COEUR d'ALENE - The power of momentum and history of cycles dictate that 2014 and 2015 will continue the gains of last year in the real estate investment market, said Rob Kannapien, a commercial agent for Coldwell Banker.

He was one of several speakers Thursday at the Kroc Center for the seventh annual Coldwell Banker Commercial Market Review and Forecast.

"What we are experiencing is an influx of major market investors looking for reasonable (capitalization rates) that they cannot achieve in Los Angeles, San Francisco, or even Seattle," Kannapien said. "For example, cap rates in some of these major markets are hovering between 4 and 5 percent for quality projects. Cap rates in our market are in the 7 1/2 percent to 8 percent range for similar quality."

While the lending environment has improved, he believes investors also now have a heightened appetite for risk.

"The very real momentum that we have felt in 2013 will continue in 2014," Kannapien predicted. "We have some headwinds that we have already discussed, but I believe that the momentum of our tailwinds will simply be too much to disrupt our deep-rooted history of commercial real estate cycles."

In the industrial real estate market, Doug Rall, also a commercial agent at Coldwell Banker, said more leasing activity has been seen through the fall. He expects vacancy rates to decline this year compared with 2013.

The recovery will lag behind the national markets since the county is outside the large metropolitan areas experiencing the most growth. The sharpest declines in vacancy in the county are not expected until 2015 and 2016.

Industrial property sales - under warehouse and manufacturing - reported by the Multiple Listing Service for the county totaled $4.7 million in 2013. That's up from $1.8 million in 2012.

"We estimate that demand for larger industrial buildings will increase as the market continues to recover," Rall said. "Rental rates will remain stable, with small increases for lease renewals in 2014."

Meanwhile, the retail sector performed better than the office sector in the past year, with the overall retail vacancy rate remaining at just more than 9 percent, with more than 8 million square feet surveyed. Office vacancy, by comparison, decreased 3 percent to an overall vacancy rate of 10.26 percent, with more than 8 million square feet surveyed.

Ryan Nipp, of Parkwood Business Properties, said retail vacancy rates will improve slightly in 2014 as existing space will be absorbed.

"Rents unfortunately will remain flat," Nipp said. "Too much inventory needs to be absorbed before there is any upward pressure on rents."

New retail construction will be limited in 2014 due to newer projects recently being developed.

"Unless there is a larger national tenant looking to locate in Kootenai County to be an anchor, I don't see anyone building (speculation) retail," Nipp said.

Riverstone has been growing and adding more tenants, he said. Retail space leasing activity at Riverstone has been strong in the past couple years, he said.

Across town, a new Golden Corral buffet is under construction near the northwest corner of Neider Avenue and U.S. 95. It will have 8,050 square feet of floor space and seat 110 customers, and have an area for private gatherings, Nipp said.

As for the county's office market, Riverstone has seen a lot of recent activity in that category, too.

"Lots are being sold and tenants are moving in," Nipp said. There are more projects on the horizon, he said.

The medical office sector saw a strong 2013, he said. A doctor shortage in North Idaho and statewide suggests there is more room for growth.

Additionally, citing statistics from Kootenai Health CEO Jon Ness, Nipp said in 2010 there was $250 million in patient-care revenue for North Idaho residents spent in Spokane hospitals. More than $100 million of that was from Kootenai County, he said.

"Those are staggering numbers," he said. "This is a huge opportunity for Kootenai Health and our community."

The commercial land sales market in the county peaked in 2006 with $53 million in sales reported to the MLS, and the bottom was 2012 with $1.5 million, said Mike Gregg, another commercial agent for Coldwell Banker.

There were three large unreported land deals in 2013, totaling $14 million.

"Riverstone was one of the market leaders in 2013, with seven closed land deals," Gregg said.

The number of residential lots platted in Kootenai County in 2013 grew to 406, up from just 209 in 2012. A record high of 2,462 were platted in 2006.

Market experts, builders and developers are predicting a shortage in platted lots and buildable development land. A shortage in buildable lots is an issue that will be most noticeable in the market in the next two to three years. This could create an increase in lot values, and likewise an increase in the value of development land.

As for multi-family transactions in the county in 2013, there were 16 with a total sales volume of $14.3 million, said Ben Widmyer of Coldwell. Twelve of the properties were in Coeur d'Alene, and four in Post Falls.

"The tremendous performance in the apartment market spurred a substantial increase in construction activity and this is dampening the outlook for 2014," Widmyer said. "We are seeing the supply put upward pressure on vacancy levels, and for the first time in a couple of years we are seeing rental concessions to attract tenants."

Appetites for multi-family investments will continue to be higher than other asset classes, but should drop slightly from last year. Cap rates will continue to drop and should drive prices for apartments higher.