West Side Story: New developments generate a west side resurgence
There’s no question that Bend seems to be experiencing a return to its trajectory leading up to the real estate heyday of the mid-2000s. With the boom and subsequent recession in its rearview mirror, Bend has seen a recovery in the region’s housing market led by prices below peak values and low interest rates, both of which have continued to rise over the last year. The activity has created a resurging commercial real estate economy with multiple developments on the horizon, and the majority of them are taking place on Bend’s west side.
Banking on a Four-Year University
You may recall, in Q2 of 2012, Compass Commercial pledged support to OSU- Cascades’ four-year university initiative. In just a short year’s time, the proposed campus is already making headway. OSU-Cascades recently announced its proposed purchase of two sites for development to accommodate the expansion. The 56 acres of undeveloped land include 10.44 acres at 1500 SW Chandler Avenue that will serve as home to a 146,000 sq. ft. “living and learning” center aimed at providing a mix of student housing and academic and student gathering spaces. The 46-acre balance of the campus site is situated on an evacuated pumice mine, presenting a few development hurdles. The site is partially zoned for residential use. Closing on the 46-acre property is anticipated for March of 2014, which allows for the university and seller to assess and work on a plan for remediation.
It should be noted that the city of Bend’s Juniper Ridge property north of downtown was also considered as a potential expansion site, but the additional investment Juniper Ridge would require to create needed infrastructure led to OSU’s selection of the west side site on Chandler, with its proximity to appealing retail amenities in the Old Mill District, downtown and along Century Drive. The proposed site is just a half-mile from OSU’s Graduate & Research Center and 2.8 miles from Central Oregon Community College.
With OSU-Cascades’ campus developments firmly vested in the west side of Bend, Compass Commercial is seeing renewed interest in undeveloped land surrounding the site.
“My clients that own land on the west side are looking at the long term opportunities,” said Pat Kesgard, CCIM. “There is such a limited amount of undeveloped land in the area that we feel a three to five-year horizon will prove to be very beneficial to those land owners.”
Land in the vicinity of The Old Mill District is also experiencing a wave of activity with a new Hilton brand Hampton Inn hotel under construction on SW Columbia Street, new ownership of the Old Mill Marketplace between Industrial Way and Arizona Avenue, and increasing developer interest in property surrounding the aforementioned sites.
“We have seen a significant increase in interest from existing retailers either wanting to stay in the properties or wanting to increase their square footage,” said Kesgard. “Additionally, retailers that do not have a presence on the west side are now realizing that their opportunities to locate there are limited. In any event, we will see increasing rates for retail as we move closer to OSU building the campus.”
Existing retail along Century Drive stands to benefit from the increase in traffic brought on by OSU’s new campus, but how will it affect Bend’s office market?
“Looking at office rates and vacancy, and the plans for OSU-Cascades to build part of the campus by 2015, the office market will undoubtedly continue to tighten,” suggests Howard Friedman, partner with Compass Commercial and editor of Compass Points. “Companies and services that cater to students could locate near the campus, lending to space being absorbed on the west side, and offsetting the vacancy. Office rents are at 60% of what they were at the peak and this will definitely change.”
The Recreational Hub of Bend
As Bend’s economy continues to recover, once stalled projects that were plotted for during the boom have taken on new life. Bend Park & Recreation District’s plans for a bond funded recreation pavilion at SW Columbia and SW Simpson Avenue promises potential community and OSU-Cascades student recreation use with its proposed event, recreation and ice pavilion. Design and planning for the site master plan and pavilion facility is underway and consultants are currently working on the cost impacts of expanding the building footprint to shelter a range of non-ice related recreation facilities, including full size tennis courts. It is expected that BPRD will have initial estimates of costs in mid-October and could be presented to the Board in November.
The west side developments, including Bend Parks & Recreation and the Old Mill District’s trails and activity along the Deschutes River, will also see benefits from bond funded improvements granted to the Colorado Dam Safe passage project. The design and construction of a new pedestrian bridge over the Deschutes River and in-stream channel improvements to reduce hazards and increase recreational opportunities surrounding the Colorado Avenue are currently in progress.
The increase in activity is giving sense of urgency to developers and investors, and one might posit that Bend is heading for another bubble. “I don’t see it as a bubble, but more of a growth spurt that has been powered by OSU. The university is going to be an economic engine for Bend, and we are riding the wave of increased activity, looking for the best opportunities for our clients to capitalize on this evolving market,” said Friedman.
This story first appeared on the cover of the Q3 2013 issue of Compass Points.