Bend vacancy rates reported down

Overbuilding in the years before the recession left Bend with a glut of vacant office buildings.

Those spaces have slowly but surely started to fill up over the last year, a trend that continued through the summer, a new survey by Compass Commercial Real Estate Services shows.

Across Bend, 17.8 percent of the city’s office space was vacant in the third quarter of the year, according to the recently released Compass Points market survey. That’s still significantly higher than a healthy rate between 6 and 10 percent, local real estate officials said.

But the office vacancy rate was above 21 percent a year ago. Since then, more than 80,000 square feet of Bend office space has been taken.

“Office users have been making due with smaller spaces than they would like for a while now,” said Russell Huntamer, a Compass Commercial broker. Local companies moving into bigger spaces have driven much of the activity, Huntamer said.

The 17.8 percent vacancy rate could drop further in the coming months. Right now, Compass brokers are working on deals that would absorb about 70,000 additional square feet of space in Bend, Huntamer said.

The Compass Points survey, released quarterly, tracks the office, retail and industrial real estate markets in Bend, as well as the Redmond industrial market.

Like Bend’s office market, retail and industrial buildings have been slowly filling up over the last year, though plenty of vacant spaces are still available.

In the third quarter, 7.7 percent of Bend’s retail space was available, down from 8.4 percent a year ago.

Unlike the office market, where local users are pacing activity, out-of-the-area restaurateurs and big retailers seem to be driving much of the Bend retail activity, Huntamer said.

“The level of outside demand coming into Bend from Northwest regional restaurants and national companies is really high right now,” he said.

Bend’s industrial building vacancy rate was about 11 percent in the third quarter, basically unchanged from 11.3 percent a year ago. But the third-quarter rate comes with a caveat: The 125,000-square-foot former Fuqua Homes manufacturing plant along Boyd Acres Road came onto the market for lease during the quarter, pushing up the vacancy rate.

Without the Fuqua building on the market, Bend’s industrial vacancy rate would have been about 8.1 percent.

“The vacancy rate is actually really low, when you look at where the demand is,” Huntamer said. Most industrial users are looking for smaller buildings in the 10,000-to-20,000 square-foot range, he said. Some have had to settle for buildings that don’t fit all their needs because there isn’t enough supply in the city.

“Lease rates are getting closer to the point where they’ll be high enough for businesses to consider building new ones,” he said. “But we’re not quite there yet.”

Redmond’s industrial vacancy rate was 21.4 percent in the third quarter, still an abnormally high rate, but down from 27.9 percent a year ago.