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Reflections on the Past and Opportunities for the Future

Bend’s commercial real estate market is ready for take-off in 2013…

By Darren Powderly, CCIM

I succinctly recall July 2007 as the peak month of the local commercial real estate boom. The housing market had peaked 12 months earlier yet very few of us realized the severity of the global economic crash that was unfolding and it took a year for our local office, retail and industrial markets to significantly slow down. It’s hard to believe that five and a half years have passed and we are just now experiencing a new period of economic growth that is stimulating our commercial real estate market. Hallelujah!

I recall writing a blog post in late 2008 debating whether what we were experiencing was a “downturn” or a “reset” of commercial real estate values and the fundamentals that drives property value. We suggested at the time that the former growth engines of residential construction and financial services alone could not return us to economic prosperity that we had grown accustomed to. We now know that the great recession reset property values and that today’s market is driven by some old and some new growth fundamentals.

An example of the old fundamental driver is the California economy. The California economy’s impact on Central Oregon has always been significant and will continue to be. Recent data from the Bend-LaPine school district suggests that Bend‘s in-migration of Californians is resuming and those people are bringing jobs with them. At Compass, we are fielding more calls from small business owners looking to relocate their companies to Bend because they are now able to sell their homes in CA and can afford a nicer home here, perhaps in Northwest Crossing. In fact, the Northwest Crossing development is reporting some of the best home sales in its history. There’s a local saying at Compass Commercial that “as the California economy goes, so goes the Bend economy.”

An example of a new fundamental driver is the new OSU Cascades four year university. Compass Commercial was recently chosen to represent OSU Cascades in a site selection process to help them locate a permanent physical campus where 5,000 students will earn their degrees by the year 2025. It’s an honor for those of us at Compass Commercial to play a role in making the Bend university campus a reality. We fully support and share the vision of Becky Johnson and her team at OSU. We believe that Bend is an ideal university town and that higher education will drive “smart growth” here for generations.

Another new fundamental driver is the entrepreneurial ecosystem that has emerged over the past five years. Entrepreneurship Magazine recently named Bend “The Next Big City for Entrepreneurship” comparing it to high tech and higher education economic hubs like Boulder, CO and Austin, TX. I’ve seen first-hand how Bend has all the infrastructure, capital and energy required to produce successful international software companies that create jobs locally. The Founders Pad Accelerator program alone has helped create 22 new jobs in the past 12 months. Smart growth is happening.

We enter 2013 with confidence for our future. The great recession of the past five years has made us more resourceful, leaner, smarter and better prepared to create a sustainable and diversified economy built on a variety of industries including renewable energy, wood products, aviation, recreation equipment, bio science, and software. Oh, and we can’t forget the delicious beer we love to brew here in Central Oregon. Stay thirsty my friends!

Darren Powderly, CCIM is president and partner at Compass Commercial Real Estate Services.