— By Nellie Day —
Boise was a hotspot of activity as the pandemic hit in 2020, with many people desiring more space, more access to the outdoors and, in some cases, a cheaper cost of living. Mike Erkmann, principal at NAI Select, fills WREB in on what the city and its commercial real estate landscape has been like since 2020.
What are the notable trends occurring in Boise?
The most notable trend occurring in Boise continues to be the expansive population growth. Boise was the fifth fastest-growing city in the U.S. in 2022 and 2023. We are expected to see 37 percent population growth between 2022 and 2050, with a predicted total MSA population of 1.1 million people. On average, we are adding about 15,000 people annually, which will continue to rank Boise at the top for fastest-growing cities in the U.S.
What challenges is this market facing?
Aside from the obvious challenges we are facing in the market, including higher interest rates and tougher lending requirements, we here in Idaho are facing a shortage of labor with the dramatic increases in the cost of living. Median sales prices in Boise have increased 78 percent over the past five years where average wages and salaries have only increased about 2.7 percent annually. This has created an affordability issue. Another key challenge we are experiencing in our market is transportation and the lack of infrastructure to support the growth mentioned above. We are confident that the state will catch up with the growth, but it certainly creates a challenge in the interim
Where do you see opportunities for investors?
We see several opportunities for investors who are able to capitalize on this expansive growth with a greater demand for housing, retail, office and industrial. Boise is a strong second-tier market that allows the small- to medium-size investors to compete without being chased off by some of the larger institutional investors that prefer the bigger primary markets. Another opportunity we see for investors is raw land in the path of development. As utilities continue to be extended, these are great opportunities for an investor with patient money.
Can you point to any recent transactions or projects that are emblematic of the activity in Boise?
Two projects that first come to mind is the recent announcement of Micron Technologies investing $15 billion into a new fabrication facility, which is estimated to add 17,000 new jobs upon completion. This is an excellent indicator as to the future of this market and the investments being made by these larger corporations.
The other recent notable transaction is the $143 million manufacturing facility for the Stow Company, which is nearing completion. The facility is about 550,000 square feet and will add about 200 jobs to the market.
Where do you see Boise’s commercial real estate market heading in the future?
We anticipate seeing steady growth in commercial real estate throughout the Boise Valley moving forward. We, of course, are seeing signs of a correction and will be settling into what we expect to be a new normal. Boise will always be a great place to live, work and play, and people want to be here. As we continue to see population shift in our country, especially on the West Coast, we anticipate Boise will continue to be a preeminent choice for those seeking our way of life — and we welcome them.
— Nellie Day