There’s no doubt the Boise-metro area is growing and with that comes development and redevelopment across all its commercial real estate sectors.
As reported in a previous edition of Square Feet, the Treasure Valley had a banner year for multifamily construction in 2018. And dozens of new projects – mostly market rate but also senior and some affordable apartments – are on the drawing boards, ready to break ground or coming out of the ground in 2019.
Property investors – both nationally and locally – are looking for unique opportunities in Boise, where the rental demand is intense, occupancy rates are high and rental increases are on the rise.
One player with a major stake in the area is a global real estate investment company that’s not only looking to breathe new life into older properties but plans to add to its holdings by bringing new apartment homes to the market.
Publicly traded Kennedy Wilson’s Nov. 21 acquisition of the 188-unit Cottonwoods Apartments is the fifth significant purchase in Boise since the company started investing in the region in 2014. In addition to the $24 million it paid for the Cottonwoods, the firm will bankroll a $6 million refurbishment and rebranding of the Southeast Boise property, which will be renamed “The Reedhouse.”
Beverly Hills-based Kennedy Wilson’s other assets include Whitewater Park Apartments with 324 units; Edgewater with 300 units; River Pointe with 204 units; and Rosewood Apartments with 168 units. All of the Boise multifamily properties were secured through off-market transactions, acquired directly from private sellers.
“Boise has emerged as one of the fastest-growing metro areas in the United States and one of the top-performing markets in our multifamily portfolio,” said Nick Bridges, managing director at Kennedy Wilson. “With Cottonwoods, we have the opportunity to take a very well-located property and add significant value through a top-to-bottom renovation program that will bring the property in line with the best multifamily properties in the area.”
“We are excited about the potential to find and create value within the Boise multifamily market and plan to continue exploring opportunities to expand our presence there,” added Bridges.
With nearly 1,200 units owned currently, the company hopes to grow to 2,000 units in the Boise area by the end of 2020 through new acquisitions and development, according to a news release.
Over the next several years, Kennedy Wilson also has plans to develop 166 multifamily units on seven acres of land directly adjacent to the properties in its Boise portfolio, as well as 278 units on a fully-entitled, 22-acre site on the Boise River Greenbelt in Eagle.
Through a spokeswoman, the company declined to comment on what the rental rates will be at The Cottonwoods once upgrades are completed – or if the new apartments coming on line will be catering to higher-income earners.
Just who Kennedy Wilson is targeting is no secret, though.
In an interview with Commercial Property Executive magazine, Kennedy Wilson CEO William McMorrow said young professionals appreciate the flexibility and mobility that renting provides, and the company is looking to cater to this demographic. “You’ve got a group of Millenials who in many cases don’t want to own a house, so the sacred cow of ‘You should all own your house’ is just not true anymore,” said McMorrow.
On the other end of the spectrum, many baby boomers are downsizing and like renting because it frees them from maintenance and upkeep.
Meridian continues to be a hotbed of apartment growth inside Ada County for those 55 and older.
With the 150-plus-unit Affinity at Boise apartments at Eagle and Ustick roads now fully rented, another developer is moving forward to appeal to the active adult demographic.
Looking to serve this clientele is The Brighton Corp., which plans to add its first residential element to The Village at Meridian with a 166-unit active adult living complex behind the Boise Co-op. The five-story structure, which is called Cadence at the Village, will target residents aged 55 or older, said David Turnbull, Brighton’s CEO.
The Village at Meridian only came on Brighton’s radar about 10 months before it bought the 2.5-acre lot behind the Boise Co-op in January from CenterCal Properties, which owns The Village at Meridian. Construction at Cadence at the Village is now underway, with completion targeted for summer 2020, Turnbull said.
Not to be outdone, the apartment market also includes a few builders looking to serve renters needing affordable digs.
The 144-unit Adare Manor Apartments now are rising on Fairview Avenue between 24th and 25th streets. The same team recently opened the nearby 41-unit New Path Community Housing for the chronically homeless.
The $20 million Adare Manor will have designated units for tenants earning 30 percent of the area’s median wage and for tenants earning 80 percent of the median wage. The complex also will include 13 market-rate apartments, according to the developers’ website.
Construction of a 26-unit housing project is expected to start this spring for local military veterans experiencing homelessness.
According to the City of Boise, Valor Pointe, which will be located on the southwest corner of State and Fargo streets, is described as a $6.2 million project with funding coming from a variety of sources.
The Boise City Council on Dec. 11 OK’d an application for rezoning the land on which the new, four-story apartment complex will rise.
Spearheading the development effort is a group of partners, including the Boise Veterans Administration Medical Center (through the VA Supportive Housing Program), the Idaho Housing and Finance Association, Boise City/Ada County Housing Authorities and the City of Boise.
Construction is slated to be finished by early 2020, according to the development team.
With the city of Boise’s apartment occupancy rates hovering between 98 and 99 percent for more than a year, competition is fierce for living space of all types.
Boise apartment rents have jumped an average of 4 percent in the past year, according to RentCafe, a national listing service.n