Colliers’ new commercial R.E. report gives mixed outlook

Colliers International’s just-released Boise Mid-Year Real Estate Market Review gives a mixed outlook for commercial property sectors. Office vacancy rose to 13.8 percent overall in the Treasure Valley, from 12.1 percent a year ago and 13.3 percent at the end of 2007, Colliers said. Absorption, a comparison of space occupied to space available, was positive overall but dropped in half of the area’s geographic submarkets. Colliers said relatively high vacancy in west Boise, Meridian and Eagle could prompt leasing incentives; downtown Boise should remain strong as tenants renew leases and expand; national market trends and a weakening economy will impact local leasing; and national tenants will continue to consider the Treasure Valley an attractive location.

Retail vacancy increased to 10 percent, from 9.1 percent at the end of 2007, the Colliers report said. Triple-net rents, not including taxes and maintenance expenses, stayed flat since the end of 2007. Net absorption was flat to negative for the first time since the most recent expansion trend started in 2002. More retail tenants are postponing expansion plans, and the market can expect a continued slowdown in the Treasure Valley through the end of the year, Colliers said.

Industrial vacancy rose six-tenths of 1 percent from the end of 2007 to mid-year, to 6.6 percent, Colliers reported. The national economic downturn led to a slowdown in residential and commercial construction that contributed to lethargy in the Treasure Valley industrial market in the first half of 2008, during which rents stayed flat. The industrial market saw the negative-absorption trend continue. Colliers said the industrial market can expect continued sluggishness based on national economic and financial-market conditions, and can expect spotty speculative development given that land prices are holding up and rents are staying flat.