Home Back Issues February 2008 Will commercial real estate be next to fall?

Will commercial real estate be next to fall?

| Print |  Email
Archives - February 2008
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

Tech makes the world go round

Contributed Blogs
Thursday, March 20, 2014
03.20.14 thumb internetBY JASON NORRIS | GUEST BLOGGER

I don’t think anyone can (or should) remember what it was like to get things done without the internet. This milestone in technology has certainly benefited brick-and-mortar companies and subsequently launched a new era of businesses.


Read more...

Powerlist: Meeting perspectives

March 2014
Tuesday, February 25, 2014

BY BRANDON SAWYER

A conversation about the event-planning industry with sales directors from McMenamins and the Portland Art Museum. 


Read more...

The solution to youth unemployment

News
Thursday, February 27, 2014
02.27.14 Thumbnail TeenworkBY ERIC FRUITS

Because they have little chance of working for someone else, today’s teens need to be entrepreneurs. But, first, we must teach our teens that entrepreneurship starts small.


Read more...

Why I became an educator

News
Tuesday, March 04, 2014
03.04.14 thumbnail teachBY DEBRA RINGOLD | GUEST CONTRIBUTOR

How can we strengthen the performance of institutions charged with teaching what Francis Fukuyama calls the social virtues (reciprocity, moral obligation, duty toward community, and trust) necessary for successful markets and democracy itself?


Read more...

Rapid ascent

March 2014
Tuesday, February 25, 2014
IMG 4255-2BY AMY MILSHTEIN

Kelly Dachtler, president of The Clymb, redefines outdoor retail.


Read more...

The 2014 100 Best Companies to Work for in Oregon

News
Friday, February 28, 2014

100best14logo ThumbnailThe 21st annual 100 Best Companies to Work For in Oregon list was announced Thursday night at an awards dinner at the Oregon Convention Center.


Read more...

Q & A with Chuck Eggert

News
Thursday, March 06, 2014
03.06.14 thumb pacfoodsBY HANNAH WALLACE | OB BLOGGER

The founder of Pacific Foods talks about why his company has flown under the radar in Oregon, how saving a family-run chicken hatchery has helped his bottom line and why he thinks organic food is anything but elitist.


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