A major state road reconstruction project that has extended a routine 12-minute drive into a 90-minute ordeal is causing a lasting shift in commercial real estate patterns in Idaho’s Wood River Valley. According to Matthew Gelso, Associate Broker at Paul Kenny and Matt Bogue Commercial Real Estate, businesses are making location decisions that are unlikely to be reversed, even after construction ends.
“This past year, it could take an hour, an hour and a half, because of this road work that’s been causing major snarl-ups,” Gelso says, describing the state’s reconstruction of the highway between Hailey and Ketchum. “That should all clear up once this road work is done, probably beginning of 2027, but businesses are kind of just saying, ‘Well, I don’t need to be in Ketchum anymore.’”
Gelso’s experience suggests that what is often considered a temporary inconvenience may instead lead to permanent changes in commercial real estate markets, especially when infrastructure disruptions coincide with other pressures.
Multiple Pressures Converge
The road construction did not create the migration of businesses from Ketchum to Hailey on its own. Gelso explains that it became the tipping point for businesses already facing several challenges. “It’s primarily cost. One is cost, one is again that the state is rebuilding the road between Hailey and Ketchum,” Gelso says. People who were already kind of on the edge between the Main Street rebuild, creating issues, the highway between Hailey and Ketchum is having massive delays. The cost of rent is going up.”
Ketchum’s Main Street rebuild had already closed significant portions of the retail corridor, creating major problems for retailers. When the state road project added unpredictable commute times between the two towns, businesses already questioning their Ketchum locations found an apparent reason to relocate.
Customer Base Shift
The infrastructure disruptions also forced businesses to recognize that their customer base was increasingly concentrated in Hailey rather than Ketchum. “A lot of people that live in Hailey are going, ‘Well, I have an established business and a lot of my clients, because a lot of the population base, at least the full-time population base, is down in Hailey primarily,’” Gelso says.
This indicates that the road construction did not create new business logic but exposed existing inefficiencies. Businesses that tolerated higher costs and a customer base located elsewhere were pushed to reconsider when the daily commute became unmanageable.
“So I think it’s kind of that confluence of factors that is driving businesses down there,” Gelso says. “My customers are down there. It’s expensive in Ketchum. There’s all this road work going on, there’s traffic.”
Will Businesses Return?
The critical question is whether businesses will return to Ketchum once the road construction is finished. Gelso believes they will not. “That’s not to say that Ketchum is on the decline. It’s just that a lot of local businesses are seeing the value in Hailey,” he says.
According to Gelso, the infrastructure disruption served as a catalyst for businesses to recognize that Hailey offered better economics and greater proximity to customers than they had previously acknowledged. Once businesses relocate and sign multi-year leases or purchase property, the completion of road construction may not be enough to draw them back.
Timing is also a key factor. With construction expected to last until at least early 2027, businesses are making decisions that will commit them to Hailey for several years. By the time the roadwork ends, these businesses will have established new customer patterns and operational systems in their new locations.
Implications for Other Markets
The Wood River Valley situation highlights how other resort markets may face similar outcomes when infrastructure projects intersect with other market pressures. Gelso’s observations suggest that municipalities planning significant infrastructure improvements should consider not only temporary inconvenience but also the potential for permanent changes to commercial real estate.
For commercial real estate investors, the lesson is clear: infrastructure projects can accelerate existing market trends. A road reconstruction project may seem like a short-term disruption, but as Gelso’s account shows, it can trigger lasting changes in where businesses choose to locate.
Ketchum’s Response
Ketchum is currently undergoing political and regulatory changes. “There are a couple of new council members coming in. There’s a new mayor,” Gelso notes. The town is also updating its zoning code to align with a new comprehensive plan, with changes expected in the next few years.
Whether these changes can reverse or slow the migration of businesses to Hailey remains uncertain. Gelso suggests that, once businesses discover the economic advantages of Hailey, policy revisions in Ketchum may need to be significant to persuade them to return.
A Warning for Resort Towns
The Wood River Valley’s experience serves as a warning for other resort markets considering major infrastructure projects. According to Gelso, the combination of road construction, downtown redevelopment, and rising costs created a period in which businesses fundamentally reassessed their locations – and many chose to relocate for good.
Whether other markets facing similar infrastructure disruptions will see comparable commercial real estate changes depends on whether they experience the same convergence of factors that Gelso describes. His observations suggest that treating major construction projects as temporary setbacks may underestimate their ability to trigger permanent shifts in market behavior.
