Real estate outlook bright

COEUR d'ALENE - What's on the real estate horizon in Kootenai County?

Coldwell Banker Commercial Schneidmiller Realty tried to answer that question on Thursday at the Kroc Center for more than 300 guests at a commercial real estate market forum. Coldwell Banker representatives also provided reviews of 2011.

Highlights of the outlook for this year included:

Office space landlords were advised to diversify their tenant bases as much as possible and avoid any dependence on large-space users. At the same time, they must focus on tenant retention.

Apartment owners were told to expect several more years of very healthy market conditions.

Significant retail expansion will not occur until the unemployment rate has been reduced.

And industrial real estate should offer attractive returns over the next several years as recoveries are seen in business inventory, import and export volumes, consumer spending, and manufacturing.

Rob Kannapien, of Coldwell Banker, said, "I see very little downside and lots of upside for owner users" in industrial real estate.

Other than industrial, the commercial real estate specialists at the forum delivered presentations on the office, retail, multi-family and investment sectors of the county's real estate market.

Pat Eberlin of Coldwell said office tenants are taking advantage of historically low rents.

"Landlords continue to get hit hard with rental concessions," Eberlin said.

Large-space retail tenants have an abundance of options and are in a position to negotiate concessions for security on long-term deals, he said.

Doug Rall, who spoke about trends in the county's retail real estate sector, said vacancies measured at 10.3 percent in 2011. But that's expected to drop to approximately 9 percent this year.

Notably, the Silver Lake Mall's vacancy rate was 25 percent, and the outlet mall in Post Falls was at 80 percent, he said.

"We're climbing out of the trough," Rall said.

In 2011, he said, new retail development projects were not seen. New store openings were few and far between and were offset by store closings.

The unemployment rate was 10.2 percent in December, down from 11.6 percent in the prior year. Unemployment continued to be a drag on retail expansion, he said.

Some good news, he said, "Consumers will continue to buy from pent-up demand."

He said taxable retail sales will increase to as high as 10 percent.

Glenn Sather, of Coldwell Banker, said demand for apartment rentals is being driven in part by "echo boomers," in their 20s and 30s, who are staying single and mobile longer and are reluctant to buy a home.

Many of them are not sold on the value of the "American Dream," with job insecurity and a perception lingering of sinking home values.

Plus, fewer people can buy homes because of financing.

Those and other factors, including returning military veterans seeking a place to live, have resulted in a growing demand for apartments, he said.

Of that demand, he said, "It's really off the charts," adding, "Our tenant pool is expanding very, very quickly."

The national apartment vacancy rate is 5.5 percent, and the rate in North Idaho is 2.3 percent, as of last spring.

He said that will put upward pressure on rental costs.

All of this is good news for owners of apartments, and investors are looking to seize the opportunity.

Wayne Burton, of Coldwell Banker, spoke about real estate investment in the county, saying lending will improve for investments.

"The banks have survived the worst and are looking for good, solid loans," Burton said.

Office and retail investment will continue to struggle, he said.

But with interest rates where they are, he said, "It is the best time to buy I have seen in a lot of years."

According to sales recorded in the Coeur d'Alene multiple listing service, county commercial sales volume in 2011 was $22.1 million. That's a nearly 129 percent increase compared with 2010.

The average sales price also saw a significant increase to $442,628, compared with $345,475 in 2010.