A Central Oregon developer appears closer to constructing a 10,000-square-foot industrial building in northeast Bend.

It’s a project that could speak loads about Bend’s real estate market. Between 2010 and 2012, the city issued three permits for new industrial buildings, as commercial and industrial vacancy rates remained elevated across the High Desert.

But those vacancy rates have dropped over the last year. Some real estate officials say new construction could make sense again.

Kevin Spencer, owner of a Bend masonry company, first proposed the northeast Bend facility last year, filing planning documents with the city to build near the intersection of High Desert Lane and Lower Meadow Drive. At the time, he declined to comment on a timeline for development.

But last week, a local excavation company applied for a temporary rock crushing permit, planning to transport 95 truck loads of rocks away from Spencer’s property starting Monday.

Spencer owns the land, along with two adjacent industrial buildings and the nearby North Empire Storage Center.

Spencer declined to comment on the proposal. However, he told The Bulletin last year that his plan was to build the new facility for two Bend research and development companies.

A blueprint filed along with the rock crushing permit this week shows plans for a two-story building totaling about 9,600 square feet on the property.

After staying above 16 percent in 2009 and 2010, Bend’s industrial vacancy rate was 11 percent in the third quarter of the year, according to market surveys by Compass Commercial Real Estate Services. That’s actually up from 8 percent in the second quarter, but only because a 125,000-square-foot industrial building came onto the market during the quarter.

Without that building, the rate would likely be 6 or 7 percent, said Jay Lyons, a broker with Compass.

“If you really dissect the market and look at large (industrial) spaces, vacancy is probably around 3 percent,” Lyons said. Less vacancy means lease rates are on the upswing, which could prompt more businesses to look for new space rather than something already on the market.

— Reporter: 541-617-7820, eglucklich@bendbulletin.com