"We had a very, very strong year last year," says Bruce Kemp, a partner at Compass Commercial Real Estate Services, which has offices in Bend and Portland and conducts its own market research. "We are anticipating somewhat of a slowdown in 2001, in part related to the national economy and in part related to a new city council that has a little more of a slow-growth feel to it, but in the long run, we are looking at strong, consistent growth."

Eight new office buildings were built here in 2000, but net absorption was a record 131,000 sf, up from 76,000 in 1999, according to a recent Compass report. Similarly, 87,000 sf of industrial space was brought to the market, but net absorption was over 100,000 sf, up from 26,000 in 1999, according to the report.

Indeed, while the Bend office market has increased from 500,000 sf in 1993 to 1.2 million sf in 2000, the vacancy rate, at 7.5% is the lowest its been in that span. Keeping it down this last year were large leases by Cylant Technology and Edge Wireless (formerly NewCom), according to the report. The downtown office market is the tightest, having dropped from 5% at the end of 1999 to 3.2% at the end of 2000.

Bend's industrial inventory grew from about 1.3 million sf in 1993 to more than 2.1 million sf in 2000. The current vacancy rate is 7.3%, down from 8.1% in 1999. Large lessees in part responsible for the drop include Maaco, U.S. Allegiance, Northwest Power and Gattaca. The Central submarket ended with the lowest vacancy rate, at 5.7%, and the Northeast submarket was the most active, seeing 87% of all leasing activity.

Vacancy rates are expected to hold steady in 2001. Currently under construction is 80,000-sf of office space and 71,000 sf of industrial space. Based on average absorption – and including projects recently completed and under construction -- there is a 20-month supply of office space and a 26-month supply of industrial space, according to the report.

The report predicts rental rates will rise along with the cost of land and systems development charges, which raise the cost of development. Rents for high quality office space remain between $1.55/sf/mo and $1.70 /sf/mo on a triple net basis. Older space in secondary markets can be had for around $100/sf/mo. Rent on industrial space ranges from $0.45/sf/mo to $0.60/sf/mo.

Acquiring industrial zoned land will run in the $4.50-$6.50 per sf range, according to the report. Office zoned land in Bend, which has grown scarce, is available in the city's Old Mill District for rates in the $10/sf-$15/sf range. Century Washington Center, the newest development, also has lots available from 20,000 sf to 10 acres.

Instant Insights /

Bend Real Estate Market, Coming Off Record Year, Should See Only Slight Slowdown in 2001

Related Stories

Recommended For You