There are more and more signs that Boises commercial real estate market is in recovery after the post-2008 recession. This recovery, combined with some new construction, is putting upward pressure on rents. The effect remains to be seen, but we are unlikely to see a rapid ramp-up. In the meantime, commercial rents are still a bargain.
Downtown rents for Class A office space average $20.02 per square foot per year, 20 percent to 60 percent lower than most other markets in the Northwest, according to CoStar, a commercial real estate information company. Class A buildings are the highest quality in their market.
Our closest big-city neighbor, Salt Lake City, is a full 40 percent higher at $28.12 per square foot. Reno is 20 percent higher at $24.07. Only Spokane comes close to our average rents at $20.12.
The affordability of leasing office space is a key factor in Boises appeal to national site selectors. According to Jana Jones of the Boise Valley Economic Partnership, One of the top reasons companies look at relocating or expanding into the Boise market is the low cost of living, including the low cost of leasing office space.
We havent seen newly constructed office space in Downtown Boise since 2005, when the Banner Bank Building was built. That will change later this month when the 8th & Main building opens. Another Downtown project in the planning stages is City Center Plaza, a 206,000-square-foot retail and office building planned for the site west of the U.S. Bank Building.
Historically, the vacancy rate for Downtown Class A space has been relatively low, with few opportunities for a large user of space to enter the market. That will change with these new projects. Ideally, an increase in vacancy Downtown, combined with lower-than-average regional rental rates, should spur interest from outside Idaho.
At BVEP, Jones says, We frequently get inquiries from companies inquiring about Downtown office space. More available options will have a positive impact.
Having Class A space available at affordable rents Downtown creates opportunity for local businesses and those coming in from outside the market.