Plan in Advance for Selling

by Compass Commercialon 6 March 2019in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Winter 2019 issue.

Topping the headlines in Central Oregon multifamily news is statewide rent control, and it does appear this measure will be passed. As usual, small businesses, like most Central Oregon rental property owners, must find a way to operate in the face of government headwinds. It seems like a better legislative approach would be to find ways to increase the supply of rental housing by encouraging and incentivizing housing providers, not targeting and obstructing them.

The good news is that the market continues to do well, driven by strong in-migration. A significant amount of new supply coming online in recent years has caused vacancy rates to inch up and rent increases to slow dramatically. Both are healthy developments as the free market continues to be most effective for regulating supply and demand and ultimately rental rates.

THINKING OF SELLING?
We strongly recommend proactively preparing your property in advance of going on the market. Surprises kill deals! They also reduce net sales proceeds and cause unnecessary pressure and stress.

Prior to putting your property on the market:

Tour all units. You could be very surprised at what some of your tenants may be up to. There is an old adage that applies here “you get what you inspect, not what you expect.”
Have your trusted contractor go through the units with you including the attic and crawlspace. Take care of deferred maintenance. Doing this proactively on your own timeline is cost effective, as opposed to operating under the pressure of deal timelines, appraisers, inspectors, and lenders.

This should not only apply when getting a property ready to sell but should also be considered on at least an annual basis. If you want to really get a gold star when putting your property on the market, consider having a complete building inspection done prior to hitting the market.

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 |rross@compasscommercial.com or Terry 541-848-4060 |toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Compass Points^® Q4 2018 Market Survey & Year Summary

by Compass Commercialon 28 January 2019in Compass Points Market Report

2018 SUMMARY / 2019 FORECAST

Cover Article By Howard Friedman, CCIM

It’s that time of year to take a look back at how we forecast the previous year. At the end of 2017 we delivered the following predictions:

“All the indicators we see point to another strong year in the commercial real estate market, both nationally and locally. Although 4th quarter economic reports from the Commerce Department recently announced a growth rate in 2017 of 2.6%, down from earlier predictions of 3.2%, it continued the trend of one of the longest periods of economic expansion in U.S. History. In short, Central Oregon is open for business in the commercial real estate market.”

Our prediction proved to be true. Compass Commercial had our best year ever, thanks to our valued clients. We foresee continued growth in Central Oregon in 2019, but are cautious beyond that, taking heed of global predictions beyond this year.

Summarizing the 2018 Market

Bend’s office market showed improvement in 2018. At the end of 2017, the vacancy rate stood at 3.61%, whereas at the end of 2018 it was 3.40%. Lease rates held fairly steady in the office market, with spaces being leased for $1.50–$2.00 per square foot per month triple net (NNN) for existing units (and depending on location and quality) and $2.00–$2.35 for newly built office space. The vacancy rate has now dropped eight years in a row in the office market, dating back to the end of 2010, when vacancies were 22.1% of the total market. At that time there was over 526,000 square feet of office space available for lease, while at the end of 2018 there was just over 87,000 sq. ft. available.

Retail vacancies in Bend also dropped from a rate of 2.8% at the end of 2017 to 2.77% at the end of 2018. Rental rates held strong again in 2018, with rents in the $1.50–$2.00 per sq. ft. NNN range and restaurants and new retail projects commanding $2.00–$2.75 or higher, in spite of many new projects coming out of the ground.

Bend’s overall industrial vacancy rate dropped again for the fifth year in a row, from 3.26% to an amazing 1.72%. Rental rates rose again to between $0.75 and $1.00 per sq. ft. per month NNN in 2018, with many flex buildings commanding rates much higher than that.

In Redmond, industrial vacancy rates dropped again for the seventh year in a row from 3.5% at the end of 2017 to just 1.9% at the close of 2018.

Supply vs. Demand

In the office market 10,587 square feet of space was absorbed in 2018, compared with 71,783 sq. ft. 2017. There is now only 87,331 sq. ft. available out of a 2.57 million sq. ft. market. Absorption slowed in 2018, but remained in positive territory.

In the retail sector, 34,335 sq. ft. of positive net absorption was recorded in 2018. This compared with 2017’s total of just 1,939 sq. ft. of positive net absorption. There is presently 123,663 sq. ft. available in the Bend retail market, with a slew of new projects looking to open in the next two years.

The industrial market recorded another 105,215 sq. ft. of positive net absorption in 2018, compared with 135,377 sq. ft. in 2017. There is currently only 73,833 total sq. ft. available in the Bend industrial market. Using market absorption calculation methods, this represents just three quarters of supply available in the Bend industrial market. Several buildings are being constructed in the Carmen Lp./American Ln. area and are scheduled to come online in 2019, which should ease any strains on the industrial leasing market.

And in Redmond 30,808 sq. ft. of industrial space was absorbed in 2018, compared to 24,588 sq. ft. of positive absorption in 2017. There is currently 30,251 sq. ft. of industrial space available in the Redmond market, just a one-year supply at current absorption rates, compared to the end of 2017, when 54,559 sq. ft. was available for lease in Redmond.

What’s Ahead?

Although there has been talk of a slowing economy nationally, we predict that commercial real estate in Central Oregon will continue to be strong, with rents slowing in their increases, but values staying robust—at least for 2019. Cap rates should rise a bit due to the recent interest rate increases, but all in all, we see a bullish market ahead.

Office: Rental rates will remain strong as supply continues to be tight in Bend. This mirrors national trends as the economy continues its steady growth. High land prices locally continue to be a challenge for developers wanting to start new projects. Strong construction and labor costs continue in the area, with some companies pointing to tariffs contributing to steel and appliance price increases. This will continue to squeeze the office market’s supply. Projects like Crane Shed Commons and Deschutes Ridge Business Park saw successful leasing during 2018, and there are few new office projects on the books for 2019.

Retail: Central Oregon’s retail market continues its strong growth and low vacancies. Several projects we mentioned last year, including the former Ray’s west side redevelopment, are still in the start-up or planning stages and many redeveloped retail properties saw strong absorption in 2018. Although Shopko recently announced its Bend store will close due to its impending bankruptcy proceedings, and Deschutes Brewery’s recent layoffs (caused by a slowing craft beer industry) will affect our workforce, there is still a dearth of qualified workers in some trades, notably the restaurant business, where many ‘now hiring’ signs grace storefront windows in Central Oregon.

Industrial: Strong industrial rents and limited supply continue in the Bend and Redmond markets. New projects in both areas may hold off any supply panic in 2019, but if the economy slows as predicted in a few years, it may well be a blessing that we did not overbuild during these bullish years.

Multifamily: Central Oregon continues a strong building phase in the multifamily market. Many new projects have eased the housing crunch, but the affordability issue is still prevalent in our community. Local community leaders are aware of the problem and are attempting to ease the situation, but it does not come easy. Will Bend follow Portland’s lead and implement some sort of rent control to assist low-income renters in their quest for fair housing prices? Many in the area hope not, but something must be done to help our neighbors be able to live and work in our community without the fear of becoming homeless or displaced out of our growing region.

Howard Friedman is a partner and the managing principal broker for Compass Commercial. He was recently promoted to president of the board of directors and CEO of the Bethlehem Inn homeless shelter in Bend.

To view the complete report and receive the quarterly publication, sign up at https://www.compasscommercial.com/POINTS or call (541)383-2444.

Compass Points® is a quarterly publication of Compass Commercial Real Estate Services offering comprehensive surveys of the Central Oregon commercial real estate market. The report provides a detailed look at quarterly vacancy and absorption data in office, retail and industrial product types throughout Bend’s primary submarkets, as well as the Redmond industrial market. Absorption data contained in the report pulls from samples of buildings over 3,000 sq. ft.

Compass Points^® Q3 2018 Market Survey

by Compass Commercialon 29 October 2018in Compass Points Market Report

BEND’S CENTRAL DISTRICT TO FURTHER URBANIZE CITY

Cover Article By Howard Friedman, CCIM

The latest census predicts that the population of Bend will be 130,000 by 2030. With just under 95,000 people currently residing in the city limits, and just 2,380 acres recently added to the Urban Growth Boundary (UGB), new density philosophies will certainly be needed to accommodate this growth.

Bend’s planners have identified a handful of ‘Opportunity Areas’ throughout the city. Several of these, the Old Mill KorPine property, the east Greenwood District and the Bend Central District (BCD) are currently being considered by the City to become urban renewal areas, and promise to drastically alter the face of this once sleepy, logging town into a much more urban landscape, one almost unrecognizable to today’s residents.

Of all these areas identified, perhaps the BCD is gaining the most traction. Brooks Resources Corporation, one of the area’s premier developers, recently purchased 1.76 acres of property between Franklin and Emerson Avenues, the former Murray and Holt auto dealer, with the hopes of jumpstarting the BCD’s urban renewal process. Kirk Schueler, President of Brooks, says that although they have no definitive plans to date, some concepts have been discussed to take advantage of new zoning, such as a mixed-use residential or mixed-use office project. With building heights ranging in the 65–85 foot range (depending on location and project standards) there are a multitude of possibilities for developers to add density to the central part of town.

Schueler says, “For Brooks, the zoning is not the only opportunity. The City is starting the effort to create urban renewal districts and is putting together an advisory board to support city staff. The city makes the decisions of which opportunity area they will spend redevelopment money on, then by selling bonds, will fund improvements like roads, intersections and sewer capacities if needed. In the BCD, pedestrian improvements like sidewalks, street trees and even a proposed pedestrian bridge crossing the parkway are all on the table.” Schueler also says that Brooks would not start developing with the existing conditions in place, citing safety issues for pedestrians as a major concern.

Along with Brooks’ impending plans, a couple of other properties to be revitalized by local developers are on the drawing board. The former church building that currently houses the Platypus Pub was recently purchased by Third Street Marketplace LLC, with plans to redevelop the corner of 3rd Street and Lafayette Avenue into a multi-tenant retail complex. And an as yet unnamed local company is said to be in negotiations on another large parcel in the area as well.

To get an idea of the magnitude of the changes coming to a city near you, check out Bend’s Development Code on the City’s website, section 2.7.3200.

As any long time resident of the area will tell you, change is inevitable. Look for some major changes in the near future.

Howard Friedman is a partner and the managing principal broker at Compass Commercial. He joined the firm in 1999.

To view the complete report and receive the quarterly publication, sign up at https://www.compasscommercial.com/POINTS or call (541)383-2444.

Multifamily News: Vacancy Rate Stabilizes

by Compass Commercialon 23 October 2018in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Fall 2018 issue.

New apartment construction is making headway in the region-wide housing shortage and affordability problems.

The market is healthy and working.

There is more housing availability, and rent growth has slowed dramatically from the recent years of double digit increases.
New apartment construction in Bend has been modest but steady. Some West Coast markets, have seen an oversupply of new construction, driving up vacancies with long periods of lease up times for new buildings. Rent growth has declined in a few markets. So far, Bend has not experienced that, as new construction has been somewhat restrained by high costs, shortage of land, and regulatory burdens and costs.

Sales activity is modest. Buyer demand remains strong but is tempered by higher
interest rates and price resistance. Many owners are still reluctant to sell, largely due to tax considerations.

It is still a great seller’s market. We are always happy to provide free Broker Opinion of Values for your multifamily properties. We are well-versed in 1031 exchanging and can answer many of your questions regarding the 1031 exchange. We also provide consulting on preparing properties for sale. Ideally, this process should begin well before actually putting a property on the market.
Contact us early if you are thinking of selling!

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 | rross@compasscommercial.com or Terry 541-848-4060 | toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Compass Points^® Q2 2018 Market Survey

by Compass Commercialon 25 July 2018in Compass Points Market Report

IS THE COMMERCIAL REAL ESTATE MARKET BEGINNING TO LAG?

Cover Article By Howard Friedman, CCIM

It’s not hard to hear the warnings of an impending downturn in commercial real estate if you pay attention to economic prognosticators. And if you are old enough to have seen the cycles of real estate, you know that another downturn is inevitable. One question is…when? And the other, will Central Oregon be insulated from it all?

Some caution signs may be looming, even though it appears all is currently rosy. If you look at our quarterly survey results in this issue of Points, the current state of the market certainly seems positive. And maybe that is the problem. What factors could change all this? Here are a few.

One nationwide factor is the slow rise of interest rates, while cap rates are at historic lows. The result is a narrowing gap between a borrower’s interest rate and their rate of return from investments is shrinking dramatically. Commercial rates are now in the 4.75–5.10% range, while cap rates for quality product in our area are hovering around the 5.5% rate, with some trophy properties even lower. This narrowing gap does not provide much cushion of safety for say, unplanned vacancies, tenant improvement dollars to re-tenant empty spaces, or other unforeseen expenses.

Another indicator is the leveling off of lease rates. While we are still in a landlord’s market, with low vacancies and scarcity of new construction starts (due to high land and building costs), but we are seeing rents in the office, retail and industrial markets begin to slow in their increases. And more projects are on the horizon, as we will explore later.

Investors on the other hand, are seemingly more cautious in their purchases of late, with much more due diligence time and investigation requirements requested in their offers. It would seem that this is a direct result of the aforementioned narrow gap between borrowed funds and bottom line income, providing the buyer with more assurances of a solid investment and mitigated risk.

Sellers are optimistically listing properties on the market at very high values, trying to capture a heated economic environment and often leaving out first-time or cautious investors, while focusing on cash buyers or 1031 exchange opportunities where buyers must place their money to avoid tax penalty. This contributes to the frenzy of trying to get into the real estate market and excludes many would-be investors that cannot obtain a loan.

Are we at a 2006 point in time of the real estate cycle, where the superheated market peaked prior to the dramatic downturn from 2007–2012? The classic bell curve for real estate shows four phases of the cycle. Phase 1 is the “Recovery” cycle from the previous recession with very little new construction due to high vacancies. Phase 2 is the ”Expansion” phase, where vacancies decline, rents increase, and new construction takes place. The top of the curve is the equilibrium point of supply and demand, where the market is stable and buyers and sellers, and landlords and tenants all feel good about their situation. Phase 3, the “Hyper Supply” cycle is a result of new construction taking place in a superheated market with high values and high rents. And Phase 4 sees an oversupply of property, resulting in increasing vacancies and declining rents, ultimately leading to the next “Recession.”

One could argue that there is not enough new construction in Bend and Central Oregon to cause the Hyper Supply cycle to exist, but there are many new projects on the drawing board, some significantly larger than any we have seen in the area to date. The impending rebuild of the Ray’s Westside complex, Brooks Resources’ plans to eventually redevelop the former Murray & Holt in Bend’s Central District, the north end Robal Road expansion, the Box Factory’s plans to expand eastward, and 193,000 square feet of new industrial buildings in Redmond are just a few of the very large plans currently on the drawing board in Central Oregon. These multi-tenant, and in some cases multi-story ventures will change the supply vs. demand equation in the near future and could contribute to an eventual downturn in the cycle.

Of course, many outside factors help to shape real estate cycles, including global influences and political changes within the U.S. and for a time prior to the previous recession it seemed that Central Oregon was immune to those impacts, but those who lived here from the mid-2000s to the mid-2010s, know it will affect us all. ‘When’ is the looming question?

Howard Friedman is a partner and the managing principal broker at Compass Commercial. He joined the firm in 1999.

To view the complete report and receive the quarterly publication, sign up at https://www.compasscommercial.com/POINTS or call (541)383-2444.

Multifamily News: Interest rates and cap rates

by Compass Commercialon 10 May 2018in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Spring 2018 issue.

Many have prematurely predicted rising interest rates for the last several years. It does appear that rising rates are finally a reality. The question now is “how far and how fast?”

Rising rates could hamper performance and returns for investment real estate. Cap rates will go up as financing costs rise. When investors can get a better return on “risk off” investments, like US treasuries, they will demand a higher return on investments like real estate. The answer to the “how far and how fast” question is critical to how rising rates will impact multifamily real estate values going forward.

A moderate and measured rise could have little negative impact. However, it will put further pressure on the bottom line. There is legitimate concern about how much further rents can rise locally, after the explosive increases over the last few years. The twin trends of rising rates and plateauing rents pose significant headwinds to valuation increases. A sharp and prolonged rate increase would be more significant perhaps resulting in some backing up on values.

“The twin trends of rising rates and plateauing rents pose significant headwinds to valuation increases.”

The above chart illustrates apartment sales metrics for the last two years including cap rates. It is likely that we witnessed the low water mark for Bend cap rates in 2017 with the rates in the mid 4’s.

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 | rross@compasscommercial.com or Terry 541-848-4060 | toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Compass Points^® Q1 2018 Market Survey

by Compass Commercialon 25 April 2018in Compass Points Market Report

CHALLENGES OF CONSTRUCTION IN A HEATED BUILDING ENVIRONMENT
Cover Article By Howard Friedman, CCIM

While driving around the southeast industrial area to survey buildings for our Compass Points^® newsletter, I noticed an unusual amount of ‘Now Hiring’ signs posted in front of businesses in the area. It should come as no surprise to locals that the construction industry and its related trades are in a very dynamic and busy time. But it is also a very challenging task for the industry to keep projects on time and on budget.

At the recent Central Oregon Builders Association breakfast, SunWest Builders President Steve Buettner discussed the labor shortage in the area. He talked about the need to pay his subcontractors well and on time, a sentiment echoed by Sage Builders President Mark Huffman. Both Buettner and Huffman are involved with the Bethlehem Inn homeless shelter’s two-phase project currently underway on north Highway 97 in Bend to completely rebuild the facilities. Huffman serves as the Inn’s “owner’s representative,” a volunteer position designed to be the liaison between general contractor SunWest and the Inn. “It is a challenge to find and keep good sub[contractor]s,” Huffman noted at a recent OAC (owner, architect, contractor) meeting at the Inn. “And with construction material and labor costs on the rise, it presents a real challenge for owners to stay within their budget.”

Steve Hendley, Managing Partner of Compass Commercial Construction Services (CCCS) added that it is important to have an identified group of subs loyal to the team, as the competition is fierce for quality workers. “To foster responsiveness, we make sure that our subs are paid in a timely manner, often well in advance of our billing cycle. This means we pay our subs first then are reimbursed by the owner. When subcontractors perform for us in this environment, we feel a responsibility to provide excellent service to them in return, similar to how we treat our clients. It all goes back to the company’s core values.” Dale Hendley, project manager with CCCS, says the labor market is so tight “Contractors are pulling subs from as far away as Seattle who are looking for a different environment to work in.”

Bethlehem Inn’s rebuild has been a smooth project, according to Executive Director Gwenn Wysling. “Even in this highly competitive construction market, SunWest has stayed extremely close to their time schedule and budget, even taking into account the rising costs of material and labor over the last three years of planning and building. We expect to get the keys on June 11th to the first building, which will house ten families, (double our present capacity), our service hub and support service, and for the first time ever, a commercial kitchen!” So far, the community has helped to raise $7.5 of the $9 million dollar campaign. With this great community support, Phase 2 will start soon and is scheduled to be completed at this time next year, expanding services for single adults experiencing homelessness.

Howard Friedman is a partner and principal broker at Compass Commercial and currently serves as vice-president of the Bethlehem Inn board of directors.

To view the complete report and receive the quarterly publication, sign up at https://www.compasscommercial.com/POINTS or call (541) 383-2444.

Compass Points^® is a quarterly publication of Compass Commercial Real Estate Services offering comprehensive surveys of the Central Oregon commercial real estate market. The report provides a detailed look at quarterly vacancy and absorption data in office, retail and industrial product types throughout Bend’s primary submarkets, as well as the Redmond industrial market. Absorption data contained in the report pulls from samples of buildings over 3,000 sq. ft.

Market Report: 2017 Summary/2018 Forecast

by Compass Commercialon 7 February 2018in Compass Points Market Report

Compass Commercial Real Estate Services has released its fourth-quarter 2017 market survey results with the 2017 summary / 2018 forecast for Bend’s office, retail and industrial and Redmond’s industrial market, included in this most recent issue of Compass Points.

Here’s an excerpt from the main article:

“SUMMARIZING the 2017 Market
For the year, the Bend office market showed improvement. At the end of 2016, the vacancy rate was 4.61%; at the end of 2017 it was 3.61%. Lease rates held steady in the office market, with spaces being leased for $1.50 – $2.00 per square foot per month triple net (NNN) for existing units (depending on location and quality), and $2.00 – $2.35 for newly built office space. The office vacancy rate has now dropped seven years in a row. Dating back to the end of 2010, when vacancies were 22.1% of the total market, there was over 526,000 sq. ft. of office space available for lease, while at the end of 2017 there was just under 92,000 sq. ft.

Retail vacancies in Bend also dropped from 3.9% at the end of 2016 to just 2.8% at the end of 2017, having dipped even further in Q3 to 2.6%. Once again this is the lowest rate we have reported since beginning our retail survey in 2008. Rental rates held strong in 2017 due to limited supply, with rents in the $1.50 – $2.00 NNN per sq. ft. range, and restaurants and new retail projects climbed further in the $2.00 – $2.75 range or higher.

Bend’s overall industrial vacancy rate dropped again for the fourth year in a row, from 4.9% to 3.26%. Rental rates rose to between $0.65 and $0.85 per sq. ft. NNN in 2017, and some higher quality spaces commanded as much as $1.25 per sq. ft.

In Redmond, industrial rates dropped again for the sixth year in a row from 3.7% at the end of 2016 to 3.5% at the close of 2017. In 2011, the vacancy rate was 27.8%!”

To view the complete report and receive the quarterly publication, sign up at www.compasscommercial.com/SUBSCRIBE or call (541) 383-2444.

Compass Points is a quarterly publication of Compass Commercial Real Estate Services offering comprehensive surveys of the Central Oregon commercial real estate market. The report provides a detailed look at quarterly vacancy and absorption data in office, retail and industrial product types throughout Bend’s primary submarkets, as well as the Redmond industrial market. Absorption data contained in the report pulls from samples of buildings over 3,000 sq. ft.

Apartment Vacancy Rates - Multifamily Outlook

Multifamily Outlook: Learning from national trends

by Compass Commercialon 20 December 2017in Central Oregon Multifamily News

Recently, Ron Ross, CCIM was published in the Cascade Business News for an article on what we can learn locally in Central Oregon about the multifamily industry from national trends. Below is an excerpt of the article as published by CBN. Read the full article as published in the CBN here.

“Real estate markets are no doubt independently local in nature. Central Oregon seems to be as wildly independent as anywhere in the country. As a sub-tertiary market, we have always been more volatile both on the way up and the way down. In the good times, we command surprisingly low cap rates driven by limited supply and strong investor demand. During the most recent recession we crashed harder than most places, but recovered strongly and rapidly.

However, we should still observe and learn from national trends. We are not an island, nor are we immune from national market forces. It has long been observed that Central Oregon has a strong correlation with both California and Portland markets, and to a lesser degree, Seattle.

In the November/December issue of the Commercial Investment Real Estate magazine from the CCIM Institute an insightful article by Beth Mattson-Teig entitled Sailing Ahead: Will the renter pool keep up with the robust development pipeline? points out the following national trends:

1. Continuing strong, but slowing demand for apartment rentals.
2. Record levels of new construction.
3. …”

Read the full article as published in the CBN here.

*Graphic reprinted with permissions from Commercial Investment Real Estate, the magazine of the CCIM Institute, November 1, 2017, Vol. XXXVI, No. 6.
Learn more at www.ccim.com/cire-magazine
If you wish to read the article referenced in Ron’s article from Commercial Investment Real Estate in full, click here.

Multifamily News: Vacancies up, rent growth slowing

by Compass Commercialon 30 November 2017in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Fall 2017 issue.

The Central Oregon multifamily market continues to be a healthy landlord market. It is still a great time to own residential rental properties.

Data collection is challenging in our market. In past years a local appraiser surveyed the market and was the statistical market expert for many years. They have long since ceased doing those surveys. In more recent years the Central Oregon Rental Owners Association surveyed its members and released a report annually. However, it seemed to generate controversy as critics disputed their data and accused them of being self-serving, thus they ceased surveying and reporting.

Currently, the best source of this data is CoStar, a very expensive subscription service. Compass Commercial is one of the few member organizations in Central Oregon. CoStar data is showing a Bend vacancy rate of approximately 3.9% and Redmond at approximately 5%. Those rates are up from the reported 1-2% vacancies during the last several years.

They are reporting modest rent increases during the last year of about 3% in Redmond and 4% in Bend. This is a substantial slowdown from the double-digit increases experienced over the last few years.

What does this mean for multifamily property owners? The market is reaching a plateau. Rent increases have outpaced incomes substantially, so continued upward pressure is not sustainable. An increasing supply of new construction is slowly impacting the vacancy rate and absorption has been slowing. All in all, a normal and healthy market cycle. And still is a great time to sell, as there is limited inventory for sale and strong buyer demand.

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 / rross@compasscommercial.com or Terry 541-848-4060 / toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Category : Market Research

2018 SUMMARY / 2019 FORECAST

Summarizing the 2018 Market

Supply vs. Demand

What’s Ahead?

BEND’S CENTRAL DISTRICT TO FURTHER URBANIZE CITY

IS THE COMMERCIAL REAL ESTATE MARKET BEGINNING TO LAG?