By Patrick Shalz, Partner, TOK Commercial
Net absorption in Boise’s office market through August is nearly 806,000 square feet. This has already outpaced the amount seen in 2020 by more than 40 percent. Meridian and Downtown Boise have had the most net absorption, with 232,000 square feet and 191,000 square feet, respectively. Overall vacancy has declined a full percentage point in 2021, from 7.3 percent to 6.2 percent. Multi-tenant vacancy has also declined from 11.2 percent to 10.7 percent.
Many of the largest transactions of 2021 involved companies that are new to the Boise MSA. Kiln, a co-working company with offices in Utah and Colorado, leased nearly 50,000 square feet of newly constructed space in the Eagle View Landing project near Eagle Road and I-84. U.S. Investment Corp. and AMS Sensors, both of which are new to the market, leased 13,100 and 10,900 square feet, respectively, at the 11th & Idaho Building in downtown Boise.
Overall asking rates have increased in the past year, rising $0.50 per square foot to $18.50 per square foot (full-service lease/FLSV, annually). Class A space in newly constructed office buildings have asking rates ranging between $26 and $30 per square foot. Landlords have been offering $60 to $65 per square foot in tenant improvement allowances for longer (7- to 10-year) lease terms.
Medical offices and health services companies represent nearly one-third of spaces leased in the past year, with a large majority of the transactions occurring in second-generation space. Leasing activity for new medical space has occurred, albeit in fewer instances, with notable deals like Saltzer Health at Ten Mile Crossing and Appleton Clinics at Eagle Lakes.
Office space absorbed by technology companies comprises around 9 percent of deals in the past year, accounting for 84,000 square feet of space absorbed. Many of these tenants are leasing space in Class A assets, primarily in downtown Boise and Meridian.
As vaccinations continue to roll out across the area and country, companies are now tasked with deciding how, if and when employees return to the office. Many companies in the Boise MSA have found that the synergies inherent in communal work are substantial. These types of companies have committed to their workforce’s return to the office. Flexible or hybrid work environments are certainly on the rise, but the need for an office space to work within is deemed necessary by many companies.