Will commercial real estate be next to fall?

| Print |  Email
Friday, February 01, 2008

{safe_alt_text}

STATEWIDE Now that the easy-money housing boom has fizzled, it is tricky to predict what will happen next with commercial real estate in Oregon.

Banks have tightened lending, and investors are watching warily to see whether rumors of recession build into full-blown realities of lost jobs and dwindling consumer confidence.

Still, vacancy rates are holding steady in most of Oregon’s urban centers, construction employment hit an all-time high last summer, rents generally are up and ambitious projects are breaking ground all over the state, even in Bend — Oregon’s capital of boom followed by bust — where builders are cranking out new stores, offices and corporate headquarters for Les Schwab Tire Centers.

How long can it last?

An extensive national report issued last November by PricewaterhouseCoopers and the Land Institute warned of a serious drop-off in commercial real estate investments and cited major concerns from the 600 developers, service firms and investors surveyed. That same report, however, mentioned Portland as one of a handful of bright spots for investors to consider. And two more recent reports, one by Grubb & Ellis and the other by Norris, Beggs & Simpson, argue that Portland’s commercial market appears solid. Central city office vacancy rates have held steady at around 10%, while industrial properties have reached 20-year lows   in vacancy and record highs in rent. Condos are cold, but apartment buildings are hot.

“The fevered pitch of bidding on properties has gone down, but there is still a lot of capital available,” says Patricia Raicht, client services manager for Grubb & Ellis. “There is no lack of investors interested in commercial real estate.”

Nor is there a lack of construction. Bart Eberwein, vice president of Portland-based Hoffman Construction Company, can easily reel off a half-dozen multi-million-dollar projects  his firm is completing, such as OHSU’s $70 million Biomedical Research Building.  “Health care continues to be a big market for us,” he says, “and I don’t see that changing.”

One thing that has changed is the level of scrutiny from lenders. “Everyone is being more cautious about new deals and how we underwrite them,” says Roberta Fuhr, senior vice president for KeyBank Real Estate Capital, the largest commercial lender in Oregon. That gives the edge to existing clients and investors with cash, while sending highly leveraged newcomers to the back of the line.

Most economists accept more stringent loan requirements as a healthy part of the ongoing correction of a money-lending system that had slid out of control. They don’t expect it to bring down the commercial market, so long as tighter credit doesn’t devolve into a lack of credit — and a recession remains just theoretical.                                        

BEN JACKLET


Have an opinion? E-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

More Articles

Justice for All

January-Powerbook 2015
Thursday, December 11, 2014
BY JESSICA RIDGWAY

Lawger upends the typical hourly based fee model by letting clients determine the cost.


Read more...

Corner Office: Timothy Mitchell

January-Powerbook 2015
Saturday, December 13, 2014

A look-in on the life of Norris & Stevens' president.


Read more...

Corner Office: Sheree Arntson

January-Powerbook 2015
Saturday, December 13, 2014

Checking in with the managing director of Arnerich Massena.


Read more...

Editor's Letter: Power Play

January-Powerbook 2015
Thursday, December 11, 2014

There’s a fascinating article in the December issue of the Harvard Business Review about a profound power shift taking place in business and society. It’s a long read, but the gist revolves around the tension between “old power” and “new power” as a driver of transformation. Here’s an excerpt:

Old power works like a currency. It is held by few. Once gained, it is jealously guarded, and the powerful have a substantial store of it to spend. It is closed, inaccessible, and leader-driven. It downloads, and it captures.

New power operates differently, like a current. It is made by many. It is open, participatory, and peer-driven. It uploads, and it distributes. Like water or electricity, it’s most forceful when it surges. The goal with new power is not to hoard it but to channel it.

The authors, Henry Timms and Jeremy Heimans, don’t necessarily favor one form of power over another but merely outline how power is transitioning, and how companies can take advantage of these changes to strengthen their positions in the marketplace. 

Our Powerbook issue might be viewed as a case study in the new-power transition. This annual book of lists provides information on leading businesses, nonprofits and universities in the state. Most of the featured companies are entrenched power players now pursuing more flexible and less hierarchical approaches to doing business. Law firms, for example, are adopting new technologies and fee structures to make legal services more accessible and affordable.

This month we also take a look at a controversial new U.S. Securities and Exchange Commission rule requiring public companies to disclose the median pay of workers, as well as the ratio between CEO and median-worker pay. 

Part of the 2010 Dodd-Frank financial reform law, the rule will compel public companies to be more open about employee compensation, with the assumption that greater transparency will improve corporate performance and, perhaps, help address one of the major challenges of our time: income inequality.

New power is not only about strategy and tactics, the Harvard Business Review authors say. “The ultimate questions are ethical. The big question is whether new power can genuinely serve the common good and confront society’s most intractable problems.”

That sounds like a call to arms. Or a New Year’s resolution. Old power or new, the goals are the same: to be a force for positive change in the world. Happy 2015!

— Linda


Read more...

Two Sides of the Coin

Contributed Blogs
Wednesday, October 22, 2014
22 twosidesBY JASON NORRIS

Historically, when the leaves fall, so do the markets. This year, earnings, Europe, energy and Ebola have in common? Beyond alliteration, they are four factors that the investors are pointing to for this year’s seasonal volatility.


Read more...

The Bookseller

November/December 2014
Wednesday, October 22, 2014
BY AMY MILSHTEIN

Everyone knows college is expensive, but a look at the numbers brings that into sharp — and painful — focus.


Read more...

Political Clout

November/December 2014
Wednesday, October 22, 2014
BY KIM MOORE

Businesses spend billions of dollars each year trying to influence political decision makers by piling money into campaigns.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS