A box for an Amazon prime customer moves through the new Amazon Fulfillment Center in Sacramento, Calif. on Feb. 9, 2018. The company is building a 110,000-square-foot distribution warehouse on the south side of Idaho Falls.
A box for an Amazon prime customer moves through the new Amazon Fulfillment Center in Sacramento, Calif. on Feb. 9, 2018. The company is building a 110,000-square-foot distribution warehouse on the south side of Idaho Falls.
Amazon is building a 110,000-square-foot distribution warehouse on the south side of Idaho Falls. That news is the top highlight from a positive commercial real estate report for the Idaho Falls area.
While the Amazon warehouse will be about one-sixth the size of the massive 650,000-square-foot fulfillment center the company opened in Nampa in 2020, it’s still a significant addition to the Idaho Falls market.
Idaho Falls’ commercial real estate vacancy rate is at a record low, with total vacancy at 1.6%.
And, despite limited product, leasing activity remains strong, according to TOK Commercial’s third-quarter market report which looks at office, industrial and retail sectors as all three adjust to new demands for design models and location needs throughout Bonneville County and the surrounding area.
Notable top deals from the third quarter included Summit Orthopaedics occupying a new 19,000-square-foot office in Idaho Falls, and office space at 780 Bridgeport Road in Taylor Crossing being absorbed by Alpine Dermatology and Snake River Surgical.
Other commercial real estate trends show tenants such as Modern Home, Elevation Labs and Intermountain Auto Recycling expanding and opening new locations.
In fact, 200,000 square feet of net absorption was recorded in the industrial category proving that there is some inventory still to be had — and it is coveted.
And it seems with the new Amazon distribution warehouse, that number will significantly increase this year’s fourth quarter.
“The Hitt Road corridor, especially for retail, is taking off. Tenants see the value in being located near a regional retailer, and so you’re going to capture the shoppers from Mackay, Island Park and Jackson in that type of location. There is no doubt that Costco is a magnetic point,” said Brent Wilson, an Idaho Falls-based partner with TOK Commercial.
“Thirty-five percent of Costco sales are coming from the outlying communities,” he added.
Wilson joined TOK Commercial as a brokerage services specialist in 2016. Known for having brokered many notable single-tenant and multi-tenant transactions in the region, Wilson has represented a range of landlord clients including Cole Real Estate Investments / American Realty Capital Properties Inc., Developers Diversified Realty (DDR) and the Woodbury Corporation. His tenant client list includes Costco Wholesale, Walmart, Panda Express, Jack in the Box, Wells Fargo, Sears, Cricket Wireless and Dutch Bros. Coffee.
There are a couple of projects in the mix that are not stand-alone buildings but shopping developments — and one is in the heart of Costco’s magnetic reach.
“There are a few projects penciling but one in retail that is compelling is Riviera Park, on the corner of Lincoln Road and Hitt Road, northeast corner office at Costco. They have multiple retail and restaurant, tenants committed to that project for a hopeful opening in 2024,” he said.
Wilson described the project as similar to the Sandcreek Commons in Ammon.
TKO’s quarterly report noted that retail is still facing the highest rate of vacancy though the vacancy rate has been steadily declining for the last nine months, it’s currently at 4.5%. In addition, unanchored vacancy continues to hit historic lows down from 6.4% to 2.4% over the past 12 months.
With a spectrum of clients in Montana, Idaho and Wyoming, Wilson is seeing the big picture trends in commercial demands, especially for restaurants in the post-pandemic world and what is specific to Idaho Falls that makes it an attractive market for franchises, more so than Pocatello.
“It’s a very different market, much smaller with less empowerment. Bonneville County, for example, does over $3 billion per year and gross retail sales and Bannock County does less than $1 billion per year in gross retail sales.”
Wilson says in Pocatello it is a combination of lower incomes, and that also, the consumers with higher incomes are just close enough to head south to Salt Lake City for their big shopping runs.
Other trends in town are related to design requirements and what Wilson says is a sign of the times.
“These new concepts are essentially prototypes that are in response to COVID, like drive-up windows,” he said.
The Chipotle chain when it released its fourth-quarter earnings report in 2021 said the success of the drive-thru lanes was so apparent that the chain has plans to add them to 70% of its new stores in the coming 2022. They’re dubbed Chiptolanes.
Whatever the lane is called, it’s clear real estate traffic in Idaho Falls is not slowing down as it heads into the final quarter of 2022.
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