Projected office supply is over two years, higher than both the retail and industrial sectors. However, certain pockets of the market have tightened. Supply is limited for Class A space in Eagle and in business parks at Eagle & Overland. Conversely, large spaces that were difficult to find a year ago have seen a significant increase in supply, primarily in Downtown, Southeast Boise, and Meridian.
Large transactions, such as a 168,000 square foot call center lease, are masking less than stellar activity in multitenant office buildings. Multitenant vacancy increased slightly in 2013 from 17.4 percent to 17.9 percent. Many tenants will find a variety of options for space today. The exception would be call center space which is limited in the Boise market.
Total vacancy dipped early in the year but ultimately increased to 12.2 percent. Some of this increase is due to new construction or companies consolidating their office space. Over 480,000 square feet of construction was delivered in 2013, the most since 2008. Notable projects include the West Valley Medical Complex in Caldwell, Scentsy headquarters in Meridian, and 138,000 square feet of office space at The Village in Meridian. Construction is nearly complete at the 253,000 square foot Eighth & Main building in downtown Boise.
Overall lease rates, while still 10 to 15 percent below pre-recession levels, saw an uptick in 2013. Overall asking rates rose for a third consecutive year to $14.95/SF (full service), a 3 percent increase. Free rent is still available, though not at levels seen during the recession. Tenant improvement allowances are increasing as construction costs rise, lease rates recover, and lease terms lengthen to five or more years.
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