BY COLLEEN LAMAY - clamay@idahostatesman.com
Edition Date: 01/20/08
Commercial development remains a bright spot in the Treasure Valley economy, especially when you compare it to ghost neighborhoods of unsold homes dotting the Valley.
To be sure, high-profile vacancies suggest the possibility of an overbuilt market. The new Gateway Center shopping center in Nampa is mostly empty, with only a J.C. Penney anchor store open. And the pace of new construction and commercial rentals is beginning to slow - at least in Boise - from the go-go pace of the past few years.
But commercial real estate agents aren't worried. 2008 promises more new stores, offices and industrial space, they said.
"Anybody in my business will tell you that Canyon County is the hot spot, and we believe that 2008 will be more of the same," said Jerry Gunstream of Gunstream Commercial Real Estate in Nampa.
George Iliff of Colliers International in Boise, which sells, leases and manages commercial properties, sees a slowdown, but not enough to worry about.
"I think tenant interest is a little slower than it's been in the past, but still is not at a standstill," he said. "Everybody is talking about how horrible it is, and it's not. People are going about their business somewhat as usual."
BOISE: SLOWING TO A NORMAL PACE
In Boise, developers' applications for new buildings appear to be dropping, said Jenifer Gilliland, building division manager for the city. But the market for the past few years had been red-hot, Gilliland said.
"It's certainly slower than it was last year, but as far as it relates to our department, it is slowing down to a more normal level of construction," she said.
"We'll know a lot more in March or April, because that is when a natural slowdown always occurs," she said. "If we start really tanking in March or April, then we start to get concerned."
The mall along busy Milwaukee Street where the consumer-electronics store CompUSA is closing has some empty storefronts, as do older strip malls at Cole and Ustick roads and the Hillcrest Shopping Center on Overland Road. But retailers are mall rats these days. Borders bookstore recently moved from its spot near CompUSA into Boise Towne Square mall.
"There is a lot of growth and continued interest in the mall in terms of expansion and so forth, so I think CompUSA is maybe a casualty of retailing strategy (rather) than an indication that retail is in trouble," Iliff said.
Office space also is doing all right, he said. Emerald Street near the mall once had quite a few buildings standing empty, with a vacancy rate of 12 to 13 percent. Now, it is 7 percent to 8 percent higher than Downtown Boise, but lower than vacancy rates further west, he said.
Big projects planned in Boise include a for-profit hospital along Fairview Avenue and a WinCo grocery distribution center off Interstate 84 near Micron's main plant.
"We are hoping those will (help) keep our boat afloat," Gilliland said.
MERIDIAN AND EAGLE: OFFICES VACANT
Meridian's office vacancy rate is in the double digits - 13 percent - a result of rapid building as the population has grown.
Gauging vacancy rates in Eagle is misleading because the market is so small, Iliff said. One or two empty buildings will drive the numbers up. Right now, it is probably about 20 percent because of a few large empty buildings.
"It's still not in bad shape," Iliff said.
A key factor on the east side of the Valley is that not much new commercial space is being built right now. That's good because it gives the market time to get in sync with tenants' needs to lease, he said.
For home sales, that will take more time because the Valley ended up with many more homes than buyers.
NAMPA RETAIL GROWTH GOING GREAT GUNS
In Nampa, Jerry Gunstream said his company does about 75 to 80 percent of the commercial work, "so we have a good pulse on the market."
Retail growth in Nampa has been huge in the past year, he said. The city grew without national developers realizing it existed. But "in the past two to three years, it suddenly has been discovered," he said.
Perhaps the biggest commercial growth in the entire Valley in 2007 was the 750,000-square-foot Treasure Valley Marketplace, along I-84 at the Karcher Road interchange in Nampa. It has a Costco, Target, Old Navy, Olive Garden and other stores and restaurants. More are coming, including a T.G.I. Friday's, probably within a few weeks.
"Almost everything in that project that's been built has been occupied," Gunstream said.
Karcher Mall, which never recovered after Boise Towne Square opened, is another story. But things are looking up, Gunstream said. A year ago, the vacancy rate was 40 percent, and now it is 20 percent, he said.
The Nampa Gateway Center, on the south side of the Interstate near the Idaho Center, probably is the most stressed of the retail developments in the Nampa area, Gunstream said.
The developer -DDR, or Developers Diversified Realty Corp., based in Ohio - has built 170,000 square feet of retail space that is vacant.
"It is the largest amount of vacant space anywhere within the county," he said.
"It is the one area that seems to be suffering the most, but the developer is a national developer, and they typically know what they are doing," Gunstream said.
The same developers are behind the successful Meridian Crossroads development at the corner of Eagle Road and Fairview Avenue. Company representatives could not be reached Thursday or Friday.
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