Recently Sold | Industrial Warehouse | Nampa, Idaho

Nampa, Idaho – October 2023– Lee & Associates Idaho, LLC has facilitated the sale of a 5,000 SF industrial warehouse located at 3462 N. Black Butte Ct., Nampa, ID 83687. Lee & Associates’ agents are considered experts in their local markets. In addition, they have access to a national network of 1,000 agents across 60 offices to serve their clients on a local, regional, national, and international basis.

Trey Thomas, Principal, and Chase Erkins, Principal, at Lee & Associates Idaho, LLC represented the buyer, Miller7, LLC.

Q2 2023 Economic Reports

GDP GROWTH: TRENDING IN Q2 2023

The Commerce Department said the U.S. economy grew at a 2.4% annual rate in the second quarter, an increase from the 2% gain in Q1, defying both expectations and attempts by the Federal Reserve to slow it down to curb inflation.

Economists are now scaling back their prediction that national output will be pushed into a recession this year due to recent interest rate hikes by the Federal Reserve to reduce inflation. The central bank has raised the benchmark rate 11 times since last year. A unanimous decision by the Federal Open Market Committee in late July raised the benchmark rate to a range of 5.25% to 5.5%, a 22-year high.

Meanwhile, inflation was held in check in the second quarter. The personal consumption expenditures price index gained 2.6%, down from a 4.1% first-quarter rise and well below the Dow Jones estimate for a gain of 3.2%. “It’s great to have another quarter of positive GDP growth in tandem with a consistently slowing inflation rate,’’ said Steve Rick, chief economist at TruStage. “Consumers are getting a reprieve from the rising costs of core goods, and the U.S. economy is off to a stronger start to the first half of the year.”

How Commercial Real Estate Behaves in a Normal Recession?

Commercial real estate is a significant contributor to the overall economy and is an important asset class for many investors. In times of recession, commercial real estate can be affected in a variety of ways depending on the type of property, location, and other factors. This blog post will discuss how commercial real estate behaves in a normal recession.

First, defining what a "normal" recession means is important. A recession is typically defined as a period of economic decline characterized by a decrease in the gross domestic product (GDP) for at least two consecutive quarters. During a recession, consumer spending typically decreases, leading to a slowdown in business activity.

One of the most significant ways that commercial real estate is affected during a recession is through decreased demand for space. As businesses struggle to stay afloat during tough economic times, they may downsize or even close, decreasing demand for office, retail, and industrial space. This can result in higher vacancy rates and lower rental rates as landlords compete for tenants.

Office space is often the most affected during a recession, as companies may choose to reduce the amount of space they occupy or even move to less expensive locations. This can lead to decreased occupancy rates and rental income for office landlords.

Similarly, retail space can also be affected as consumers may cut back on discretionary spending during a recession. Retailers may struggle to stay afloat, leading to store closures and higher vacancy rates. In addition, e-commerce has become an increasingly popular way for consumers to shop, which can further impact brick-and-mortar retail space.

On the other hand, industrial real estate may be less affected during a recession as demand for warehouse and distribution space can remain steady or even increase. This is because companies may choose to focus on e-commerce and online sales during tough economic times, leading to increased demand for warehouse and logistics space.

Another way that commercial real estate is impacted during a recession is through financing. Lenders may become more cautious and tighten lending standards, making it more difficult for developers to secure financing for new projects. This can result in a slowdown in construction activity and a decrease in new commercial real estate supply.

In summary, commercial real estate behaves differently in a normal recession, depending on the type of property and location. Office and retail space may be more affected, while industrial real estate may be more resilient. Financing can also become more difficult to obtain, leading to a slowdown in new construction activity. As with any investment, it's important to consider the potential risks and rewards of investing in commercial real estate during a recession and consult with a financial advisor to determine the best course of action.

 As everyone knows, the “real estate market” is a very broad term. Different locations have different markets, and the Treasure Valley markets don’t necessarily react like a sub-section of New York or San Francisco’s markets. If you are interested in chatting about the local Treasure Valley market during these interesting times, call me, and let’s catch up.

Chase Erkins
chasee@leeidaho.com
208-789-4900

ULI: Emerging Trends in Real Estate® 2023: United States and Canada

Dig deeper into this year’s “places to watch” from the top real estate hotspots to a possible Sun Belt “cool-down.”

Featuring the latest data from almost 1,500 industry experts, the report is a key indicator of the sentiment steering real estate and investment and development trends around the globe.

Top Three Take Aways:

1. There is a “new normal” for real estate markets after all the pandemic-fueled market distortion. Learn why the 1,500 leading industry experts interviewed for the ULI and PwC US Emerging Trends in Real Estate® 2023 report remain upbeat about the sector as it “normalizes” despite economic shifts, behavioral changes from work at home, and environmental, social, and governance (ESG) concerns affecting decisions on where and when to invest.

2. Discover the top 10 real estate markets to watch. Find out how Sun Belt “Supernova” Nashville managed to repeat its position as the nation’s top market, learn about Boston’s success in leveraging its world-class concentration of higher education to become a world leader in life sciences, and hear which other markets are on the rise.

3. Some still like it hot, but the Sun Belt may be cooling. Nine of the top 10 markets to watch remain in the Sun Belt. The average year-round high temperature among the five top-rated U.S. real estate markets is a balmy 76 degrees Fahrenheit, almost 20 degrees warmer than the 57-degree average in the bottom five markets. Get expert insight into which of these hypergrowth markets are now experiencing growing pains as their success demands greater investment in infrastructure and regional planning to facilitate growth if they are to keep their appeal.

Research | Inflation, The Economy, and Commercial Real Estate

In June and July of this year, the Fed raised the interest rate at the fastest pace in forty years: it raised the federal funds rate 75 basis points at each open market committee meetings. Why did it do so, and what do its actions and current economic data say about the economy? This report will investigate and answer these questions, as well as explore the thinking that is guiding the Fed’s policies and explain the implications of these policies for commercial real estate.

INFLATION AND THE ECONOMY

• What is the federal funds rate and what did the Fed do with it in June and July of 2022?

• Why did the Fed raise the fed funds rate by so much in June and July?

• What does current economic data say about the state of the economy?

• What does the mixed economic data imply for future Fed policy regarding rate?

COMMERCIAL REAL ESTATE IMPLICATIONS

• Given future increases by the Fed and current inflationary conditions, what implications does this have on commercial real estate?