Retail Market: A look back at the first half of 2013 from TOK Commercial

MERIDIAN, Idaho - Aug. 22, 2013 - PRLog -- Retail Watch
Absorption was flat in the first half of 2013, but transaction volume remained healthy. Net absorption should improve in the second half of the year as construction is completed on a new Walmart on Overland near Meridian Road and at The Village at Meridian, where a movie theater and numerous restaurants will open in the coming months.

While total vacancy increased slightly in the first half of 2013, unanchored vacancy continued to improve, declining to 16.4 percent. Unanchored vacancy has declined for 15 consecutive quarters, dating back to 2009 when it was over 25 percent. As a result, projected supply declined to 18 months, lower than both the office and industrial sectors.

Demand for premium space is up, pushing lease rates higher along the Eagle corridor and in downtown Boise as tenants compete for limited space. In some cases, landlords are not accepting below-market offers because they are confident they can find tenants to pay the asking rate. Although rents for premium space are pushing record highs, overall rents are still 25 percent below pre-recession levels. Concessions, such as free rent, are occurring less frequently as demand rises and the market recovers.

Many national retailers are opening their first stores in the Boise market, including a Trader Joe’s currently under construction in downtown Boise. Multiple restaurants are opening their first Idaho locations at The Village at Meridian, including Toby Keith’s I Love This Bar & Grill and Yard House.

The food service industry continues to be a bright spot for retail, with new and expanding restaurants taking space across the valley. Second-generation restaurant space is in high demand as tenants seek spaces where impact fees have already been paid.

Construction is on pace for over half a million square feet in 2013, much of which is being built with retailer commitments in place. Speculative construction will continue to face challenges for developers due to the increased cost of construction coupled with tenant rent expectations.

For more information regarding the Boise Commerical Real Estate Market, as well as the surrounding area, please visit http://www.tokcommercial.com.