Recently Leased | Retail Building | Garden City

Garden City, Idaho – September 2023– Lee & Associates Idaho, LLC has facilitated the lease of a 1,746 SF retail building at 4299 W. Chinden Blvd., Garden City, ID 83714. 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.

Chase Erkins, Principal, and Trey Thomas, Principal, at Lee & Associates Idaho, LLC represented the landlord, Chinden at 43rd LLC, and the tenant, William Groebler.

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.”

Q1 2023 Economic Reports

GDP GROWTH: TRENDING IN Q1 2023

The nation’s gross domestic product slowed dramatically in the first quarter, reflecting reduced production of goods and services that rose at a seasonally adjusted 1.1% annual rate in the first three months. Nevertheless, the Q1 data released by the Commerce Department shows that consumers still are spending despite higher prices driven by high inflation, which the Federal Reserve is trying to stifle by raising interest rates. Spending on travel, restaurants, and other services continues to rebound. Purchases of goods also rose after four straight quarters of declines.

EMPLOYMENT: TRENDING IN Q1 2023

Although nonfarm U.S. employment gains totaled 236,000 in March and the 3.5% unemployment rate was little changed, job openings fell to their lowest level in nearly two years, a sign to some economists of an easing labor market.

MONETARY POLICY: TRENDING IN Q1 2023

The Federal Reserve increased interest rates twice in the first quarter, bringing the benchmark borrowing rate to a new 4.75%-5% target range – the highest since the mid-2000s – as Fed Chairman Jerome Powell signaled the need for more tightening was increasing.

GLOBAL ECONOMY: TRENDING IN Q1 2023

It’s been one year since central banks began raising interest rates to slam the brakes on inflation. Although pricing pressures have receded, risks to financial stability have increased along with pessimism that a soft landing can be achieved.

Recently Sold | Retail Building | Boise, Idaho

Boise, Idaho – May 2023– Lee & Associates Idaho, LLC has facilitated the sale of a 51,559 SF retail building in the Country Club Plaza, located at, 4540-4550 W. Overland Rd., Boise, ID 83705. 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.

Chase Erkins, Principal, and Trey Thomas, Principal, at Lee & Associates Idaho, LLC represented the buyer, KC Emerald Property Holdings, LLC.

How can investors take advantage of a recession through commercial real estate?

While a recession can bring challenges for commercial real estate investors, it can also create opportunities. Here are some ways that investors can take advantage of a recession through commercial real estate:

1. Look for distressed properties: During a recession, some commercial properties may become distressed due to financial difficulties, such as a high vacancy rate or difficulty making mortgage payments. Investors can seek out these distressed properties and negotiate a favorable deal, potentially buying the property at a discount and turning it around for a profit.

2. Focus on cash flow: In a recession, it's essential to prioritize investments that generate steady cash flow. This could mean investing in commercial properties less susceptible to economic downturns, such as industrial or multifamily properties, or finding properties with long-term leases and stable tenants.

3. Be patient: A recession can be an excellent time to be patient and wait for the right opportunity to present itself. This could mean waiting for prices to come down or for a distressed property to become available.

4. Diversify: Diversification is essential in any investment portfolio, and commercial real estate is no exception. Investors can diversify their portfolio by investing in properties in different sectors, such as office, retail, and industrial, as well as other geographic locations.

5. Consider value-add opportunities: A value-add opportunity involves investing in a property with potential for improvement, such as upgrading the property's amenities or renovating to increase its value. During a recession, value-add opportunities may become more prevalent as landlords may be more willing to negotiate and have difficulty finding tenants.

In summary, investors can take advantage of a recession through commercial real estate by seeking out distressed properties, prioritizing cash flow, being patient, diversifying their portfolio, and considering value-add opportunities. As with any investment, it's essential to do thorough research, consult with professionals, and feel the potential risks and rewards before making investment decisions.

To take advantage of a recessionary market, an investor needs to have good market knowledge to know if a deal that comes across their desk is good or if they may be better off waiting for other opportunities. Feel free to reach out if you are interested in chatting about real estate in the Treasure Valley.

Chase Erkins, SIOR
Principal, Associate Broker

208-789-4900
chasee@leeidaho.com