Amidst uncertainty, there is optimism in the commercial development and real estate sectors.
Despite a possible (current or future) recession and fluctuating interest rates and workforce availability — to name just a couple of uncertainties — stakeholders shared over breakfast industry highlights and opportunities, and some challenges, during BOMA Idaho’s sold out 26th annual Commercial Real Estate Symposium. BOMA Idaho is the state chapter of the Building Owners and Managers Association.
This year’s symposium theme was Leading the Way.
“We thought this was incredibly relevant, given the economic situation we’re in — interest rates, inflation, the past three years of COVID and everything that came along with that, supply chain and countless other issues that we’ve had to deal with,” said Trever Nicoll, incoming organization president. “That being said, we feel really confident about the future, but I’m sure all of us could say that in the past six months, we’ve felt a little bit of turbulence, and probably anticipate feeling a little bit more over the next six to 12 months.”
The event featured market updates, a keynote speech and two panel discussions as well as time for networking for the attendees. What follows is a snapshot of insights into the commercial space sector.
Data shows Idaho remains in the top-10 places people are moving to, according to Wes Jost, senior vice president and senior director of Zions Bank’s Idaho real estate banking group. The state’s unemployment remains below the national average, at about 3%, and the state’s employment growth has been at about 3%, so, “(some) opposing forces there,” as Jost described. Nationally, unemployment remains well below full employment, “and that’s going to have a real impact on our inflation,” Jost said. And low labor force participation will also be an influential factor.
Some of the top sectors of employment growth in Idaho include construction, trades and utilities.
And while inflation has been slowing, the region’s change in consumer prices is at about 8% and has consistently been above the national average (currently about 6.4%). But those numbers are now starting to converge, which was the case pre-pandemic.
“It’ll be interesting to see where it happens here, in 2023,” Jost said.
Nationally speaking, gross domestic product is fluctuating, and its positivity or negativity is very likely to affect whether the Federal Reserve (the Fed) continues to raise its rate.
“We need to get the Fed funds rate up to a point where it crosses over with inflation, so it helps tamper that down,” Jost explained.
The workforce challenge is a layered issue and a result of a variety of factors, such as a fundamental demographic change, the pandemic’s reconstruction of the labor market, and the skills gap.
Geoff Wardle, BOMA Fellow and partner at Clark Wardle LLP, discussed these challenges and addressed the importance of workforce development.
“Workforce development requires all of us. It is so crucial to BOMA that we have restructured our entire federal advocacy program around workforce development,” he said. “The committee’s goal is to eliminate redundancy, increase sharing of information and address the workforce challenge.”
To resolve workforce challenges, Wardle suggested utilizing those that are available through the Idaho Department of Labor, such as the work opportunity tax credit and the growth opportunities grant program. He also mentioned the importance of supporting fair chance legislation.
“We have to quit disqualifying people from the workforce. Most job applicants are not applying for jobs that necessitate disqualification for past criminal acts,” he added. “I would encourage each and every one of us to support employment for all and take the steps necessary to do that.”
Industry leaders also discussed the challenge of affordable housing and the issue of housing availability, as well as possible solutions.
A revised zoning code was discussed as a comprehensive solution to the housing dilemma. Elaine Clegg, incoming CEO of Valley Regional Transit and former Boise City Council president, said the city’s zoning plan would help to resolve the crisis at a local level, as it calls for more density, smaller lot sizes and more opportunity for mixed-use development.
“The plan is looking at corridors for a really intense development that we think will bring new kinds of activity and the number of living spaces that we need,” she said. “It’s much needed if we are going to solve this housing crisis.”
Another point highlighted in Wardle’s advocacy speech was for construction industry leaders to find innovative ways to lower housing costs and find ways to reduce construction costs for more affordable housing options in the state.
“We have to get creative,” he said, “We have to change our approach to housing; we have to reduce unit costs. We have to get creative in our use of materials and find cheaper ways to deploy the means of construction.”
Wardle also mentioned the overlap between affordable housing and workforce development.
“Limited housing choice restricts regional labor supply, forces lower wage employees into long commutes and entrenches economic segregation,” he said. “If we want to attract and retain our employees, there has to be housing choice.”
— This piece was written by reporter Chloe Baul and managing editor Alx Stevens.o