Commercial real estate market remains 'vibrant' during pandemic

Posted at 4:51 PM, Mar 08, 2021
and last updated 2021-03-08 21:59:32-05

BOISE, Idaho — Three main areas are used to measure the health of our commercial real estate market, retail, industrial and office space.

Idaho has a much healthier market than neighboring states.

"We're doing much better than most of the country, there is definitely areas of weakness, but in general if you're going to be somewhere in a global pandemic, I think you want to be in Boise Idaho " said Michael Ballantyne, TOK commercial managing partner.

Office space has slowed during the pandemic over uncertainty of how much office space will be used after the pandemic.

"When the pandemic first hit back in March a lot of companies were really struggling, we had a significant number of tenants that were asking for rent concessions and we had a significant amount of delinquency's, from March to December the delinquency rate has dropped 70%," Ballantyne said.

TOK Commercial recently studied the Boise metro market and found compared to this time last year leasing activity is down 20%, but sales are up 65%.

"From a financial perspective the borrowers we deal with are very healthy and doing well with a cautious eye to the future to see what lies ahead," said Todd Cooper, president of Idaho First Bank.

TOK's study found when it came to land sales retail remains the strongest and remained unchanged between 2019 and through 2020. Office space is the second in land sales and is nearly tied with Industrial space.

"We're in parity on the office side retail has been surprisingly strong given the amazon effect as they call it, but industrial has really struggled with a shortage of inventory" said Ballantyne.

The study also evaluated how much office space is being used. In the Boise metro 85% of existing space is being used with 15% empty. The pandemic couldn't slow down development either, the 11th & Idaho Street building project continued through the pandemic.

"We started in August of (2019), so we built all through the pandemic we were just starting to hit our stride, I have a picture of the company as we were installing the last beam and that was in March so that was just when the pandemic was starting and then we all went with mask, so most of the construction was done during the pandemic, we finished just about on time we we're a little bit late but not much" said Scott Schoenherr, partner at Rafanelli & Nahas.

So how healthy is our commercial real estate market?

"We've been really encouraged and sometimes surprised to see the resiliency in the market. occupancy rates have stayed high, rent collection has stayed very strong and we continue to see a healthy vibrant real estate market today," Cooper said.