In the heart of Idaho’s construction boom, towering cranes dominate the skyline, driven by a robust multifamily project landscape. Beyond this urban transformation, the construction sector is embracing a new era of “mega projects,” led by endeavors like Micron’s groundbreaking FAB facility.
Surging demand for multifamily housing
The demand for multifamily housing is on the rise in the Treasure Valley and throughout the state of Idaho. The City of Boise alone has stated it will require 2,770 units each year for the next decade to keep up with the demand. Notably, 77% of this demand is for housing that’s affordable to those earning 80% or less of the area’s median income.
As people continue to flock to the Gem State, affordable housing and a vibrant apartment lifestyle appeal to newcomers and those facing challenges entering the single-family home market.
Ryan Pina, realtor with The Premier Group, said a significant factor contributing to the rise in multifamily construction is the evolving preferences of the younger demographic.
“Millennials and individuals aged 18 to 25 now lean towards renting over owning a home,” he added. “Studies show they prioritize a debt-free lifestyle, value mobility and prefer proximity to urban amenities.”
A recent Today’s Homeowner study found that long-term renting in Boise is far more cost-effective than buying. Over three decades, the average Boise renter will spend $1.11 million. In contrast, homeowners will spend $231,826 more. On an annual basis, renters save $7,728.
Investor interest in multifamily housing
According to Pina, large-scale investors and institutions are increasingly drawn to the multifamily sector.
“Investing in multifamily properties provides tax advantages, making it an appealing option for investors,” he said. “The potential for long-term appreciation and growth in value is a significant driving force.”
Pina underscores Boise’s remarkable real estate market performance, which has thrived despite economic downturns and global events like the COVID-19 pandemic. Investors are taking note and intensifying their focus on multifamily development.
From an economic perspective, building multifamily properties proves to be more cost-effective than single-family homes, especially during periods of high inflation.
“The cost per square foot for constructing multifamily housing is notably lower than that of single-family homes,” Pina stated. “This cost-efficiency enables landlords to maintain reasonable rental rates, contributing to more affordable housing options.”
Additionally, constructing multi-family properties can lead to lower resale values, making homeownership more accessible for first-time buyers.
“While the lots may be smaller and closer together, this approach helps bridge the gap in the first-time homebuyer market,” Pina said.
Pina also addresses future uncertainties looming over Boise’s real estate market. “Despite the perception of homes spending more time on the market, the demand for housing in the Boise area remains high, with a shortage of supply.”
He predicts that the real estate market in Boise is projected to reach its bottom in 2024. However, the exact timing remains uncertain, given the upcoming election year and the potential impact of changing policies and economic conditions.
Construction beyond multifamily: Idaho’s “mega projects”
While multifamily projects are taking the spotlight, Idaho is also experiencing a surge in “mega projects” with budgets exceeding a billion dollars, placing significant demands on the construction industry.
Wayne Hammon, CEO at Idaho AGC, points out several of these noteworthy projects, including Micron’s large office complex and their groundbreaking $15 billion manufacturing fab. Additionally, there are substantial undertakings like the development of a wastewater treatment plant in Kuna, Meta’s $800 million data center in Kuna, and various Idaho National Laboratory projects in eastern Idaho.
Scott Gatzemeier, CVP of front-end expansion at Micron, discussed how the 600,000 square foot semiconductor cleanroom project — slated for a decade-long completion—will contribute to the growth of the construction job market.
According to Gatzemeier, Micron’s strategy involves not only addressing its workforce needs but also closing the gap in the Treasure Valley’s construction, trades, and labor market.
“We’ve been in discussions with the local trades, unions and union halls to bring in more workers. We’ve also been exploring travelers’ housing, childcare flexibility, and women’s entry into the construction workforce,” he stated. “We want to enable diversity and make this construction project accessible to all.”
Additionally, Micron is engaged in apprenticeship programs and offsite manufacturing techniques to upskill the existing workforce and reduce labor costs. According to Gatzemeier, Micron plans to reduce their construction labor force by up to 25% locally by doing offsite manufacturing.
“It’s safer, more cost-effective, and efficient, ultimately taking pressure off the local workforce and benefiting the community as a whole,” he explained.
Rise of Light Industrial
Another notable trend in the Idaho construction sector is the growth of light industrial facilities. Hammon highlights an increase in facilities combining office space with storage or workshops, particularly in West Boise and East Meridian.
This type of real estate includes businesses such as home remodeling stores and electrical supply stores. Notably, it differs from standard retail locations as it prioritizes functionality over showroom aesthetics.
Adler Industrial, a prominent player in the market, is actively involved in the construction of such light industrial spaces, according to Hammon, indicating a surge in their demand.
“They’re building them as fast as they can,” he said. “While the retail market itself—like the shopping mall market—is soft right now, this light industrial is doing very well in Boise.”