2014 Q1 market report by Colliers Idaho

COLLIERS IDAHO

First Quarter Market Review

2014 BOISE

755 WEST FRONT STREET, SUITE 300

BOISE, IDAHO 83702

NAMPA

208 345 9000

www.colliers.com

2014 Q1 MARKET REVIEW

Floating Feather Rd.

55 55

W. State Street

S. Eagle Rd.

Middleton e

84 Marble Front Rd.

184 I84 84 BB

84 84

Overland Rd.

84 84

e. Av ise Bo Vista Ave.

AV AV AV W. Fairview Ave. AV A AV

Maple Grove Rd.

Nampa

Five Mile Rd.

W. Ustick Rd.

84 Orchard Ave.

W. Franklin Rd.

E. Franklin Rd.

Karcher Rd.

Cloverdale Rd.

Meridian Rd.

Linder Rd.

Roa d

McMillan Rd. Black Cat Rd.

W. Ustick W. Ustick Rd.Rd.

Cherry Lane

Hill

Star Star Rd. Rd.

Rd.

W. Ustick Rd. lB lv d.

E. Chinden Blvd.

Can-Ada N. N. Can-Ada Rd.

hA Ave. . Nor r h Ex d d 11th Ave. North Extended

Lake Ave.

S. Indiana Ave.

Ca ld w el

Franklin Rd.

Midland Blvd.

Middleton Rd.

Caldwell

Northside Blvd.

Lake Lowell Ave.

Amity Rd.

E. Amity Ave. W. Iowa Ave.

Greenhurst Rd.

FF FFF

Victory Rd.

Lone Star Rd.

Fe de ra lW ay

E. Amity Rd.

Gowe n Rd.

Lake Hazel Rd.

Ada County Submarkets 1

4 Airport

7 Garden City

10 Eagle

2 North End

5 Central Bench

8 West Bench

11 Meridian

3 South East

6 Downtown Boise

9 Southwest

Northwest

Canyon County Submarkets 12 Idaho Center

14 Downtown Nampa

13 Northside

15 South Nampa

16 Karcher

VACANCY RATE vs BOISE MSA UNEMPLOYMENT RATE 20.0%

Office

Retail

Industrial

Unemployment Rate

16.0%

12.0%

8.0%

4.0%

0.0%

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YE 2007

MY 2008

YE 2008

MY 2009

YE 2009

MY 2010

YE 2010

MY 2011

YE 2011

MY 2012

YE 2012

MY 2013

YE 2013

PG. 2

OFFICE

Q1 REVIEW

OFFICE TRENDS Ada Co.

Canyon Co.

2014

2013

2014

2013

VACANCY RATES ASKING RATES

LEASE TRANSACTION DATA Q1 TOP 5

1,700 SF

Class B

*Top 5 based on total consideration

ASKING RATES Asking rates throughout the Treasure Valley were on the rise, ending the first quarter at $13.35. Ada County witnessed an $0.29 increase in asking rates for the first quarter of 2014 versus the fourth quarter of 2013, while Canyon County experienced a $1.11 increase between quarters. The Karcher and Idaho Center submarkets contributed the highest increases, at $3.33 and $1.37 respectively.

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OFFICE VACANCY & ASKING RATES 2006 - to Present Asking Rate Vacancy

$18.00

25.0%

$16.00 20.0%

$14.00 $12.00

15.0%

$10.00 $8.00

10.0%

$6.00 $4.00

5.0%

$2.00 $-

YE 13

West Bench

Q1 14

$6.00 FSEJ

Activity in the Office market held steady in the first • Swing Down, LLC purchased the 50,000 quarter of 2014. While both vacancy rates and square foot John Alden Life Insurance building asking rates were up over the 2013 year end, the in downtown Boise trend continued to demonstrate positive change in • Quail Hollow Holdings, LLC purchased 16,000 this segment. square feet on Emerald Street in Boise Vacancy rates throughout the Treasure Valley for • Four office condominiums were purchased in the first quarter of 2014 were mixed, with seven Eagle totaling 5,800 square feet. submarkets showing an increase in vacancy rates over the 2013 year end, and eight submarkets • Idaho Primary Care Association leased 3,900 showing a decrease in vacancy rates. The oversquare feet in the downtown periphery all outcome resulted in a 102 basis point reduction for Ada County, a 101 basis point increase for • F&M Tile Contractors purchased 2,000 square feet in the Northwest submarket Canyon County, and a 100 basis point increase for the Treasure Valley as a whole. The greatest LOOKING FORWARD quarter-to-quarter increase occurred in Southeast Boise, rising from 11.0% at the end of 2013 to As anticipated at the 2013 year end, asking rates 17.3% at the end of the first quarter of 2014. The should continue to rise and newly constructed Southwest submarket experienced the largest de- space may increase the vacancy rate as the decrease, from 19% at the end of 2013 to 6.0% at velopments become available. the end of the first quarter of 2014.

YE 12

Class A

MY 13

2,724 SF

YE 11

Southeast

KEY TRANSACTIONS

MY 12

$14.14 FSEJ

OVERVIEW

YE 10

Class B

MY 11

1,225 SF

YE 09

Meridian

MY 10

$14.03 FSEJ

YE 08

Class A

MY 09

5,000 SF

YE 07

West Bench

MY 08

$12.56 FSEJ

YE 06

Class A

MY 07

3,896 SF

MY 06

$18.20 FSEJ DT Periphery

0.0%

PG. 3

RETAIL

Q1 REVIEW

RETAIL TRENDS Ada Co.

Canyon Co.

2014

2013

2014

2013

VACANCY RATES ASKING RATES

LEASE TRANSACTION DATA TOP 5 $13.92 NNN

Karcher

12,000 SF

Big Box

$24.68 NNN

Meridian

4,572 SF

Restaurant

$22.00 NNN

Meridian

3,392 SF

Anchored

$14.93 NNN

West Bench

6,900 SF

Unanchored

$12.00 NNN

West Bench

8,309 SF

Unanchored

*Top 5 based on total consideration

OVERVIEW

KEY TRANSACTIONS

The first quarter of 2014 experienced continued • The IHOP on Caldwell Blvd. in Nampa was absorption of the Valley’s retail market space, purchased by an investor reflecting a growth trend that began at the 2010 • A national big box retailer leased 12,000 year end. Over the same period, asking rates have square feet in the Treasure Valley Crossing remained in the upper twelve dollar range, indicatshopping center in Nampa ing stability. Vacancy rates dropped in both Ada and Canyon counties, ending the first quarter of 2014 at 6.5% for the Treasure Valley, a 102 basis point reduction over the 2013 year end. In Ada County, the vacancy rate decreased from 8.1% for Q4 2013 to 6.9% for Q1 2014 – the largest reduction was witnessed in the Central Bench, which decreased from 9.4% to 3.5% quarter-to-quarter. In Canyon County, the vacancy rate decreased from 6.9% in the previous quarter to 5.7% in the first quarter of 2014. The Idaho Center submarket showed the most significant drop, going from 14.2% in Q4 2013 to 5.8% for Q1 2014.

• Le Peep Meridian, LLC purchased restaurant space in the Gateway Marketplace in Meridian

• The Dutch Bros. Coffee on Cleveland Blvd. in Nampa was purchased by an investor

• Eckhardt Family, LLP purchased 1.12 acres of retail pad space in Meridian LOOKING FORWARD With available retail space continuing to decrease and speculative development on the rise, asking rates are also likely to rise. Expect to see former challenged properties experience activity.

ASKING RATES

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RETAIL VACANCY & ASKING RATES 2006 - to Present $18.00

16.0% Asking Rate Vacancy

$16.00

14.0%

$14.00

12.0%

$12.00

10.0%

$10.00

8.0%

$8.00 6.0%

$6.00

4.0%

$4.00

Q1 14

YE 13

YE 12

MY 13

YE 11

MY 12

YE 10

MY 11

YE 09

MY 10

YE 08

MY 09

YE 07

0.0%

MY 08

YE 06

2.0% MY 07

$2.00 MY 06

Despite a drop in vacancy rate, asking rates in the Treasure Valley were flat between the first quarter of 2014 and the year end 2013, decreasing slightly from $12.67 to $12.59. Ada County witnessed a $1.32 decrease, while Canyon County saw a $1.11 increase. The largest decreases between Q1 2014 and Q4 2013 were seen in the North End and Central Bench submarkets, where rates dropped by $3.25 and $3.21 respectively. The South Nampa submarket experienced the largest increase, in Q1 2014, by $4.95 over Q4 2013.

PG. 4

INDUSTRIAL

Q1 REVIEW

INDUSTRIAL TRENDS Ada Co.

Canyon Co.

2014

2013

2014

2013

VACANCY RATES ASKING RATES

LEASE TRANSACTION DATA TOP 5 $0.55 NNN

Southwest

25,409 SF

Warehouse

$0.74 NNN

Southwest

7,700 SF

Warehouse

$0.44 NNN

Idaho Center

4,400 SF

Industrial

$0.81 NNN

Eagle

2,105 SF

Flex

$0.45 NNN

Southeast

12,000 SF

Warehouse

*Top 5 based on total consideration

OVERVIEW

KEY TRANSACTIONS

The limited available product on the Industrial • Teton I, LP purchased 11,000 square feet in the market continued to dwindle in the first quarter West Bench submarket of 2014. Asking rates, while flat at the 2013 year • Carahan/Woodman, LP purchased 22,724 end, began increasing in the majority of submarsquare feet in Nampa kets, perhaps indicating the onset the trend necessary to spark new construction. • True North Investment Boise, LLC purchased 14,099 square feet in the Airport submarket Vacancy rates in the Treasure Valley showed a decrease in every submarket except Northside • Florida Tile leased 25,409 square feet in the Nampa, which increased only slightly by 10 basis Victory Business Center points. At 4.8% the overall vacancy rate was down 290 basis points over the last quarter of 2013. • SRS Distribution, Inc. leased 7,700 square feet on Liberty Road in Boise Ada County experienced the greatest reduction, going from 7.8% in Q4 2013 to 4.2% in Q1 2014. LOOKING FORWARD Canyon County also experienced a significant decrease, from 7.7% at the end of 2013 to 5.9% at Expect asking rates to continue rising, and stimthe end of the first quarter. The Karcher submar- ulate speculative development. Activity in Canyon ket had the greatest reduction in vacancy due to County should increase. the large transactions at the former Micron sites. ASKING RATES

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INDUSTRIAL VACANCY & ASKING RATES 2006 - to Present

$0.60

14.0%

Asking Rate Vacancy

12.0%

$0.50

10.0%

$0.40

8.0% $0.30 6.0% $0.20

4.0%

$0.10 Q1 14

YE 13

YE 12

MY 13

MY 12

MY11

YE 11

YE 10

YE 09

MY 10

YE 08

MY 09

YE 07

MY 08

YE 06

MY 07

2.0% MY 06

The Treasure Valley asking rate increased $0.02 to conclude the first quarter of 2014 at $0.49. All but two submarkets (Southeast Boise and Garden City/North End/Northwest) in Ada County reflected an increase in asking rates – up $0.03 over Q4 of 2013. Canyon County ended the first quarter nearly equal to the previous quarter, showing a $0.01 decrease over Q4 2013. The greatest increase in asking rates was experienced in the Central Bench and West Bench submarkets, which were up $0.12 and $0.09 respectively quarter-to-quarter.

0.0%

PG. 5

STATISTICS

2014 | MARKET REVIEW

INDUSTRIAL SUBMARKET STATISTICS AT A GLANCE Submarket

Count of Property

Sum of Bldg SF

Direct Vacant

Total Vacant

Vacancy Rate

Average of Asking Rate

112

4,297,818

140,657

3.3%

$0.38

Central Bench

2,630,435

140,497

5.3%

$0.60

Eagle

351,896

11,000

3.1%

$0.67

Meridian

157

4,102,439

173,921

4.2%

$0.56

GC/N.End/NW

142

2,191,634

77,246

3.5%

$0.37

Southeast

5,891,114

156,742

2.7%

$0.43

Southwest

1,843,844

158,077

8.6%

$0.52

West Bench

201

7,458,951

389,406

5.2%

$0.57 $0.51

Airport

947

29,768,826

1,247,546

4.2

Idaho Center

Ada County Total

2,040,907

38,977

1.9%

$0.48

Karcher

2,051,079

24,023

1.2%

$0.42

Northside

123

6,051,775

858,974

18.3%

$0.45

Caldwell

179

4,951,252

46,840

0.9%

$0.38

466

16,472,881

968,814

5.9%

$0.43

1,413

46,241,707

2216360

4.8%

$0.49

Canyon County Total Grand Total

OFFICE SUBMARKET STATISTICS AT A GLANCE Submarket

Count of Property

Sum of Bldg SF

Direct Vacant

Central Bench

113

2,239,041

412,101

Downtown Boise

101

4,177,362

330,501

Downtown Periphery

102

2,226,160

184,189

Sublease

Total Vacant

Vacancy Rate

Average of Asking Rate

412,101

18.4%

$10.13

346,814

8.3%

$17.05

184,189

8.3%

$15.52

16,313

Eagle

766,816

72,695

9.5%

$14.37

Meridian

161

3,225,255

396,231

12.3%

$15.00

CG / N.End / NW

807,158

68,555

8.5%

$13.10

Southeast

1,423,104

238,497

8,225

246,722

17.3%

$15.00

Southwest

1,041,867

52,882

9,838

62,720

6.0%

$14.50

West Bench

162

3,112,976

483,048

744

483,792

15.5%

$12.13

871

19,019,739

2,238,699

35,120

2,273,819

12.0%

$14.09

Downtown Nampa

588,571

45,467

7.7%

$11.26

Idaho Center

227,618

33,785

14.8%

$14.69

Karcher

344,403

47,626

13.8%

$15.00

Northside Nampa

196,919

16,309

8.3%

$12.45

South Nampa

471,853

26,247

5.6%

$10.80

Caldwell

500,116

31,533

6.3%

$10.63

Middleton

83,997

2,912

3.5%

$12.00

Canyon County Total

241

2,413,477

203,879

8.4%

$12.40

Grand Total

1111

21,332,218

2,442,578

2,477,698

11.6%

$13.35

Ada County Total

35,120

RETAIL SUBMARKET STATISTICS AT A GLANCE Submarket

Count of Property

Sum of Bldg SF

Direct Vacant

Total Vacant

Vacancy Rate

Average of Asking Rate

Central Bench

1,477,031

Downtown Boise

1,254,180

51,530

3.5%

$10.31

107,697

8.6%

Eagle

925,140

106,925

$15.36

106,925

11.6%

$12.69

Garden City

752,910

25,510

3.4

$10.56

Meridian

113

3,584,685

255,268

7.1%

$14.45

North End

179,720

2,880

1.6%

$14.00

Northwest

800,804

28,670

3.6%

$10.91

Southeast

1,238,070

107,019

8.6%

$14.20

Southwest

1,724,473

108,330

6.3%

$12.68

West Bench

2,990,700

238,323

8.0%

$12.18 $12.73

486

14,927,713

1,032,152

6.9%

Downtown Nampa

Ada County Total

823,928

51,095

6.2%

$9.10

Idaho Center

1,322,811

76,658

5.8%

$16.38

Karcher

2,662,981

184,435

6.9%

$13.48

Northside Nampa

392,841

37,045

9.4%

$13.48 $14.98

South Nampa

716,417

9,001

1.3%

Caldwell

972,450

29,129

3.0%

$9.85

Middleton

73,571

10,400

14.1%

$9.50

Canyon County Total

168

6,964,999

397,763

5.7%

$12.39

Grand Total

654

21,892,712

1,429,915

6.5%

$12.59

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PG. 6

Colliers Idaho Management

2014 | RESEARCH REPORT

Investment Brokerage

Land Brokerage

George Iliff

Clay Anderson CPA, MBA

John Starr

Managing Owner & Office Associate 208.472.2858 george.iliff@colliers.com

Associate 208.489.6177 clay.anderson@colliers.com

Associate 208.472.2838 john.starr@colliers.com

Office Brokerage Greg Macmillan

Scott Feighner Associate 208.493.5107 scott.feighner@colliers.com

Associate 208.472.2857 greg.macmillan@colliers.com

Jimmy Roumanis Associate 208.472.2840 jimmy.roumanis@colliers.com

Canyon County Brokerage Matt Palmer Associate 208.472.2836 matt.palmer@colliers.com

Shanna Rondeau Transaction Coordinator 208.472.2854 shanna.rondeau@colliers.com

Mike Pe単a Associate 208.472.1666 mike.pena@colliers.com

Jamie Anderson

Lew Manglos CCIM, SIOR

Lincoln Hagood

Associate 208.472.2842 jamie.anderson@colliers.com

Associate 208.472.2841 lew.manglos@colliers.com

Associate 208.472.1667 lincoln.hagood@colliers.com

Retail Brokerage

Industrial Brokerage

Mike Christensen

Steve Foster

Associate 208.472.2866 mike.christensen@colliers.com

Associate 208.472.2834 steve.foster@colliers.com

Bryant Jones Associate 208.472.1663 bryant.jones@colliers.com

Property Management Lew Goldman

Devin Ogden, CCIM

Mike Attiani

Associate 208.472.2847 lew.goldman@colliers.com

Associate 208.472.1668 devin.ogden@colliers.com

Director of Property Services 208.472.2862 mike.attiani@colliers.com

W. Brook Blakeslee

Rick Scruton

Peter Draper

Associate 208.472.2835 brook.blakeslee@colliers.com

Associate 208.472.2851 rick.scruton@colliers.com

Sr. Project Manager 208.472.2869 pete.draper@colliers.com

Marketing & Research Dave Fernandez

Linda King

Director of Marketing 208.472.2868 dave.fernandez@colliers.com

Broker Assistant 208.472.2863 linda.king@colliers.com

Christina Turner

Robin Richards

Alexa Sakolsky-Basquill

Research Coordinator 208.472.2860 christina.turner@colliers.com

Broker Assistant 208.472.2839 robin.richards@colliers.com

Admin/Broker Assistant 208.345.9000 alexa.sakolsky-basquill@colliers.com

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PG. 7

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BOISE

755 West Front Street Suite 300 Boise, ID 83702 208 345 9000

NAMPA 5660 E. Franklin Rd. Suite 110 Nampa, ID 83687 208 472 1660

• 522 offices in 62 countries • 12,300 professionals and staff • 1.25 billion square feet under management

• US $68 billion total transaction value

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