BEND, OR -- As the Central Oregon economy improves, more businesses are relocating to the High Desert. Pat Kesgard with Compass Commercial in Bend says lease prices are on the way up and office vacancy rates are headed down. "My sense is, in the office market- and, we're actually already seeing this - we're gonna see more and more conversation about new buildings being built." He added, "You look at a bell curve, we're in the cycle, we're recovering. If you plan to build an office building, you're a year- year and a half out, if you own the land."
According to Compass Commercial's newly released report, third quarter lease rates in Bend are up about 50-cents per square foot from a year ago, and office space availability is down about 7%, standing at 11.3%. That's the tenth consecutive drop, and lowest rate since first quarter 2008.
Kesgard says how the recovery continues is dependent on long term interest rates. "If rates tick up gradually, it's not gonna slow it down dramatically. If there's an appreciable increase in a short period of time, then it's gonna knock it down. Probably by the end of the 2nd quarter next year, I think conceivably, we could be down to that 7%, which is kind of a healthy range for vacancy," he said.
Despite those improvements, retail space remains relatively flat. Kesgard says he's not surprised the retail real estate market is not recovering as quickly. "We think over time this will continue to tighten up a little bit. You've seen all the new construction - the Walgreens, the new Wilco - so there will be redevelopment of retail to a fairly high degree."
Between the second and third quarters of this year, Compass Commercial's report shows industrial vacancy rates in Bend down about a quarter of a percent, landing at just under 8%. In Redmond, available industrial space stands at less than 16% - it's the first time that rate has been below 20% in seven years.