Local economic outlook positive, with some challenges

Even the most upbeat sector forecasts delivered at the Boise Metro Chamber of Commerce Economic Outlook forum Nov. 13 came with warnings of challenges in store for 2008.
Business, government and community issues are getting more complex even though the Boise area’s prospects remain solid, and better than those of many U.S. locations, local market experts said.

Emerging companies
Idaho’s government should do more to support Idaho’s emerging companies, many of which are high-tech, Treetop Technologies Inc. founder and Chairman Jason Crawforth said.
“The public sector has taken for granted what this industry brings to our state,” he said. The emerging company / tech industry in the last 15 years has grown rapidly despite a lack of involvement from government, he said.
Enterprises in science, technology and innovation – the biggest industry in the state – generate about a quarter of Idaho’s revenue and 70 percent of export dollars, said Crawforth, a member of the Governor’s Science and Technology Advisory Council.
State spending in the category per capita is substantially higher in Colorado, Oregon, Montana and Utah, he said. Such spending can produce strong returns on investment, he said.
“How are we going to pay for the rising costs of infrastructure? The last time I checked, agriculture is not going to pay the bills. Technology is going to pay,” Crawforth said.
Crawforth, in an interview, said one thing that Idaho can do is spend money to market itself nationally to the emerging company/tech sector. States including Oregon do this, and newspapers in the Silicon Valley frequently carry ads promoting other communities, he said.
In his presentation, he urged local business leaders to learn about and support emerging companies, which must compete nationally and internationally, he said.
Crawforth displayed a slide showing numerous emerging companies in the area and twice asked for a show of hands. A majority of audience members indicated they have heard of at least one of the companies, but only a handful indicated  they have done business with them.
“We as a group in Boise in my opinion do a very poor job of supporting these emerging companies,” he said. Established companies should devote a portion of their budgets to reaching out to emerging companies, he said.

Commercial real estate
Downtown Boise office leasing activity has been strong this year, but now available space in older, class-B buildings is somewhat limited, said Debbie Martin of real estate firm DK Commercial. The ParkCenter area of southeast Boise offers few large office spaces, though that is an indicator that last year’s sale of Albertsons hasn’t had a lot of impact on vacancy rates, she said.
Active office submarkets this year include south Meridian – which has reported the highest total absorption – Eagle and Nampa, Martin said.
More sublease office space is available, partly because of the housing downturn, she said. Demand is down for small, owner-occupied building but up for spaces 15,000 square feet and larger – which bodes well for locations including the Emerald Corridor in west Boise, she said.
On the retail front, recently strong activity should continue next year, Martin said.
This year, strong retail areas included north Nampa, the Eagle Road corridor and downtown Boise, she said. Downtown Boise condo development figures to boost demand for retail services, she said.
Retail space absorption should increase next year, Martin said.
The industrial real estate market saw strong absorption this year and now has more demand than supply, as well as limited options that will push development to outlying areas, she said.
Commercial real estate investors from other cities continue to show interest in southwest Idaho, but “are looking harder at the numbers and taking longer to make decisions,” Martin said.

Residential real estate
Wayne Forrey of Kastera Homes, another forum speaker, said transportation will remain a key factor in the housing market’s long-term prospects. Forrey has worked in community planning for decades in southwest Idaho.
Historically, regulatory resistance to growth has been low in the Treasure Valley, he said.
“Anti-growth pressure is starting to grow. I think you can feel it,” Forrey said. He cited a scheduled runoff election in an Eagle mayoral race wherein candidates promoted opposing views on growth, and his own recent experiences.
“Every time I present a project to a city or county, I get a big, fat headache because I fear the project is going to be denied, and neighbors get a headache thinking it is going to be approved,” he said.
On the other hand, opposing sides have made efforts to understand the other party’s position – a positive in the long run, Forrey said.
Recent trends in the local housing market include in-migration, planned communities, user fees, a continued quality of life, and the Boise area’s exposure to a national audience, he said. Costs for land, housing and construction materials have dropped in many instances, and the Treasure Valley still has an ample supply of land and available utilities for residential development, he said.
Nationally, the Boise-area housing market ranks well as to factors including quality of life, home affordability, wage growth and education options, Forrey said.

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To contact the author, send e-mail to brad.carlson@idahobusiness.net.