Mon 22nd Dec 2008 12:00 PM
A few large commercial projects are keeping the Coeur d’Alene construction market alive this year while residential construction slumps.
The city issued just over 200 single-family home permits between January and November this year, compared to almost 600 in the same period at its five-year high in 2005. And single-family project valuation dropped from about $95 million in 2005 to about $36 million in 2008.
Multifamily construction is down, too. In 2006, multifamily construction peaked at 47 building permits with a total valuation of almost $82 million between January and November. But in 2008, only one permit was issued for a $6 million project during that same period (a 97 percent valuation drop).
Over on the commercial side, permits for over $60 million of construction were issued between January and November this year, compared to $87 million during the same period last year, when commercial construction reached a five-year high. This year’s commercial total beats the years leading up to 2007 (2004 saw just $31 million in commercial construction in January through November).
One of the big projects from the last few years is the Riverstone development. It includes 50 condos, retail, parks, restaurants, hotels and offices. Recently, developers completed a couple of new buildings, and the city has issued permits for additional restaurants and tenant improvements, according to Coeur d’Alene Building Official Ed Wagner.
He said Riverstone developers “moved an entire mountain,” or at least a hill, to build the project right off Highway 90, which Wagner said is bringing in major national tenants and has a “good feel to it.”
The office space in the Riverstone development and other projects like the mixed-use Tullamore development in Post Falls are coming into a real estate market that is already overbuilt, said real estate agent Joe Fabiano of Windermere/Coeur d’Alene Realty. He said office vacancy rates are around 7 to 8 percent, with retail in the 9-to-11-percent range. Each of those rates is about 2 percentage points higher than it has been in recent years.
“The Coeur d’Alene market would be better if we could get our office vacancies back to 3-to-5 percent, and retail in the 6-to-8-percent range. That’s a more robust economy for us,” he said.
He said the overstock really started to build up about a year ago, as landowners “got ahead of themselves” and started building to try and earn a return on their property investments. And he said he thinks it will be about 18 months before vacancies start to get back to better rates.
“There are still a number of projects coming out of the ground, and they’ll just contribute to the oversupply,” Fabiano said. “We don’t have enough local economic backfill to fill the space.”
One big project that will not add to the commercial oversupply is the Salvation Army Ray and Joan Kroc Corps Community Center. The Salvation Army issued a $70 million grant to its Coeur d’Alene branch back in 2006 to build and operate the new community center, which includes pools, gyms, a track, a recording studio, an amphitheater, a chapel, classrooms, sports courts, an indoor playground and more.
“Living in North Idaho, the winters are long, and there are just a few places to go,” said Major John Chamness of the Salvation Army. “This will add a whole other dimension.” He said the center will provide a place for kids to come after school and participate in activities, classes and sports teams.
Goebel Construction of Spokane is building the 123,000-square-foot building, designed by Architects West of Coeur d’Alene. Chamness said the project’s biggest challenge came from its site: it was an old gravel pit, 37 feet deep. Crews brought the site up to eight feet below street level, leaving passersby with a view of the building and surrounding trees instead of the parking lot.
Chamness said crews are finishing the building from the east and west ends into the center, working toward completion in just over three months.
Fabiano said despite the oversupply, he thinks the Coeur d’Alene real estate market experiences higher demand than much of the nation.
“On a relative basis … we’re perceived as having good moderate costs. And secondly, our demographic growth is outpacing on a percentage base many of the other second- and third-tier cities in the nation,” he said. “We’re offering a more attractive lifestyle here.”
By Dani Grigg
Idaho Business Review
