The demand to rent is high. Interest rates remain low. Investors realize that the bottom has come and gone and values are now improving. Gee, if they had only been reading my blog, they would have known to buy months ago. And lastly, inventory levels are very low. The combination of those 4 factors have created an urgency to buy in Boise and Meridian. We've actually seen quite a bubble in the last 30 days. I hate using that word, but what better describes the huge jump in pricing that we've seen. Evidently the builders and developers saw the demand and are more than willing to help provide the supply. There are 1,200-1,600 rental units in the works to be built. Some are under construction now while others are in early planning stages. Below are some of the sites and status. This does not include the current build-out of four plexes in unfinished subdivision like Sommersby, located at Ten Mile and Franklin. That same builder is looking at building the same 4 plexes in Southeast Boise near Broadway and I-84.
APARTMENT CONSTRUCTION - 2012
Project Name | # units | Proposed Status |
12th st. Boise, Sec. 42 Senior | 53 | Under Construction |
Traditions Senior, Eagle N. of Ustick | 170 | Under Construction |
N. of Overland, E. of 5 mile in Cory Barton Sub. | 126 | Permits/Foundations |
Gramercy Villas | 48 | Done |
Gramercy Phase 2 I think they are looking for $$$ to do this still |
| Early Planning Stages |
Macys Down Town Boise |
| Demo |
2 projects off Royal St. by BSU. Student Housing Quad |
| Concept Planning |
Regency at River Valley, E.of Eagle rd., S. of Ustick | 240 | Plans, Site Work |
Park Center 5 B I would guess fewer units will be built | 278 | Planning/public hearings |
Park blvd and Front street, East of State Tax Commission bldg | 68 | Early Planning Stages |
BSU Apts on Lincoln & Beacon 90 x 4 beds = 360 beds | 90 | Done |
Crossfield Apts, S side of Ustick W. of Meridian rd. | 80 | Plans, Site Work |
Apts by Settlers Park, W. side Meridian, N of Ustick. | 36 | Planning/public hearings |
Franklin & 10 Mile Not real at this point (369 units) |
| Early Planning Stages |
| 1189 |
|
Significant Remodels |
|
|
Pioneer Square | 43 | Almost Done |
Longmont | 15 | Done |
Lancaster | 30 | Should be done this year |
| 88 |
|
Boise rents were starting to improve and vacancy has been excellent, so what will this substantial increase in supply do to the rental market and the investment sales market? Well, based on some of the pricing that has already come out, it looks like the new construction will strengthen values. I do think the increase in rental supply will have an effect on vacancy rates. Other contributors to vacancy is the huge move-in specials being used to fill these complexes quickly. We've seen $99 move-in specials and one month free rent. That surely will entice some of our current tenants. But what the new construction will do to rents is the real mystery? We're seeing fantastic floor plans with upgraded finishes similar to new high-end homes so rents are much higher than average. It's possible this new construction will hurt rents, but with the higher rents, we may see that void filled in providing high-end rental housing for those young professional wanting to rent instead of purchasing a home. In fact, their rents are so high, they may make the older and more simplistic rentals seem more affordable and therefore allow for modest rent increases. Only time will tell.
As promised, I have another post coming soon that talks about how the improved rental market has caused many first-time managers to enter into the business and how some companies are doing what they can to capitalize on the hot market.