A Primer on Restaurant Buying:
In this issue’s cover article principal broker and former restaurateur Howard Friedman shares tips on what it takes to purchase and operate a successful restaurant.
Bend’s Office Market:
Compass Commercial surveyed 207 buildings for the second quarter 2019 office report. The buildings in the sample totaled just under 2.6 million square feet. Negative net absorption of 2,396 sq. ft. was recorded during the quarter. Despite the negative absorption, the vacancy rate moved down to 2.98% from 3.03% in Q1, due to an additional building added to the survey. There is now 77,257 sq. ft. available for lease, down from 77,902 sq. ft. in Q1.
Bend’s Retail Market:
Compass Commercial surveyed 255 retail buildings totaling 4,492,794 square feet for the second quarter of 2019. The citywide vacancy rate rose significantly, from 2.84% at the end of Q1 2019 to 5.39% at the end of Q2. However, the majority of the vacancy was the direct result of the Shopko on Bend’s north end vacating its 106,216 sq. ft. store in April, due to bankruptcy of the company. In fact, removing that data point, the overall city wide vacancy rate would be just 3.0%, with only a 9,084 sq. ft. negative net number, rather than the 115,300 sq. ft. loss officially reported.
Bend and Redmond Industrial Markets:
In Bend we surveyed 313 buildings for the second quarter 2019 industrial report, totaling 4,392,452 square feet. The industrial market gained 30,018 sq. ft. of net absorption in Q2, and although the vacancy rate rose from 2.37% in Q1 to 2.71% presently, the change was due to two buildings being added to the survey. There is now 119,105 sq. ft. of industrial space available in Bend, compared to 103,104 sq. ft. in Q1.
In Redmond there was dramatic negative absorption in the second quarter, with the vacancy rate rising from 1.4% to 4.6%, due to 42,356 sq. ft. of negative net leasing and the addition of new buildings to the market. Redmond’s industrial sector now has 1,637,179 sq. ft. of total leasable space, not including owner occupied buildings and buildings under 3,000 sq. ft., with 76,026 sq. ft. available for lease in the 86 building industrial market.
To view the complete report, sign up to receive our quarterly publication 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.
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.
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.
