A tenant’s market

Glenn Sather, apartment broker with Coldwell Banker Commercial, reports a 6.8 percent market vacancy for multiple family housing in Kootenai County for 2010 Thursday during a commercial market forum.

COEUR d’ALENE – Local commercial real estate specialists shared reviews and forecasts during the fourth annual Kootenai County commercial market forum on Thursday.

More than 400 professionals turned out at the Kroc Center for the program presented by Coldwell Banker Commercial – Schneidmiller Realty.

In Kootenai County’s office space real estate market, forecasters said cash-rich landlords will continue using rent concessions and tenant improvements in the upcoming year to attract their competitors’ tenants.

“It’s a tenant’s market,” said Charlie Nipp, owner and manager of Coeur d’Alene real estate development company Parkwood Business Properties. Nipp was the forum’s keynote speaker. “We spent more money than ever in 2010 on tenant improvements.”

With more than 2.7 million square feet of office space in Coeur d’Alene, the vacancy rate sits at 11.4 percent. Post Falls has more than 700,000 square feet of space with a vacancy rate at 8 percent, according to figures provided by Coldwell Banker Commercial.

Every office space lease now requires extended negotiations, said office space specialist Craig Hunter, of Coldwell Banker Commercial.

“New construction was very slow in 2010″ on office space buildings, he said.

Retail specialist Pat Eberlin, also of Coldwell Banker Commercial, said retail vacancy in the county is at 8.7 percent. Coeur d’Alene came in at 7.6 percent with 4.8 million square feet of space, and Post Falls was 12.9 percent with 1.9 million square feet.

Retail tenants in the county will continue to seek rent concessions and tenant improvements, he said. He said consumer confidence is rising.

Investors in multi-family housing can expect better returns in an environment with favorable financing terms and rates of return on purchased property, along with the potential for rent increases.

Glenn Sather, an apartment broker for Coldwell Banker Commercial, said economic conditions have had people switching to renting from home ownership, creating a larger pool of tenants.

“The fever is not there to buy” anymore for people in their late 20s and early 30s, he said.

The county’s multi-family housing market vacancy rate is 6.8 percent, he said. Post Falls had the county’s lowest vacancy rate of 3.7 percent, and Coeur d’Alene had the highest with 7.6 percent.

Forecasters said occupancy rates should improve this year in the industrial and flex-tech sector of the county’s commercial real estate market with no new speculative development in the pipeline.

With 2.1 million total square feet of industrial space, Post Falls had a vacancy rate of 6.3 percent, while Coeur d’Alene had a rate of 5.3 percent with 1.6 million square feet. Hayden was 7.8 percent with 1.1 million square feet of space.

For investors in commercial real estate, forecasters said it’s time to lock in low mortgage rates. Indexes are down 2-3 percent from 2007.

And if the cash is available, there are incredible opportunities to buy land, said Mike King, a commercial investment specialist with Coldwell Banker Commercial.

“It may never go lower than now,” King said.

No matter what part of the commercial market is being forecast, employment is going to go a long way in determining where the market really ends up, the forecasters said.

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