Apr

7

Office - Kootenai County Commercial Real Estate (1 of 5)

Filed Under Kootenai County, Local Market 

Review

The office sector of our market claimed the lowest vacancy rate across all sectors surveyed. Overall vacancy is at 2.37% with over 1.5 million square feet surveyed. Office tenants have trended towards fewer turnovers and a greater amount of lease renewals. Lessees have found it clearly more cost effective to renew or expand in their current location than move to a new space. Rising tenant improvement costs have contributed to the increased level of renewals. In addition, rising land prices and construction costs are driving up asking rents on new projects.

Existing buildings have continued to increase rents to compensate for higher operating costs. However, rents at existing buildings are still significantly more economical than new office space entering the market.

One major new project to note is the recently completed 46,300 square foot Riverview Tower on Northwest Boulevard. Parkwood Business Properties is offering space in this project at an annual rate of $18/sq. ft. net. As of the end of February 2008, they have successfully leased 90% of available lease space in this property.

Forecast

Year end 2007 unemployment for Kootenai County remained remarkably low at 3.5%, significantly better than the 4.8% national year-end unemployment rate. Job growth and unemployment trends are a key indicator of future office space needs. These positive factors typically foreshadow upward movement in office leasing activity as job growth and business expansion continues.

Expect to see increased build-to-suit activity in the office market as rising land and building prices make speculative construction cost-prohibitive, and developers risk ongoing holding expenses. The “credit-crunch” will remain a pervasive problem that could limit sales of office condos and new office development. Completion of the federal courthouse should keep market conditions stable throughout the year. Completion of the federal courthouse in North Coeur d’Alene will drive development of office space for tenants in associated professions. A combination of modest growth and minimal planned office construction should keep market conditions stable throughout the year.

Kootenai County Non-Farm Payroll Jobs

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Office Survey Breakdown

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Riverview Tower

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