BEND, OR -- As Bend struggles through a housing crisis with residential rental vacancy rates hovering barely above zero percent, commercial rates are not far behind.
Erich Schultz with Compass Commercial Real Estate says the drop in vacancies over the past year is directly tied to the city’s inability to expand the UGB. "The problem is, we don’t have a lot of land to develop any of these product types, whether it’s apartments, industrial, office, retail. It’s just not there." Schultz tells KBND. "We’re supposed to have a 20-year supply within the Urban Growth Boundary and we’re well below that. Just finding land to build any of these things is challenging. Then when you find it, finding something that’s affordable, makes it even more challenging."
Schultz says retail vacancies fell in the first quarter to 6.1 percent, industrial rates dropped to 6.6 percent, and office vacancies fell to 8.9 percent, compared to the 20 percent range Bend saw during the depths of the recession.
However, he's concerned business growth could soon stall, given that affordable housing availability remains barely above zero. "It means that some of the companies are going to expand elsewhere. The ones that have been looking at Bend, may look outside of the area. So we’re losing opportunities as a result of not having enough housing. It’s a matter of affordability. We may have some housing, but the jobs may not support that housing. So, they may look to Redmond, they may look to Prineville or La Pine, and some may choose not to move here because of that commute."
However, Schultz says it isn't all bad news for the economy. "Rental rates are up and the cost of buying new buildings is up – so what’s good about that? Well, what’s good about that is that businesses are making money again, and landlords are part of the business world, and now it’s their turn."
To hear more of our conversation with Schultz, visit our Podcast