Vacancy rates for multi-family housing in the Treasure Valley have continued to remain low for the first quarter of 2018 driving the continued construction of multi-family projects. The latest Vacancy Overview produced by Valbridge Property Advisors indicated a reported vacancy of 2.8% as of January 2018. This is down from 3.2% recorded for January 2017. The report covers most municipalities in the greater Boise area and includes roughly 17,000 units. The comprehensive report suggests strong indicators that the multi-family housing market will continue to build in the coming months.
According to the report, while vacancy rates remain low, average rents have continued to increase rising roughly 12% from 2017 to 2018. Rental data is based on a per square foot price averaging $1.02 per square foot in 2017 and $1.14 per square foot so far in 2018. This overall average may appear to be high given that the report is biased toward newer properties, however, the rise in rental rates and continued low vacancy suggest that demand remains high for multi-family units. Because the market remains favorable, projects continue to be proposed and permitted across the region.
After a review of city and county planning agencies, and research with local developers and architects, roughly 2,629 multi-family units are under construction with another 4,130 units being proposed. Projects under construction include the 250-unit development on Meridian Road and McMillan Road in Meridian as well as smaller projects like the 136-unit 4-plex community on the corner of Deer Flat and Ten Mile Road in Kuna. In conversation with several commercial developers, labor shortage has been a huge factor in the latest surge of large project development. Still, developers are undeterred about the favorability of the market and the projects that are currently being proposed. The largest number of units being proposed are located in Boise while Meridian remains a close second for larger projects. Kuna remains a relatively untapped market but will most likely receive additional building pressure as the construction migration continues across the valley.
While roughly 6,800 multi-family units are either under construction or are currently in the proposal stage this pace is not new to the area. In the past 24 months, Idaho residents living near the capital city have seen about 2,879 units come online for would-be Idahoans. Most of the smaller completed projects are located in the Boise area while the larger communities are being built in Meridian where land is more readily available and where quick freeway access is a plus. There are 3,268 units that are now between three and five years old. 3-5 years. With roughly 20,000 new Idaho residents moving into the valley each year, congestion and infrastructure continue to be heavy concerns. All things considered, with 17,085 units surveyed, 97.2% of the units were occupied as of the date of this survey indicating that occupancy continues to keep pace with building. Some of this pressure can be attributed to the single family home market. In many instances, where tenants have leased single family homes, property owners are opting to sell to capitalize on favorable single family home prices. The resulting displacement of tenants drives up the demand for rental properties. So the shortage in available single family homes continues to add to the pressure on multi-family units.
In summary, the Boise, Idaho market continues its strong course in the housing market. Rental rates increase, keeping pace with low occupancy and driving the ongoing building of multi-family projects. If migration to the state continues, this scenario will continue for the foreseeable future. The other piece of this puzzle is whether the labor market and wages allows for a continuation of increasing rents and single family home prices.
Beech Tree Property Management is centrally located in the Boise valley and provides comprehensive rental management services. For the For additional information please contact our office at office@BeechTreeManagement.com or call us at (208)484-4801.