR, INC.

SOUTHEAST BOISE13,400 SFOCCUPIED BY DELTA DENTAL

CENTRAL BOISE20,000 SFSOLD TO ADA COUNTY

DOWNTOWN14,900 SFLEASED TO BROWN & CALDWELL

MERIDIAN60,500 SFLEASED TO PERSPECTA

SOUTH MERIDIAN85,100 SFLEASED TO ICCU & COMPUNET INC.

MERIDIAN89,400 SFLEASED TO AMERIBEN & JUB ENGINEERS

CENTRAL BOISE19,200 SFOCCUPIED BY CHILDREN’S THERAPY PLACE

BLACKSTONE BUILDING EAGLE VIEW LANDING - ICCU BUILDING TEN MILE CROSSING - AMERIBEN II

CLEARWATER BUILDING PIONEER CROSSING TEN MILE CROSSING - LASALLE BUILDING

555 PARKCENTER BLVD 250 BEECHWOOD 101 S. ALLUMBAUGH WAY

7 t o k c o m m e r c i a l . c o m

BOB MITCHELL, CSM208.947.0836bob@tokcommercial.com

DAN MINNAERT, SIOR, CCIM208.947.0845dan@tokcommercial.com

CHRIS PEARSON, SIOR208.947.0859chris@tokcommercial.com

MIKE KELLER208.947.0844mtk@tokcommercial.com

PETER OLIVER, SIOR, CCIM208.947.0816peter@tokcommercial.com

SAM MCCASKILL208.947.0814sam@tokcommercial.com

JIM BOYD208.947.5522jim@tokcommercial.com

MIKE GREENE, SIOR, CCIM208.947.0835mikeg@tokcommercial.com

NICK SCHUITEMAKER208.947.0802nick@tokcommercial.com

AL MARINO, SIOR208.947.0811al@tokcommercial.com

PATRICK SHALZ, SIOR208.947.0834pat@tokcommercial.com

KARENA GILBERT208.947.0853karena@tokcommercial.com

LAURIE REYNOLDSON CCIM, CLS208.947.5514laurie@tokcommercial.com

ZACK STODDARD208.947.5509zacks@tokcommercial.com

DEVIN PIERCE, SIOR208.947.0850devin@tokcommercial.com

GAVIN PHILLIPS208.947.0812gavin@tokcommercial.com

BRIANNA MILLER, CLS208.947.5519briannam@tokcommercial.com

MARK SCHLAG, CCIM, CLS208.947.0817marks@tokcommercial.com

HOLLY CHETWOOD, CCIM208.947.0827holly@tokcommercial.com

JP GREEN208.947.0852jpgreen@tokcommercial.com

LENNY NELSON 208.947.0831lenny@tokcommercial.com

MARKET INSIGHT+122 MILLION SQUARE FEET

TRACKED REAL TIME ACROSS IDAHO MARKET

RESULTS18,000 SQUARE FEET

LEASED OR SOLD PER BUSINESS DAY (2020)

REACHAS THE LARGEST CRE FIRM IN IDAHO, WE CAN COVER

REQUIREMENTS ACROSS THE STATE

OUR EXPERTISE. YOUR ADVANTAGE.JOHN STEVENS, CCIMSALES PARTNER208.947.0814john@tokcommercial.com

MICHAEL BALLANTYNE SIOR, CCIM MANAGING PARTNER208.947.0831mjb@tokcommercial.com

BOISE OFFICE

2 5 0 S . 5 t h S t r e e t , 2 n d F l r B o i s e , I d a h o | 2 0 8 . 3 7 8 . 4 6 0 0 | t o k c o m m e r c i a l . c o m