Commercial real estate vacancies increase
By Joseph Ditzler / The Bulletin
Tenants vacated more office and retail space in Bend than they rented overall during the second quarter, ending a months-long trend in which brokers leased property faster than it became available, according to a survey by Compass Commercial Real Estate Services.
The vacancy rate for office space, for example, declined steadily for three years, or 12 straight quarters, according to the survey, called Compass Points. But in the second quarter, Bend office vacancies rose to 9.2 percent from 8.9 percent the previous quarter. About 6,600 more square feet of office became available than brokers leased during the period, according to data from the survey released in July.
However, that interruption in an otherwise steady decline in vacancy rates does not indicate a coming drop in lease rates or a slump in businesses’ interest in commercial real estate, the firm concludes in its quarterly market summary.
“Our assessment is that this represents a typical market fluctuation as businesses expand and contract in a healthy market,” the firm stated.
Erich Schultz, a partner and principal broker with the firm, said the local market for commercial real estate is actually very robust. The increased amount of space available in the second quarter will have no effect on leasing rates, he said. He expects rents to increase.
“I think that what people might want to know is that with a lack of new construction, particularly of office space, rents are going to go up fairly dramatically in the next 12 months,” Schultz said Tuesday.
Available retail space in Bend also increased slightly, the first time in 13 months that more shop space became available than merchants leased, the survey found. About 14,500 square feet became vacant overall during the second quarter, with just over 4,000 square feet leased of the 4.5 million total.
The survey attributed the imbalance to the departure from the Old Mill District of Coldwater Creek, a women’s clothing and accessories store, and the closing of Connecting Point, a computer retail store on NW Franklin Avenue.
Industrial space in Bend in buildings of more than 3,000 square feet increased in the quarter by 22,800 square feet, due in part to vacancies at properties on SE Ninth Street, NE Layton Avenue and SW Industrial Way. The vacancy rate increased from 6.63 percent to 7.8 percent, according to the Compass survey of 4.2 million square feet of industrial space.
In Redmond, about 8.1 percent of industrial buildings larger than 3,000 square feet were vacant in the second quarter, a decrease in available space from 10 percent the previous quarter, according to the Compass survey. About 27,160 square feet was leased in the second quarter.