A Decade-Low Vacancy and What Drives It
Boise-area industrial vacancy fell to 3.1% in Q4 2024, the tightest reading in over a decade. The compression is driven by two interlocking forces: a surge of e-commerce fulfillment operators seeking last-mile proximity to a fast-growing population base, and a secondary wave of cold-storage tenants servicing Idaho's agricultural processing sector.
New supply has been absorbed almost as fast as it delivers. Developers broke ground on approximately 2.8 million square feet of speculative industrial product across Ada and Canyon Counties between 2022 and 2024 — yet net absorption tracked at 2.6 million square feet over the same window, keeping vacancy structurally tight.
Cap Rate Compression: Into the Low-5% Range
Stabilized Class A industrial assets along the Eisenman Road and Garrity Boulevard corridors are trading at cap rates in the 5.0–5.4% range, down from the 6.0–6.5% band observed in 2021.
Appraisal Implications
Market rent vs. in-place rent: Many leases signed in 2020–2021 are now below current market levels. Appraisers using the income approach need to carefully distinguish between contract rent and market rent.
Expense ratio assumptions: As cap rates compress, even small errors in estimating vacancy, management fees, or replacement reserves have an outsized impact on concluded value.
Comparable selection: With so few transactions in the tightest tier, appraisers are often forced to bracket with sales from adjacent markets.