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"We certainly hope the market doesn't go back to the heated levels of 2006, but there is increasing competition for real estate, limited inventory and little new product set to come on line; as well as continuing extremely attractive interest rates.
"Three months ago it started to be a lot of fun again because the fear had mostly subsided and more companies were talking about growth. Today, most every company we talk with is planning for growth and evaluating market opportunities.
We asked for perspectives on the apparent turning of the market cycle, insight into the near term prospects and what recommendations may be given to prospective tenants and investors; receiving the following feedback from some of those in the field:
Darren Powderly, CCIM, Partner/President Compass Commercial Real Estate Services: "We are officially in fast moving waters at this point. Six months ago we were enjoying the first signs of economic growth helping the local commercial real estate market.
"The market is changing rapidly and unevenly, so make sure you understand the art and science behind the property you are evaluating. We see too many overpriced listings out there, so buyers have to really understand the market fundamentals impacting the property.
"As far as recommendations go, I would suggest examining your goals for your investment and try to match the type of property to your goals. Rate of return is usually a function of risk, so evaluate realistic expectations. Talk to property managers and brokers about anticipated owner costs and lease up times on vacancies.
Brian Fratzke, CCIM, Principal Broker and Founder Fratzke Commercial Real Estate: "Tenants in the light industrial or retail sector in Bend need to take note of market conditions today which have improved dramatically compared to 12 months ago.
"It's amazing how quickly the investor sentiment has improved. The ultra discounted real estate values of 2009 2011 are gone, yet good values certainly still exist and we have more room to run until prices rebound to replacement values.
Simon Lowes, Broker, Lowes Commercial Properties: "I would say there has been a marked shift, particularly relating to Bend, in the last six months or so with a more normalized, and even accelerated, level of activity compared to the last several years.
"Development activity has picked up so much the City is having difficulty keeping up with the demand. It's exciting again!
Local Brokers Report Heightened Activity and Points for Future
"Also, take advantage of the historically low cost of borrowed money especially if you are purchasing a property for your business. The market is heading in the right direction, and reasonable use of leverage in this upswing will pay huge dividends in the long run.
"One example of how things have moved in the cycle is that I worked for three years to sell a building and the eventual recent buyer reported very few remaining options out there now for owner users in a certain range in Bend, so that supports the view that things have tightened up substantially in the last 12 months."
"For investors, we would advise to invest in what you know. We see people currently trying to invest in multifamily property because it is hot right now, but that is something of a specialist area.
"Competition among tenants has increased significantly in the last year, when there were often multiple suites to choose from, and the days of wringing rent concessions from landlords appear behind us, particularly in light of a seemingly strengthening economy.
"Our investors are having a tough time locating quality, reasonably priced real estate investment property listings. The apartment and industrial markets are hottest followed by retail, office and bare land.
"Throughout the market fluctuations, the multi family sector has remained strong especially in light of the current favorable interest rate environment and rising occupancy and rental levels as evidenced by the activity regarding an apartment complex listing I have under contract that attracted interest from all along the West Coast and beyond.
It seems the general drumbeat is that there has been a marked improvement in the commercial real estate market in Central Oregon, and Bend in particular, compared to a year ago, so we tested the waters of that theory by canvassing opinion from several experienced exponents in the industry.
Commercial Real Estate On the Rise in Central Oregon
"Well located retail land prices should be heading up. Office activity has picked up, but not yet to the Omega Watch Sale
Dan Steelhammer, Broker, COLM Commercial Real Estate Services: "The market activity has done almost a 180 degree about face and it is great news for owners finally.
"In my case, industrial leasing led the way starting last summer, and now most of our owners have very few if any industrial vacancies in Bend. Retail followed suit with interest picking up from regional and national retailers who recognize the potential income stream value of top high traffic/high visibility locations.
"Going forward, any business that has survived the past five years and has any interest in owning its own real estate needs to seriously evaluate the low cost of borrowed money and a real estate market that appears to have bottomed.
"In Redmond, we have seen a pick up in retail leasing activity, although there are still plenty of light industrial and office opportunities.
"It is interesting that commercial real estate typically lags the conditions seen in the residential market, and things are latterly tightening up in our sector but values are still something of a moving target, particularly as they are often driven by rental rates a property can command, which are still catching up.
"I would say things started turning around in April of 2012, to the point where landlords have become more cautious Omega Speedmaster Mkii on lease negotiations in the context of a rising rent environment, though there still seems ample office inventory for lease in Bend.
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"Light industrial lease space is seeing very little vacancy, especially regarding smaller units, and retail vacancy is extremely tight Omega Seamaster 300m Ladies
"Given the uneven recovery, it's important that buyers work with an expert commercial broker, such as a CCIM or SIOR designee. You can also check out the Compass POINTS newsletter for up to date market statistics."
"And consider multifamily. Demand for rentals is high, vacancies are low, rents are headed in the right direction, and you get to spread the risk of vacancies among many tenants."
"We would recommend that prospective tenants have their affairs in order and be ready to provide financials and potential personal guarantees when negotiating with building owners.
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