The Bend Chamber recently hosted the 2017 Real Estate Forecast Breakfast at the Riverhouse. Compass Commercial had 12 brokers and three staff members in attendance. The main take away was that Bend will continue to grow, it’s inevitable. According to presenters, Bend has been growing at an average rate of seven people per day for a while. Therefore, growth over the next 10 years is predicted to be an estimated additional 30,000 people. There was a clear consensus Bend has the capacity for this growth, but it will take being creative and forward thinking to do it well. Updating infrastructure has been on the minds of those planning since they realized this growth was not a fluke. There is an understanding that much of our infrastructure, including transportation and utilities, was planned for a much smaller population and won’t sustain the predicted growth. In addition, planning for new infrastructure within the newly added UGB, approved in December 2016.
Amid concerns about growing well, maintaining the culture of Bend needs to be taken into consideration as well with new growth. Bend is known for having a great culture and presence when people visit, but how do we keep that when we have people moving from different cities. Keynote, principal broker Brian Fratzke, of Fratzke Commercial Real Estate Advisors, shared three action steps to keep a great atmosphere: first, coach new members of the community to know how to fit the culture; second, don’t complain—get involved; third, say “Hi.” Bend is known for being friendly; we each have the ability to contribute to a positive culture.
Additional panel discussion topics included those most relevant to the real estate industry in Bend, specifically the UGB, affordable housing, rent control, expense of infrastructure—installing plumbing and electrical with basalt shallow under the surface, speed of development, retaining the character of Bend, infill/redevelopment versus adding to city boundaries.
Our economy is booming and real estate demand is high, among both residential and commercial. With Bend’s economic history, one key question posed and discussed was, “Are we in another bubble?” Panelist Wes Price of Price Fronk & Co. pointed out that even if the economy is a bubble, we cannot predict what’s going to happen based on the previous recession because we have a much different economy now than we did before. Much of our income in Bend is of the traded-sector, rather than in construction. EDCO is one entity that has helped to diversify the economy with industries currently present in Central Oregon that help support the economy during a downturn through traded-sector jobs. These include craft breweries, outdoor recreational products, computer hardware and software production, biotech, aerospace and other specialty goods manufactured here, then shipped outside of Central Oregon. Hence, there is more economic stability and more longevity in those traded-sector industries for our regional economy.
As for the residential rental market, panelist Garrett Stephenson of Schwabe, Williamson & Wyatt Portland shared about Portland and how what is happening there could be instructive for Bend. He was very clear though there was no way to predict this. No one can control who or how many people are moving into the area. Garrett shared many of the details about inclusionary zoning being implemented in Portland and the similar mandate in Seattle. One distinct negative outcome of inclusionary zoning is developers are more hesitant to develop areas for residential. He postulated that many of the mom-and-pop landlords would not be able to create the rentals that are available now, being taken over by out-of-state investors who have the money to fund this type of development.
In addition, there has been negative feedback about rent control in Oregon. Concerning this issue, Compass Commercial principal broker, Bruce Churchill stated, “The thought of rent control in Bend should be concerning to developers and landlords but in NYC it apparently hasn’t prevented the development of 750 SF apartments that rent for $4,500/month (one example given during the keynote address).” Rent control is a charged issue in Oregon as it has been legally prohibited for so long, but we have to remember rent control exists elsewhere and may not mean it will halt progress according to fears.
According to Stephenson, many of the legislative bills relating to housing have moved through the Oregon State House of Representatives so quickly there hasn’t been time for proper research and reflection to occur. Stephenson could not predict about what would happen in Bend as a result of Portland’s changes to rent control, but he encouraged those in the crowd to be involved and aware of what is being passed by city council. Also, he encouraged those attending to have an idea of what we want the city to look like as those 30,000 eventual residents move in.
Panel member, Assistant City Manager John Skidmore from the City of Bend, talked about how everyone in development within the City is busy creating change for these new developments, and the UGB and current infrastructure changes that are overdue. The city is actively addressing these needs according to the goals and guidelines, all of which are focused around livability in Bend. One challenge he shared is that land use policy was created when land was cheap, however, the infrastructure to develop raw land is more expensive and that cost affects the speed of development to some degree.
Panelist Nick Lelack, Community Development Director for Deschutes County shared insights about the workforce housing partnership that is actively assessing ways to solve the current deficiency. Deschutes County as a whole is slated for large numbers of growth through 2065. He reminded the audience of the well-known quote from Lewis Carroll, “If we don’t know where we are going, any road will get us there,” and made the point that conversation needs to continue around where we want to be as a community. If we are inactive, there will be consequences. However, we can be proactive and direct the consequences toward what we want to create.
To recap, Compass Commercial’s principal broker Ron Ross, CCIM offered his thoughts after the event. His takeaways are as follows, “First, experts say the Central Oregon area will continue to be one of the fastest growing regions in the country over the next 20 years. Second, this will continue to put pressure on real estate prices and infrastructure. Third, we have a challenge to build the infrastructure to accommodate the growth as well as keep housing as affordable as possible. Fourth, we have a responsibility to deter short-sighted, politically expedient policies that will only exacerbate the problems in the long run.”
Each of the speakers acknowledged there are conversations currently happening around affordable housing. There are many organizations and entities working toward growing Bend well and doing what we can as a city to retain our true character. This year’s forecast signals more growth will be eased by being civically aware, forward thinking and collaborative in our steps as a city. Bend has a bright future; the people will make that future truly great.