— By Colton Yasinski, Investment Sales Advsor, Capstone Cos. —
The multifamily market in Idaho and, specifically, Boise, has experienced an impressive surge over the past five years. This has largely been fueled by the impact of COVID and the attractiveness of Idaho living. The result has been an unprecedented demand for multifamily housing, triggering a development boom that has reshaped the market landscape.
In the past year alone, Boise has seen the delivery of 4,000 multifamily units with numerous ongoing construction projects. The city’s rapid population growth and robust housing demand has attracted institutional capital, leading to tighter cap rates similar to larger metropolitan areas.
Pioneering developers have recognized the potential in Idaho’s market and entered the scene alongside local development groups. Among them are prominent names like Lincoln Property Company, Alliance Residential Company, Woodside Homes, Morgan Stonehill, American Homes 4 Rent and others shaping the multifamily landscape.
However, amidst this growth, market dynamics have started to shift. Over the past year, multifamily sales in Boise have declined by more than 70 percent, accompanied by rising cap rates due to fluctuations in the capital markets. The surge in new units has transitioned the market from favoring landlords to becoming more tenant-oriented.
Current data from CoStar indicates Boise’s vacancy rate rests just below 11 percent, with around 4,000 new units introduced in the past year. This has caused a 2 percent decrease in rental rates. Despite these changes, Boise’s long-term market outlook remains strong. Experts believe the surplus of units will be absorbed over time, ensuring steady demand in the Idaho market.
Despite the challenges posed by COVID, Idaho’s appeal as a desirable location for homeownership and investment has remained intact. The pandemic, rather than dampening growth, has driven an influx of new residents attracted by the region’s natural beauty, affordable living costs and quality of life, further stimulating the housing market.
As the multifamily market continues to evolve, concessions, incentives and tenant improvement allowances have become critical factors to monitor. These aspects hold the potential to shape the market’s trajectory, attract new tenants and elevate the living experience for residents.
The surge in demand, institutional investment and ongoing development makes Boise a promising market in the region. While market dynamics have shifted recently, Boise’s potential remains strong. Developers, landlords and property managers must stay attuned to tenant preferences and market demands to harness the full potential of this thriving Idaho multifamily market for years to come.