The hybrid office era in Boise: Adapting to a changing workplace

Since the pandemic, there has been a tremendous change in how companies use their office space. We are frequently asked about Boise office space use, the new normal and the impact of the work-from-home phenomenon locally. I thought it may be worth sharing some observations on how Boise area companies are using their office space, and how to navigate the current local market.

It is interesting to note that one company’s surplus office space can present an opportunity for another.

Since 2020, we have seen it all. Some companies gave back their office space immediately and have yet to return. Others never left the office. But most common are companies that have adopted a hybrid office-use model. These companies can work remotely but also benefit from working in person.

Some companies continue to operate as they did pre-pandemic, maintaining private offices or designated workstations for each employee. Others have significantly downsized, opting for shared workspaces where employees utilize available desks rather than having dedicated personal offices. This hybrid model appears to be a lasting trend, offering businesses a competitive advantage in attracting and retaining talent while downsizing their office footprint.

In my opinion, even as labor market conditions turn in favor of employers, flexible work environments will remain the new normal.

We all know that big urban areas have an excess supply of office space, especially in dense downtown environments. Vacancy rates as high as 25% to 40% are common and office landlords are giving back their property to the bank or repurposing office buildings for some other use.

But here in Boise, the vacancy rate is healthy, in the 6% to 8% range. As spaces hit the market, they are absorbed by companies needing more space or upgrading their current office. If there is a trend, I would say it is that companies are downsizing their overall footprint but upgrading their office environment to draw employees back to the office, at least most of the time.

We are not seeing companies leave the downtown area for the suburban areas as is common in bigger metros. Commuting and parking are not the issues they are in bigger cities. But suburban offices seem to be the trend for expanding companies and companies moving to Boise. In fact, the supply of new office space in Meridian is nearly exhausted and the nicer, functional spaces in older buildings are quickly leased.

This issue is compounded as construction costs have soared, making new construction non-existent, and significant remodels too expensive. Soon, we very well could be out of nice office options in the suburbs.

Given this, how does a company navigate securing a nice office allowing for productivity, efficiency and attracting employees to work in person? In the distant past, we would prepare for an office tour by lining up a half dozen or more options to look at. These days, the options can be counted on one or two fingers, and these options may not be ideal. Some starting points:

• Engage a tenant representative to work for you on your side of the table.
• Start the process early, at least a year prior to a lease expiration date.
• Gain a full understanding of the current real estate market and landlord motivations.

Once you have a team, an understanding of the market and a good head start, businesses can explore creative solutions. In several cases, we have found a “plug-and-play” sublease to be a good fit for our clients. Many companies that have moved fully remote, or no longer have a need for office space, leave behind a highly functioning layout and often furniture, artwork and other amenities.

These subleases can be great solutions for companies wanting to upgrade their office but not commit to a long-term lease and incurring substantial renovation and furnishing costs.

Here are a few examples of companies and why they secured plug-and-play subleases:

• Financial services firm: Downsized by half and moved to a sublease in the suburbs. Paid full-market rent but avoided cost of tenant improvements and purchase of new furniture that would be required in a new office building.
• Back-office contact center/creative firm: Forced to move due to unforeseen circumstances but unsure of future space needs. Opted for a two-year furnished sublease that allowed for flexibility while providing an enticing environment for employees.
• Out-of-area office employer: Had multiple executive suites around the valley, plus employees working from home. Wanted everyone under one roof but uncertain as to future space needs. Signed a two-year furnished sublease in a preferred central location.

These examples highlight how companies can secure high-quality office space with minimal upfront investment in a competitive market. While subleases can present initial navigation challenges and uncertainties upon lease expiration, working with an experienced tenant representative ensures businesses can effectively manage the process and optimize their office strategy.

As Boise’s office market continues to evolve, businesses that embrace hybrid work models, explore flexible solutions and leverage expert guidance will be best positioned for success in this crazy office market.

Greg Gaddis is the managing broker at Tenant Realty Advisors, a tenant representation firm in Boise Idaho.