Is Boise, Idaho, the next Austin, Texas?

May 3, 2023

The Boise, Idaho, commercial real estate market has experienced a significant surge in growth over the past few years; the locals refer to it as the "Blue Wave." As a city traditionally known for its natural beauty and outdoor recreation opportunities, Boise has recently been attracting new residents from LA, San Francisco, Portland, and Seattle. As the population increases, so does the demand for commercial real estate as businesses and investors look to take advantage of its booming economy and favorable business climate.

To further understand Boise's commercial market, the team at Rockval collaborated with Drey Campbell, PhD. Campbell is a Principal at Lee and Associates Idaho and hosts the TVCRE Podcast, which covers all aspects of real estate and development for the Treasure Valley. Campbell is a self-proclaimed generalist but primarily focuses on multifamily and industrial investment sales.  

Population Boom

The Boise and Treasure Valley regions experienced robust growth while maintaining a projected annual population growth of 2.8%. According to the Index of State Economic Movement, Idaho was the #1 ranked state, beating out Texas and Florida. The report's rankings are based on personal income, employment, and population growth. Last year, Boise's most notable company, Micron Technology, announced its plan to build a $15 billion manufacturing plant. Micron employs 6,000 people in the Treasure Valley and estimates the new plant will add 2,000 jobs.

"Employment in Boise City is projected to grow by 89.2% by 2060, while personal income per capita is projected to grow from $54,770 in 2022 to $312,606 in 2060." - 24/7 Wall St

According to Campbell, retail has remained strong as national tenants and brands are making their entrance into the Treasure Valley market. The major retailers who have previously entered the market are PGA Superstore, TopGolf, Raising Canes, and the gas station chain Kum & Go.

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As of Q4 2022, the direct vacancy rate was 3.1%, compared to a year early at 4.1%. To help support the demand, a number of mixed-use developments are coming online. The majority of the leasing demand is from entertainment or service-based industries. The fast-growing South Meridian submarket has the highest average asking rents (NNN) at $27/PSF.


Similar to national markets, the vacancy rate has been on an upward trend for Boise, but their vacancy rate remains below double digits. The majority of vacancy is seen in Class B and C assets as the flight to quality continues. Surprisingly the return to office has been well received, and demand for new construction Class A space will continue to put pressure on Class B and C assets. Rental rates have remained relatively flat; the average rental rate is $22.90/PSF.

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On average, 180 people move to Idaho every day; many are coming from western coastal cities looking to benefit from the low cost of living and better business conditions. But this puts a major strain on the housing inventory. According to the City of Boise, more than 21,450 housing units are needed over the next decade. The average rental rate is nearly $1,800 per month, which is a 27% increase over the past 3 years.

The high demand drew in flocks of institutional investors and REITs looking to capitalize on Boise's growth, pushing down cap rates to record-low levels. At the beginning of 2022, the median securitized cap rate for multifamily assets was 3.87%. Since then, cap rates have risen nearly 30 basis points, and the median LTV on commercial mortgaged-backed securities was 46%.

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Industrial vacancy in all submarkets remains under 3%, and development continues with over 2.4M square feet delivered last year. Boise is positioned for additional growth because of its vast availability of land. Development is expected to remain steady as subsidiaries of Micron's plant will maintain demand. Garden City had the highest rents at $10.4/PSF, closely followed by Caldwell and Meridian City at $9.00. Campbell mentioned the high demand for owner-occupied space, as many new residents brought their businesses along.

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Key Takeaway

Boise was able to handle the growth and investment demand because of their ability to execute city planning and legislation. Campbell notes the new city planner is focused on density, prompting infill and vertical projects while at the same time promoting development. Some have called Boise the next Austin in regard to the similarities of rapid population and economic growth.

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