Why Idaho’s Apartment Market Outpaces the Norm

Multifamily investment properties are at an all-time high throughout the US. The Fourplex Investment Group looks for key factors in a market when deciding to put a shovel in the ground and our reputation on the line by presenting a project to our investors. The key factors include:

  • Low Vacancy Rates
  • Decreasing Unemployment
  • Increasing jobs in a multi-sector market
  • Multidimensional job sector
  • Increasing wages
  • Fluid transportation options

When we can put this model together and then deliver a higher cap rate than the traditional market offers with new construction….a new FIG development will be born. So now that you have the back-story to the FIG decision-making process into new territories check out this great article from The Idaho Business Review. Full article found here.

Home / News / Construction / Treasure Valley apartment construction bucks national trend

By: Teya Vitu April 13, 2017

Apartment projects are going up across the Treasure Valley from Boise to Meridian to Nampa and to the next frontier in multi-family housing, Kuna.

Some 2,700 apartment units are in various stages of construction among those cities. Some are recently completed and some are being built in phases. That is a stark contrast to the near-zero multi-family construction in 2010 in metro Boise.

Multi-family housing has evolved in the 21stcentury, largely moving away from large buildings with hundreds of units. Locally, many developers have settled for the common denominator of sets of fourplexes with the occasional six-, eight- and 12-plexes, and townhomes are also popular.

The shift to smaller apartment buildings serves tenants and developers for different reasons.

“There is an aspect of intimacy with fourplexes,” said David O’Neal, owner of Foothill Construction, who is building nine fourplex and two duplexes across from Simplot Sports Center, a 161 complex of sports fields in southeast Boise. “You feel closer to your neighbors rather than just a door down a hall. In a fourplex, you have some semblance of your own yard. You have your own balcony or patio.”

Fourplexes also allow developers to commit to projects one small building at a time rather than having to bankroll one large structure at the outset. Several local multi-family housing projects are being built in phases.

CBH Homes is now building seven out of 44 buildings destined for its Crimson Point Village in Kuna, with the first two already completed.

“We now have 44 separate opportunities to proceed or not. We also have the opportunity to sell each one if we choose to,” said Corey Barton, president, and owner of CBH Homes, which has built three apartment projects since 2011 and has three more on the way.

The growing apartment market in the Treasure Valley may be running contrary to what many members of the National Multifamily Housing Council are seeing across the country. The NMHC in January reported the loosest apartment market across the country in seven years in terms of rents and occupancy rates.

Its quarterly survey of apartment conditions had a market tightness index of 25, a drop from 47 in January 2016 in an index where a 50 reading is the dividing line between loose and tight.

The index records the direction the market is moving, with index changes indicating more cities getting looser or tighter rather than reflecting any specific categories. A looser market means more cities report that occupancy rates are down and rents are lower, or rent increases are lower, said Mark Obrinsky, the council’s senior vice president of research and chief economist.

The survey had 58 percent of respondents indicating a looser market, 8 percent a tighter market, and 34 percent an unchanged market over the prior three months.

Clay Anderson

The Treasure Valley falls toward the tighter side of the ledger, with vacancy rates at just 3 percent and rents steadily increasing. Boise developers keep closer tabs on supply and demand, and many projects are leased while still under construction. Places like Seattle, Portland, and San Francisco have hedged apartment development to future prospects, which sometimes don’t pan out, said Clay Anderson, who provides investment brokerage services at Colliers International in Boise.

“Here it has to make sense today before we build it,” Anderson said. “Our market has absorbed the units we have brought on in very short order. We haven’t taken a downtick at all with occupancy.”

Park Place Property Management in Meridian manages 3,000 apartment units across the Treasure Valley.

“We’re continuing to see very little move-out activity,” said Andy Propst, Park Place’s president. “We have properties with 50 to 100 units and nobody has moved out, which is crazy. We’re seeing rental applications from Wyoming, North Dakota, Texas, and Calgary. In 2012, they were all from Boise. We rarely see applications from Boise now. Now 70 percent of the applications we see are from people moving from out of state.”

The NMHC survey also addressed the sales of apartment complexes, which had a similar 25 index reading with 55 percent of respondents seeing a lower rate of apartment properties selling. Boise may have an even lower index reading than the rest of the country in this category.

“There’s nothing being sold here,” Propst said. “There is no market action. If there is something to buy, there is demand, absolutely.”

Wes Jost

With all the apartment construction going on across the Boise metro area, lenders are being more diligent with funding multi-family projects, said Wes Jost, senior vice president of Idaho commercial real estate at Zions Bank.

“If creditors have lent a lot of multi-family, they are less inclined to lend in the current year,” Jost said. “They want to discover a different regional market.”

A developer’s track record in the local market is the key to obtaining financing, Propst said.

“There are some banks locally that have pulled back,” Propst said. “People who have relationships with banks have no problems (getting financing). If you are a new developer, you will get a different answer than a guy who has done three or four projects.”

Boise’s Brighton Corp., currently building the Paramount Square and Arboretum at Barber Station apartment projects, fits in with Propst’s reasoning.

“We will be doing more and we will get the financing because we pay our bills,” said David Turnbull, Brighton’s CEO. “Most banks are getting a little more cautious about lending.”

Perryman Construction owner Kelly Perryman in Nampa can also bank on his track record of building 15 multi-family housing complexes with 1,368 units since 2002.

“I think banks are doing more due diligence, but I haven’t had trouble finding money at all,” Perryman said.

Financing multi-family housing isn’t hugely appealing to banks, Jost said. Zions in Idaho is only financing The Fowler, the 159-unit apartment house nearing completion at Fifth and Broad streets in downtown Boise.

The reason is project economics, Jost said.

“Production costs are no less than years ago,” he said. “Renters pay a higher rent point. A lot of product today is pushing a higher rent point. So far renters are willing to pay it.”

But with the new era of Boise area apartment building dating to just 2014, banks can’t track enough history to feel fully comfortable with the continuous stream of more multi-family housing.

“We haven’t had enough (data) for determining if this is a sustainable trail,” Jost said. “You can’t underwrite on the future. You can only underwrite on the past. We don’t have enough of a track record of newer project delivery at a higher rent range.”

New apartments strain affordability for the lower-income class. Average rents are about $150 a month more for new apartments, according to statistics compiled by Valbridge/Mountain States Appraisal and Consulting.

They determined a new two-bedroom, one-bath apartment rented for $825 to $895 in January 2016 while a 30- to 40-year-old apartment commanded $675 to $735 a month.

Propst senses the apartment market south of Interstate 84 may be reaching saturation.

“Meridian south and west, I would be very cautious in that area because so much is being built,” Propst said. “Projects that are going up in Kuna are very much in demand.”

Kuna has three apartment projects under construction now. First out of the gate was CBH Homes’ Crimson Point Village, a 208-unit community at Ten Mile and Deer Flat roads that in spring 2016 was the first multi-family building permit issued in Kuna in the 8½ years senior planner Troy Behunin has worked for the city.

“After that apartment complex was given design review approval, there was a small project on Kay Avenue,” Behunin said.

Journey’s End will ultimately bring 96 apartments to Kuna.

That was also CBH Homes with its three, fourplex Tomorrow’s Subdivision, with those 12 units started in December and finishing up in April or May. Kelly Perryman is onboard in Kuna, starting construction in October with a first-phase, 36-unit Journey’s End set of nine fourplexes on Kay Avenue and just south of Kuna Road that will be followed in May or June with a 60-unit second phase with 15 fourplexes.

Two more projects have preliminary approvals in Kuna but have not started construction. These are 52 units in 13 fourplexes proposed by TNT Estates on Deer Flat Road west of Linder Road, and developer Don Newell is considering an underdetermined amount of multi-family for his mostly single-family Ashton Estates development at Meridian and Deer Flat roads.

“We are going to experience a lot more apartments than we ever have before,” Behunin said. “We are growing and developing and want to build apartments. People want to live in Kuna but can’t afford a house. In terms of being the next frontier, we are going to see an increase. More multi-family will find its way to Kuna because there is a demand for it.”

The Kuna population has swelled from 5,382 in the 2000 Census to an estimated 18,430 in 2016 with city planners preparing to double in population in 20 years. Behunin believes apartments play a crucial role in Kuna’s exponential growth.

“In order for a community to be considered healthy, you need a good balance of multi-family and single-family residences,” Behunin said. “They talk about (an ideal balance) of 8 to 14 percent multi-family. As of last April, we had only 3 percent multi-family.”

Cory Barton started building Crimson Point Village in October, 11 years after starting development with sewer and water.

“The market was starting to come apart (in 2007),” Barton said. “I said stop it.”

Nine years later, Barton was first out of the ground in Kuna, but he doesn’t see it as pioneering in Kuna.

“We had this,” he said. “We weren’t sitting here saying we can be the first one.”

Crimson Point will have 44 fourplexes. By the start of March, Barton had completed the first three finished, with two others under construction and two more starting in mid-March. The Architects Office is the architect.

“We’ll start to two to four buildings a month for the next couple years,” Barton said.

Apartment projects across the Treasure Valley

  • Boise = 1,046 units
  • Meridian = 840 units
  • Nampa = 520 plus
  • Kuna = 316 units
  • Total = 2,722


1,046 Units in Larger Projects

The Fowler, Fifth, and Broad streets, 159 units. Developer: LocalConstruct, general contractor: Andersen Construction, architect: Portland-based Holst Architecture. Construction started in February 2016 and will be completed this summer.

The Watercooler Apartments, 14th and Idaho streets, 37 units. Developer: LocalConstruct, general contractor: Andersen Construction, architect: The Architects Office. Construction started in June 2016 and will be completed in June.

Gatehouse Apartments, Ustick Road, 22 units. Developer: Biltmore Co, architects: Gary Lawson of Lawson Design Inc. in Nampa and NeUdesign Architecture of Meridian. Construction started in June.

Kensington Apartments, Saxton Drive, 323 units in 24 buildings. Developer and general contractor: Bach Homes of Draper, Utah, architect: Tuttle and Associates of Salt Lake City. The first seven Kensington structures with 124 apartments were completed at the start of March with additional buildings becoming ready for residents every six weeks.

Aberdeen Place Apartments, Allumbaugh Street and Fairview Avenue, 168 units. Developer Biltmore Co., architect: neUdesign Architecture. Construction started in 2013.

Tree Valley Apartment, Fastwater Avenue, 32 units. Developer and general contractor: CBH Homes, architect: The Architects Office. Construction started in October-November with completion expected in April.

Arboretum at Barber Station, Parkcenter Boulevard, 162 units. Developer: Brighton Corp, general contractor: Pentalon Construction, Architect: Richardson & Associates of Salt Lake City. Construction started in July with completion expected in stages from May to October/November.

Havenwood Multi-family (provisional name), Grand Forest Drive, across from Simplot Sports Complex, 48 units. Developer: Havenwood Partners, general contractor: Foothill Construction, architect neUdesign Architecture. Construction started in November with completion expected in June.,

SilverCloud Apartments, Goodyear Way, 56 units. Developer: Trilogy Development.

Towne Pointe, Preece Drive, 24 units. Developer and general contractor: Envision Homes, architect: Wilson Architectural in Garden City. Construction started in May and was wrapped up on Dec. 15.

Idaho Street Townhomes, Idaho and 16th street, 15 units. Developer and general contractor: Hale Development, architect: Cole Architects. Construction on the first nine units started in October with the next six units expected to start in spring.


840 Units

Stonesthrow Apartments, Florence Drive, 140 units. General contractor: Summit Developers, c. Construction started in July 2016 with 68 units complete. Completion expected in July or August.

Shallow Creek Townhomes, Locust Grove at Franklin, 60 units. Owner and general contractor: Summit Developers, architect: Houston Bugatsch Architects of Nampa. Construction started in mid-February with completion expected in July.

Paramount Square Apartments, Elsinore Avenue, 280 units. Developer: Brighton Corp, general contractor: Pacific Partners, architect: DG Group Architects. Construction starts as soon as weather permits.

The Franklin at Ten Mile, near Franklin and Ten Mile Roads, 360 units. Developer and general contractor: ESI Construction, architect: The Architects Office. Phase 1 with 128 units started in 2015 and completed in spring 2016, Phase 2 with 132 units started in September with buildings completed from May through October, Phase 3 with 100 units will start construction in summer and wrap up in September 2018.


539+ Units

Station at Gateway, Stamm Way, 256 units. Developer and the general contractor was Bach Land and Development of Draper, Utah, architect: Tuttle and Associates of Salt Lake City. The first 64 units opened in November across from the Nampa Gateway Center and the new WinCo store with the next 48 completed in March. Another 160 units should be complete in late summer or early fall.

Hayspur, Horton, and Kansas avenues, 30 units. Developer and general contractor: Perryman Construction Management, architect: neUdesign Architecture of Meridian. Construction started in September with completion expected in May.

RidgeCrest Commons, Birch Lane, 172 units. Developer: Biltmore Co.

Hines Creekside Park, Edgewood Circle, 48 units. Developer: Biltmore Co.


316 Units

Crimson Point Village, Deer Flat and Ten Mile roads, 208 units. Developer and general contractor: CBH Homes. Architect: The Architects Office. Started construction in October, first two of 44 buildings completed, the remainder being built in phases

Tomorrow’s Subdivision, Kay Avenue and Ensolarado Street, 12 units. Developer and general contractor: CBH Homes. Architect: The Architects Office. Started construction in December, completion in April-May

Journey’s End, Kay Avenue, south of Kuna Road, 96 units. Developer and general contractor: Perryman Construction Management. Architect: Glancey Rockwell Architects. The first phase o 36 units started construction in October, finishing in May or June to be followed by the second phase of 60 units.

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