Thursday, November 13, 2008

Bend commercial vacancy rate hits 15 year high

From the Bend Bulletin:

The vacancy rate in Bend’s office market more than doubled from third quarter 2007 to third quarter 2008, to 17.1 percent — an amount of space that would take more than four years to lease at the current rental pace, according to a local survey.
The vacancy rate is the highest in at least 15 years, said Darren Powderly, a Bend-based broker for Compass Commercial Real Estate Services, which releases a quarterly survey of retail, office and industrial vacancy rates in Bend and industrial vacancy rates in Redmond.
The third-quarter vacancy rate amounted to 377,535 square feet of space available, according to Compass.
Locally, the spike in demand for office space that occurred during the boom years between 2004 and 2006 resulted in a glut of new office buildings that appeared on the market this year — just as demand levels waned with the economic downturn, Powderly said.
Compass began measuring commercial vacancy rates locally in 1993, Powderly said.
“We’re seeing a perfect storm of three things,” Powderly said. “There is a glut of new construction completed this year that was conceived from 2004 to 2006. There is a lack of available credit to finance growing companies. And there is a decrease in demand for office space due to companies going out of business and layoffs. We’re going to need some pretty serious job growth to absorb all this (office) space.”
Bend’s office market vacancy rose from 13.5 percent in the second quarter, while its industrial market vacancy dipped slightly from 12.1 percent in the second quarter to 12 percent in the third quarter, according to the data.
Vacancy in the city’s retail sector grew from 6.8 percent in the second quarter to 9.7 percent in the third quarter.
In Redmond, the addition of three new industrial buildings to the survey, including the 190,000-square-foot Redmond mill site on Antler Avenue, formerly home of Crown Pacific LP, helped the industrial vacancy rate rise from 23.1 percent in the second quarter to 31.2 percent in the third quarter, according to Compass.

Wow! 31% vacancy rate.