Tenants Stay on the Offense As Population and Income Growth Push Expansions
As of the second quarter of 2024, the tight retail market in Boise, Idaho, reflects near-record low availabilities, which have driven a lack of suitable options for tenants. This has curbed move-outs from existing space and pushed preleasing activity related to incoming projects. Vacancies have had minimal room to run as a result.
Boosted by sustained population and income growth, Boise’s retail formation rose by 180,000 square feet during the first quarter of 2024. This bolstered consumer purchasing power has increased diversity in the various uses of retail space as national tenants look for a foothold in the growing region.
While gyms and fitness centers have been popular plays across different parts of the metro area, food, beverage and experiential sectors continue to match sustained growth in the discount, off-price and grocery sectors. Restaurant deals dotted the metro’s western landscape in the first quarter of 2024: Put’n’Pub and Taquiera La Flama signed leases in Nampa, Idaho, while Chicken Delite leased 2,500 square feet at the former Qdoba space at CentrePoint Marketplace in Meridian, Idaho.
These dynamics have kept the retail vacancy rate at 3.6%, much lower than the region’s all-time average of 5.4% and the national rate of 4.1%. Boise’s relatively low cost of living should also continue strengthening a foundation for retail spending in the near term, ultimately sustaining an appetite for businesses to target expansions.
Developers, constrained somewhat by financing options, stepped up activity toward the end of 2023, with construction starts reaching a three-year high. The bulk of ongoing builds reflect a mix of smaller standalone and quick-serve restaurant buildings, but several big-box and larger mixed-use projects will have outsized impacts on availability in the coming quarters.
The Meridian Road and Ten Mile Road corridors on the metropolitan area’s west side comprise the largest concentrations of activity, supporting a theme of targeting signalized intersections along highly traveled arterials. At the corner of Ten Mile Road and Franklin Road, a 36-acre mixed-use development named Discovery has taken shape. Along with 559 residential housing units, the design encompasses more than 165,000 square feet of single- and multitenant retail and office space. Starbucks and Grocery Outlet are already open and will be followed by East Idaho Credit Union and Heartland Dental in the coming months.
Additionally Scheels, an employee-owned sporting goods chain headquartered in Fargo, North Dakota, recently opened a 220,000-square-foot location further southeast near the ongoing Ten Mile Crossing office park.
If current drivers remain in place — barring a significant reversal in interest rates that would theoretically boost groundbreakings or a severe erosion in population growth — retail space markets in Boise will likely remain tight over the near- to midterm.