Central Oregon’s Economic Horizon Hot Spots or Dismal Prospects?

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This issue of CBN is devoted to the economic outlook of Central Oregon. On the one hand we have Economist Bill Watkins saying: “Three years after the beginning of the recession, and a year after the end of the recession, Central Oregon’s economic prospects are distressingly dismal, characterized as they are by continued job losses, still-declining real estate prices, negative net migration and economic growth so weak as to be barely measurable.

On the other hand CBN staff has put together an extensive list of fifty companies that are expanding and growing in our region. We have accumulated this list of companies ‘to watch’ as they increase their employment levels and create innovative products particularly in the high tech and bio tech industries. The list might serve to counteract some of the negative forecast predictions.

The third view you’ll find on the local economy comes from several business      people representing various industries. Perhaps one of the most uplifting is from Brian E. Fratzke, CCIM, Principal, Fratzke Commercial Real Estate who said, “We must leverage our existing assets and sell what Central Oregon already has to offer including increased quality of life over large metropolitan areas, true community involvement for all residents in Central Oregon, quality educational system, incredible natural resources and a region that people outside the area continue to vacation to and desire to spend more time and money.

We Must Leverage Existing Assets & Sell What Central Oregon Already Has to Offer
Brian E. Fratzke, CCIM, Principal Fratzke Commercial Real Estate

2010 was a year where investors were able to take advantage of record low prices for retail, office, and industrial investments. The primary focus for buyers of commercial properties centered on existing buildings with just a handful of commercially zoned land sales occurring in the year.

Several owner/users of commercial real estate found that the monthly debt service attributable to purchasing a building was less than or equal to the monthly lease payments and in turn purchased vacant properties for 30-70 percent below replacement cost. Cash, SBA 504 and SBA 7a loans dominated the acquisition landscape.

In the leasing market, credit worthy tenants looking to optimize their space needs were able to improve location(s) and in many cases decrease their lease payment or modify the length of their lease.

Attention to increased Systems Development Charges, utilities and overall development costs continued to dominate local media. Municipalities and governmental agencies were unable to cut spending quickly enough to mitigate the impact to their budgets due to the decrease in property values.

Predictions for 2011
We will continue to see the lending environment take extremely conservative measures to protect their assets and conventional financing will be available for only the strongest credit worthy and experienced buyers.

Lease rates for retail properties have hit bottom and Bend will experience positive absorption of high quality retail suites in 2011. Many office buildings are experiencing 100 percent occupancy for the first time in 4 years and we will see larger office suites (4,000-10,000 SF) leased while sales of office buildings in the $2.0 to $8.0 million price range will capture local headlines. Medical office buildings will continue to be in demand and 2011 will be the year that lease rates INCREASE for select properties in the office and retail sector. Unfortunately, the industrial sector will continue to experience low lease rates especially for suites larger than 2,500 SF. With over 800,000 SF of vacant move in ready industrial space for lease in Bend, tenants requiring large industrial suites will be in a strong position to negotiate favorable lease terms. The multifamily market will remain strong with limited inventory available for purchase in Central Oregon.

Job growth will continue to be the focus in Central Oregon and our community will benefit from new companies started by existing residents looking to own and operate their own firm. COCC and OSU Cascades Campus will continue their increased enrolment challenging both institutions to manage growth.

Locally, organizations that are funded primarily from taxes will need to use great restraint in proposing tax increases. Property owners have decreased overhead since 2007 and are in a neutral to positive position to climb out of 4 years of economic turmoil.  Implementing tax increases will have a detrimental effect on the progress within our community which could impair any momentum or gains in 2011. Allowing the private sector to provide solutions in partnership with governmental organizations focused on improving economic growth in central Oregon is paramount to increasing our local economy.

Recommendations
We must leverage our existing assets and sell what Central Oregon already has to offer:

  • Increased quality of life over large metropolitan areas
  • True community involvement for all residents in Central Oregon
  • Quality educational system
  • Incredible natural resources

A region that people outside the area continue to vacation to and desire to spend more time and money.

Cautiously Optimistic That We Will See Moderate Improvement in 2011 
Kyle Frick, Vice President,  Marketing & Sales Mid Oregon Credit Union

The current economy has impacted credit union members in several ways. Members have experienced increased financial stress in their lives that has resulted in increased delinquencies, repossessions, and bankruptcies.

Wherever possible, we have sought to work with members by modifying loan terms or through other flexible approaches that help preserve the relationship.  These negative trends seem to have peaked after a two year steady rise, and are now moving back toward normal historical levels.

Membership and deposits have grown significantly.  We have seen very positive growth in new members joining the credit union and bringing deposits from other institutions or investment options.  We believe that represents a consumer flight to safety and preference for doing business locally.

 
Lending growth is positive, yet the demand is lower due to the number of individuals who have credit challenges, or tend to be more cautious about borrowing due to the current economic conditions.

The regulatory environment is changing rapidly, which introduces a great deal of uncertainty. Many of the financial reform laws that have been enacted have yet to be fully interpreted by the agencies charged with their enforcement.  This introduces some difficulty for the credit union in being able to accurately plan or to introduce new products and services for members.

Healthy financial institutions, like Mid Oregon Credit Union, are bearing the burden of failed financial institutions.   The cooperative insurance funds which protect member deposits are used to cover these failures, and the remaining healthy institutions then face additional mandatory assessments to replenish those funds.   This impacts our ability to grow as that earned income would normally be reinvested locally in our members and communities.

We are cautiously optimistic that we will see moderate improvement in 2011.   We anticipate that two indicators of growth in Central Oregon – construction starts and employment levels – will somewhat lag the national trend.
Local governments can be proactive in promoting and helping businesses start, move, grow and increase employment. State and Federal government can help by reducing the impact of the regulatory burdens, allowing credit unions to focus funds on investing in local individuals and small businesses. Other economic development entities can identify opportunities and provide resources to help attract, grow, support, and retain businesses in our region.

Bend a Desirable Destination For Small-to Mid-Sized High-Technology Companies
Jeff Eager, Mayor City of Bend Partner, Balyeat & Eager, LLP, Attorneys at Law

I am optimistic that Bend’s economy will show modest improvement in 2011.  With relatively low property costs and an ample workforce, Bend is well-positioned to benefit from what appears to be an improving national economy.  In particular, Bend is a desirable destination for small- to mid-sized high-technology companies that may look to expand, and whose owners want to move someplace nice to live.

In my business law practice, I am seeing slightly fewer foreclosure and bankruptcy related questions, and more questions about taking advantage of business and real estate opportunities.  The December 2010 unemployment rate for Deschutes County fell to 14.5 percent.  While that is an unacceptably high number, it is an improvement of 0.9 percent over November 2010.  If the percentage of unemployed workers continues to fall, foreclosures should slow and businesses will feel more confident about investing in expansion and hiring.  We have been mired in a downward spiral, in which bad news fed upon bad news.  Perhaps the December 2010 unemployment numbers are the first bit of good news to help turn that trend around.

Government cannot solve our economic problems, but government can and must create an environment in which economic growth can occur.  The passage of Measures 66 and 67 was harmful to the business climate in Oregon.  To allow for an improved economy, all levels of government must keep taxes low, eliminate job-killing regulations, and make the strategic infrastructure investments necessary for private-sector job-creation.  With those components in place, Bend can position itself to emerge from the Great Recession stronger than ever. 

Buyers Market So Don’t Pass Up the Opportunity to Own
Tim Knopp, Executive Director Central Oregon Builders Association

In 2011 the Central Oregon housing economy, and therefore our entire economy, is likely to improve over last year. After the most difficult housing market in decades new home permits increased about 25 percent year over year for the first time since 2005. The problem of course is that in 2005 there were over 2,000 permits in the City of Bend and last year there were almost 200. But that’s 25 percent better than the 150 permits in 2009 and I like my glass half full. Our local economy will not recover without the housing economy recovering because housing has been and will continue to be one of our biggest economic sectors we have so we all have a vested interest in helping it recover.

 
The historical annual average of single family permits is about1,000 permits a year.  There is pent up demand for new housing in Central Oregon which will make 2011 better for our local housing industry. For 2011 there are homes being planned, designed and now under construction. Nearly 75 percent are under $300,000 with most closer to $200,000. Affordability is back, that is of course if you have a job and decent credit.

 
Last year I said in this column that the “Central Oregon housing economy will improve slightly” and it did, it just doesn’t feel good knowing so many of our family members, friends and neighbors are still without work. Last year I also wrote that Measures 66 & 67 “won’t produce the income they (politicians) project because more Oregonians simply trying to survive will find ways to avoid paying additional taxes. Since the new taxes will result in thousands of jobs lost in the private sector the Legislature will still have a budget hole come 2011. Passing the tax measures only delayed dealing with fundamental problems in state government, employment and benefit levels that are far beyond private sector Oregonians ability to pay for them.”

 
I truly wish the whole episode hadn’t happened because laws like those in physics and economics aren’t subject to the wishes of politicians, their supporters or their spin machines. If you’ve read the headlines recently you know that I was right about this too, but not because of some genius ability or crystal ball. The results were predictable because repeating private sector job destroying policies while expecting different results simply doesn’t make sense.

In order for Central Oregon to see substantial improvement in our economy local businesses and homeowners are still going to need loans to get back on the economic treadmill and spur our local economy. Most homes built during the peak have gone back to the lender and there are lenders with quite a bit of foreclosure inventory yet to be released that will hold housing prices down, especially if they release them all at once. It’s a great buyers market so don’t pass up the opportunity to own if you are in a relatively stable situation. Yes, any kind of investing comes with risk but don’t let fear stop you from achieving your dreams.

In Central Oregon we tend to keep a stiff upper lip and we’re pushing forward one day at a time. Our state and national economies will need to improve for truly happy times to visit us anytime soon. The good news is the revolution I predicted last year at the ballot box did happen last November. Out are the tax and spend, let us control every aspect of your life types and in are Congressman Greg Walden and his colleagues that have promised to do the right thing, which is to reduce spending and live within their constitutional authority and their means. If they keep their promises we will recover sooner rather than later.

 
We’ve been given a fighting chance. Now hold them accountable to expand freedom and institute policies that will give small businesses a stable and level playing field to bring us back from the brink. The brink of crushing federal debt that will result in inflation which will be part of the price for the four year spending bender we were just taken on. The bottles are empty and the American economy has a hangover including a massive headache. Thanks to most of you Congressman Greg Walden is now the fifth most powerful congressman in America and in a position to help lead all American’s to a more prosperous future.

 
So work hard, stay involved by communicating with your elected officials and enjoy life. Out of 308,000,000 American’s roughly 200,000 people live in our piece of paradise which means less than 1/10 of 1 percent of American’s get to enjoy everything our region has to offer like you do. Let’s work together to make 2011 the year our recovery started in earnest!

A Notion, Not a Forecast
Inspiring to See People & Businesses Improve & Reinvent Themselves
Scott T. Steele, AIA, LEED AP Founder/President, Steele Associates Architects LLC

  

I’m not going to embarrass myself by pretending to be able to accurately forecast what is going to happen economically in Central Oregon in 2011. There are many others more qualified to speculate on that subject. I do however have plenty of faith and confidence in our region’s ability to recover as quickly as possible, due to the character and quality of local individuals and organizations.

It has been tough going for many individuals, businesses and organizations, but I have many reasons for optimism for Central Oregon. As always we have the allure of our incredibly scenic and beautiful environment and strong k-12 and higher education, but there is something else…the people. While it has been painful to see many struggle it has also been inspiring to see so many people and businesses improve and reinvent themselves. There is a strong entrepreneurial and pioneering spirit here, a lot of hard working motivated people and not many quitters.

We also have talent here. Our ability to provide goods and services far beyond Central Oregon creates local jobs and provides stability in our economy. It appears to me that sometimes we focus too much on trying to bring new business and industry to Central Oregon and forget to focus on greater support for the ones already here. Don’t get me wrong, I fully understand the need to recruit good new business and industry, but perhaps we need to remember to “Buy Local” during the good times too, instead of waiting until the bumper stickers appear during the tough times.

 
We are blessed with so many good businesses that provide excellent local services and products; we obviously need to support them as best we can. There are also many strong and innovative local companies such as Bend Research, Deschutes Brewery, GL Solutions and PV Powered whose goods or services are provided far beyond Central Oregon.  The more goods and services they and others can provide in and beyond Central Oregon the more family wage jobs we will create and those people will help support all other aspects of the economy such as retail, housing, medical, schools, etc. The continued success of such businesses is paramount to our recovery and stability, and success also often brings with it community service and philanthropy.

Our firm has been fortunate through the recession and we have worked hard to expand our architectural and sustainable design service range. In addition to success in the local market we have demonstrated the ability to compete and secure projects all over the western United States and have developed expertise in new building types. We are also actively pursuing international opportunities. While the communities of Central Oregon will always be home to us, and their projects special, we will continue to expand our range to the benefit of our staff and the local economy.

So I look forward with optimism. We live in a wonderful place filled with bright, generous, innovative and hardworking people, and I know that our community will persevere and recover from the recession as well as any can.

 

Investing in Infrastructure, Technology & Diversification
Amy Tykeso, President and CEO BendBroadband

Growth in the cable television/broadband sector is heavily tied to housing. Traditional video service or premium television service, such as cable, telcoTV and satellite service is mature. As a result, most of the change in customer counts is due to share shifting from one provider to another. With high unemployment and economic challenges in many families, there is less discretionary income that, in the past, may have gone toward higher levels of premium television subscriptions. Some customers are adding Internet based entertainment instead.

As an industry we have not seen “cord cutting” despite the popularity of this theory in the press. People still want access to the major cable channel brands like ESPN, CNN and the Disney channel. The large media companies are hesitant to put all their content on-line because their financial model is based on advertising sales supported by ratings and fees charged to cable companies. There is not a clear on-line solution at this point to fund the heavy expense associated with high quality content. In addition, at this time the Internet infrastructure nationally simply cannot support an on-line replacement of traditional video service distribution.

 
At BendBroadband we continue to invest in infrastructure, technology and diversification to meet anticipated customer needs. There is a long and steep investment curve in our business. The trends support an all Internet Protocol future, meaning all content will delivered in an IP format which allows content to be viewed on any device—TV, PC, smart phone, tablet and whatever is coming next. Businesses are upgrading their telephone infrastructure to IP to gain more features and lower cost through hosted models, where they might not own their telephone switch.   In addition, there is movement away from personal on-site data storage to the “cloud”, meaning businesses and consumers will be migrating away from their own on-site servers for back up to shared facilities, for example.

 
Government regulation and tax law definitely impact our industry. The uncertainty looming around “net neutrality” for the past several years has chilled investment. The rules were more clearly defined by the FCC last month and that has helped ease some of the confusion. But, more regulation in the absence of demonstrated need in a rapidly growing sector of the economy is bad policy.  From my perspective ISP’s have every motivation to ensure a great on-line experience.

 
The regulations enacted by the FCC put the thumb on the scale to determine winners and losers by exempting content and application providers and wireless carriers from the “net neutrality” rules and also limit flexibility between stakeholders to find new business models within the Internet ecosystem to fund investment. With Rep. Greg Walden at the helm of the Energy & Commerce Sub-committee on Communications, there may be additional arm wrestling on the powers of the FCC to regulate the Internet.  I am hopeful that Governor Kitzhaber and President Obama have the political will and bi-partisan cooperation to trim spending and make the tough choices for long term economic stability.

Economy Spawning New Wave of Entrepreneurialism

Katherine Tank, Attorney Schwabe, Williamson & Wyatt

The current economic climate has impacted the law business in different ways, depending upon areas of expertise. Creditors’ rights (i.e., foreclosure) and bankruptcy attorneys are extremely busy in this market. The same is true of commercial litigators, who are left either prosecuting or defending business or real estate deals that have gone south. The sad truth is more often than not, no one is to blame but the economy and perhaps the “get rich quick” mentality of the 2000s. Also busy are employment attorneys, and intellectual property and patent attorneys.

 
The economic climate and high unemployment are spawning a new wave of entrepreneurialism, start ups and creativity at levels we have not seen in some time. The saying “necessity is the mother of invention” could not be more true! Of course, business, real estate and land use lawyers have seen a slow year, but this will change as we climb out of this recession.

As for predictions for the coming year, we are seeing signs and seeds of activity that are certainly promising. Those with liquidity or credit worthiness will likely capitalize and profit in this market. With the current economic climate, we have seen Darwin’s “survival of the fittest” theory in full action, with the effect that the strong (or perhaps just the lucky) will remain, and hopefully thrive. I believe that 2011 will be a year of recovery, albeit a cautious and modest one. No one can ever take away one of our inherent and best assets – our beautiful scenery and lifestyle. They will continue to drive people to the area, preferably to invest or start or move their business.
There is a lot our local governments can do to assist in a healthy and speedy recovery, and nurture the seeds into real growth. Governments need to reduce the costs of opening or doing business in Central Oregon, ensure we are developing the infrastructure critical to a healthy and growing economy (i.e., roads, schools, water, power), and adopt a pro-business “can do” mentality. Central Oregon regularly competes with other regions in attracting business opportunities and jobs, and we need to figure out where and why we fall short, and do what we can as a community to fix it.

 
We need to attract living/family wage jobs that will be sustainable in the long term, and the work that local economic development agencies (such as EDCO) do every day behind the scenes is key. At the end of the day, we all need to step up and be part of the solution, as it will take a village to restore Central Oregon to the thriving and prospering place I know it will be again.

Balance Your Budget Folks
Jim Schell Development Director for The Partnership to End Poverty

I’ll start out by paraphrasing what everyone will probably conclude, in one form or another, on the subject of our economic outlook:

1) Nationally, our economy will moderately (or better) improve in 2011. The stock market however, will outperform the employment index by a fur piece, as corporate America was the first to learn the lesson of how to work with less. (Can our governments be far behind?) The bottom line: it’s a good time to buy stocks but not a good time to be looking for a job.

2) Locally, our economy will improve slightly, but not at the same pace as that of the U.S. We’re paying the price for being overly-dependent on real estate and construction for all those years. All indications (i.e. the experts) point to the fact that it will be a number of years before real estate and construction approach previous levels.

3) Things will never return to the way they were, especially where employment is concerned. The days of running a lathe and making a family wage are fading fast, if they’re not already over. For better or for worse, the skills required to get a family wage job have taken a quantum leap forward. (Or sideways, dependent upon your point of view.)

The organization I work for (The Partnership to End Poverty) is a part of the nonprofit sector. While there are many similarities between the way nonprofits and for-profits work, there is one mega difference that delineates the two.  In times of recession, a for-profit business witnesses a decrease in revenue AND a decrease in demand for its product or service. Thus it’s incumbent upon the business to cut expenses. (And it’s relatively easy to determine where to cut.)

Not so in the nonprofit world. When our revenues go down, the demand for our services go up. Ask any nonprofit today, never have they been so swamped. Our market, sadly, is growing, even as our revenues decline.

What’s more, it’s going to get worse before it gets better. Our much maligned State of Oregon needs to deal with a $3.5 billion shortfall, and you can bet that PERS isn’t going to take the kind of hit that social service expenditures will.  When the next budget cut comes along, and it won’t be long, many of the services that are currently funded by the State of Oregon will shift to the nonprofit community to provide.

The bottom line for the nonprofit sector:  Declining revenues, increased need. Same as last year.

The email requesting this forecast also asked to “provide my view on what our local governments can do to help our industry and the general economic potential in our area.”  That’s easy, everyone who has operated in the for-profit or nonprofit world knows the answer to that question.

Balance your budget folks, just like we have to do and just like you should have done a long time ago.  Head for your expenses first, which is where the rest of us have to go.

There is good news in this recession however, for some organizations anyway.  For those who have made the cut (read; survived the downturn), once our local economy improves the playing field will be less crowded. Those businesses and nonprofits who, in the halcyon years, usurped market share with poor products, shoddy services, and cheap prices, will be gone.  Or stated another way: Less clutter means less competition means increased revenues and margins.

This is always the benefit of any recession, even a tsunami one like what we’ve been in.  Recessions, after all, are nature’s way of separating the wheat from the chaff.

For those of you who have made the cut this far, congratulations. Better times are on their way.

 

Is the Recovery Real?

Roger J. Lee Executive Director, Economic Development for Central Oregon (EDCO)

This time last year, we predicted 2010 would see a marked improvement over the previous two, which were among the toughest Central Oregon has experienced.  This generally has held true.  Nationally, some economists were forecasting a double dip but the leading trends and indicators were in place at the end of 2009 for a sustained recovery.  Manufacturing orders were up, venture and angel capital investments were up, the lending freeze was just beginning to thaw and unemployment rates were peaking. 

What was lacking this time last year were some positive signs for employment growth.  Companies had tightened their belts, reducing employment, reducing waste and increasing productivity.  And while their balance sheets improved (even with lower revenues), businesses were doing more with fewer people.  

Our own Madras-based Bright Wood Corporation is a great example.  With a workforce nearly half of what it had two years ago, the company is today producing nearly as much in terms of product volume.  That’s fantastic  news for the go-forward strength of the company, but scary for those 350 people who no longer work there.

Employment Growth at Last
But as 2011 begins, the employment picture could not be more different than January 2010.  A leading indicator is at least a dozen local traded-sector companies that have either doubled their employment or are well into the process of doing so.  While some firms in that list are small, others are not by Central Oregon standards: 

  • G5 Search Marketing, 70 new jobs
  • GL Suite, 40 new jobs
  • PV Powered, 60 new jobs
  • MediSISS, 60 new jobs
  • Nashelle, 20 new jobs

The list does even not include companies like Bend Research (60 jobs in the past year)  or Keith Manufacturing (20 or new jobs in the past six months) new companies to the region including Facebook (40 new hires in the past month, plus 200 full-time construction workers for the past year that will continue for another year) and Pacific Pellet (15 new jobs).

Importantly, these are all high paying jobs that support home and car purchases, restaurants and retail.  Add hundreds of these jobs and we will start to feel it more broadly across all sectors of the economy.  Consider that each of these jobs creates two to three more in the non-traded sector and the recovery starts to feel real. 

 

Regaining Lost Ground
It has been so long since we’ve seen it, what does recovery and economic expansion look like?  While it won’t get out of hand in 2011, look for inflation in certain sectors – food, fuel and energy.  With ample supply of labor and real estate in the market, expect wages and home prices to be flat.  Look  for foreclosure notices and bankruptcies to peak out much as unemployment did in 2010, which will translate into to fewer distressed properties in 2012. 

 
Banks and other financial institutions will lend more money in the year ahead, though don’t expect an easing of paperwork requirements.  Anticipate  unemployment rates to go down faster than last year, but nowhere near levels we saw before the recession.  By year end, Central Oregon counties might get to current state averages which are just over 10 percent.  Not great, but a considerable improvement over what we see today. 
In some districts, school enrollment will be up and expect traffic at the Redmond Airport to exceed 2010, which was up over the previous year.  With more disposable income, expect tourism’s strength in 2010 to carry into 2011 and accelerate.  What we need not anticipate for the year ahead is another 2006 peak – or a 2008 valley. 

 
EDCO’s Efforts, Results
It may not seem possible to some, but EDCO celebrates its 30th year in 2011.  Our charter has never been that of economic forecaster, but rather as a positive change agent for the regional economy.  Our leverage point to achieve this mission is focused on business development.  Specifically, we:

• recruit new companies and target industries to diversify our employment base;
• assist existing traded-sector employers (defined as any business that exports most of their goods or services outside our region) grow and become more profitable; and
• help early stage companies move to the next stage of success by helping with financial and human capital. 
This past year, EDCO successfully recruited businesses to the region that together invested more than $200 million.  2011 promises to be an even better year for attraction and expansion efforts as companies consume excess capacity and grow their employment.  Specific initiatives we are pursuing this year include:
• Create a new Unmanned Aerial Vehicle (UAV) testing area somewhere within the Juniper Military Operations Area (MOA) that could attract a broad range of manufacturers, software and testing companies in this growing segment of the aviation industry. 
• Develop the region’s first angel capital fund to provide needed funding to promising early stage companies in the tri-county area. 
• Establish a new applied research center (likely with a material science focus), working with Bend Research, OSU and other private and public partners to help local and out-of-area technology companies with testing and research.
• Recruit at least one new college or university program (public or private) to the region to expand our higher education offerings.
• Further expand our commercial air service flights and destinations with ongoing collaboration between the Redmond Airport, COVA and consultant Mead & Hunt.
• Assist with the creation of at least 500 new traded-sector jobs and investment of at least $50 million in
private capital.

Regarding this last bullet, EDCO has in its portfolio of active projects (65 companies) that together would result in a total of nearly $1 billion in capital investment and 1,200 jobs.  Experience tells us that not all these projects will come to fruition, but our pipeline is relatively full and we expect to add volume as the year progresses.  The evidence of economic recovery is indisputable, and we will do everything possible to make sure that Central Oregon capitalizes on opportunities as they unfold in this new stage of the business cycle.

Good Lessons Have Been Learned
Susie Stevens Executive Director, Opportunity Knocks

As a non profit organization, Opportunity Knocks continues to feel the impact of a troubled economic environment.  In the last two years, member attrition has been higher for Opportunity Knocks because of an increase of some members unfortunately needing to close their business, move out of town or find another job.  The reasons all share in a common theme.  That being said, the organization has also continued to experience increased growth in bringing new members on and creating new teams.  One change in operations for our organization has been the need to offer payment schedules for the annual memberships which range in price from $325-$650.  Limited cash flow for many continues.

My prediction for the coming year is that it’s still going to be a painful time for some and unfortunately we may continue to loose more businesses.  Hopefully, they will be far fewer than in recent times.  I am optimistic and believe this year will be stronger than last.  I continue to hear about businesses that have experienced up to double digit increases this past year.  Good lessons have been learned and are being practiced.  Seeing positive performances in such challenging times, makes one hopeful that those businesses can and will only get stronger and help in contributing to the region’s economic environment. 

We are fortunate because our region is rich with a variety of business resources that are provided.  Opportunity Knocks recently completed a strategic plan and one of the areas addressed was learning about the extensive list of support organizations that exist in our area to help small businesses.  Depending upon the stage of business from start ups to maturing companies, there are many options available to provide training and resource information.

It is also gratifying to see the various economic development efforts presently taking place within our area and specifically in Bend.  Having been introduced  recently to the Bend Economic Development Advisory Board (BEDAB),  which is a committee designated by the City of Bend to identify a plan that would contribute to the city’s efforts towards economic development, I can say I am delighted at the attention the City is directing towards this needed area.

In addition to BEDAB, Economic Development of Central Oregon (EDCO) continues with their work in recruitment and expansion and the newer Center for Economic Research & Forecasting is also studying what can be done to enhance the economic climate of our area.  To bring all of these efforts together and identify common goals and action plans is what I hope to see in the near future. 

Until then, I am confident Central Oregon can only get stronger.

We continue to believe that Opportunity Knocks plays a significant role in helping Central Oregon’s Economic Development by providing existing businesses with services, tools and education to help them grow in all aspects.  The stronger our businesses are the more jobs that can be created and the better for all of our community.

Seeing Continued Increase of Entrepreneurs
Clell Gibson Co-Founder, BendTel Inc.

It looks like 2011 is hopefully going to be a better year than 2010. Central Oregon is still overbuilt in both commercial and residential development, banks and lending are still very tight, but showing signs of improving. Unemployment in the high desert is still at a very high level. For these reasons and others we think that our local economic recovery will be behind the national recovery.

We are seeing a continuing and increasing trend of small entrepreneurial companies relocating to Central Oregon, which is a positive sign, but little growth from our existing business base. New technologies in communications are allowing businesses extended reach at less cost. We are continuing to see a significant increase in long distance call conferencing as companies try to save money by reducing travel expenses.

 
Assessing value from employees, equipment and service providers will continue to be a business priority in 2011.

Asking the Right Questions More Critical for 2011
Jim Lee Executive Director of CORIL/ Principal with InvitExcellence

Our recent experiences with such a challenging economy have certainly brought about a lot of prognosticators regarding when a potential recovery might take effect, where we actually are in that process and what it might look like, especially here in Central Oregon.  These are all natural and important issues to have accurate information and answers to in order to guide and focus our planning efforts.  Being more receptive and user friendly to retain current companies and attract new business sectors to our area is also very important.

However, I think the more we look to others for such information we may miss critical questions and opportunities that are right in front of us, in our own backyards, so to speak.  Predicting the future may often be better determined by whether you and I are asking enough of the right questions regarding how we run our own companies instead of searching for answers on the perimeters.

I would like to suggest four areas of questions for you to focus on as part of evaluating your organizational readiness to capitalize on both present and future market opportunities.

Work Environment
How intentional are you in defining your work culture?  How does it feel to work in your organization?  In solving “problems”, do things generally get better or worse? What is your organization’s capacity to develop healthy relationships?  Are people as excited to be working with you six months after they join your organization?

There has been a lot written over the recent years on how important it is to intentionally define and maintain a work culture of positive growth potential. It is a lot more concrete and less illusive than previously thought, although it can be somewhat counterintuitive to beliefs held previously.  Research shows there is indeed a direct correlation to long term positive return on shareholder investment, whether you are a for-profit or nonprofit or whether we are, as a whole, in boom times or in a sustained downturn.

Leadership Quotient
How does your organization define leadership, by position only or by targeted behavior?  Based on the number of people in your organization, how many can you consider leaders?  Do the position leaders in your organization seek compliance or true commitment by involving a wider base of the organization?  In your organization, would your employees follow your leadership team if they had a choice not to?

This question is one that I hear over and over again; “how do we continue to do more with less?”  My response is that, although that question is relevant, it may not be the most productive question.  A better question might be; “how can we realize more success with more?”  If you have an organization with, let’s say thirty people, the typical leadership team would be defined most likely, give or take, by about 20 percent of that number or six to eight people. Over the years I have discovered that we can achieve more organizational success from a wider involvement of our employee base. The payoffs can be enormous and are directly related to the metrics that are most important to all companies.

Leverage Capability
Before you can effectively leverage your external markets you need to evaluate your present internal leverage capability.  Relevant questions might be: Is our organization overloaded with policies and procedures, rules and regulations, organizational charts, changing job descriptions and executive memos?  Does our organization more effectively use a well defined strategy to inform structure or is it the other way around?  Do problems and crises primarily drive our organization or do we stay centered on a well-defined strategic vision?  Does internal conflict bring about synergistic solutions or just more problems?

In my experience, I find that a lot of efforts within organizations to improve are focused on a continual reorganizing around a set of problems, hoping that the results will eventually be more favorable.  The realized results from “shifting around the problem” are more often not as positive as hoped for and the end results might be even more concerning and consequential from a negative perspective.  Often, internal leverage is compromised by trying to manage by rules and regulations instead of a well thought out strategic vision that invites people to the table because they are truly inspired and want to help you maximize positive results with all of your customers, both internal and external!

Creating Lasting Legacy
It is certainly understandable that a lot of organizations and individuals today are stuck in trying to figure out the probabilities-their best guess about the future vs. the possibilities-how they envision the future they want to create for themselves and the people that are most important to them.  If you are in the constant position of trying to gauge the future instead of creating the one you want, it can lead to discouragement, frustration, burnout and does not attract over time sustained investment or involvement by those critical to your long-term success.  Some relevant questions for you to consider are: Do we have more investors and supporters than we did three years ago? Are we seen in our region as an employer of choice?  Do people seek our advice both within and outside our industry sector?  Have we been able to transcend our mission or product lines and increase our relevancy and importance year to year?

Building a Lasting Legacy and fulfilling the purposes for both your professional and personal endeavors can be fun and exciting, even in the roughest of times, provided we build our desired legacies on the firm foundation of what constitutes healthy communities and relationships and also on what truly motivates people to be their best.  Think of the above four areas as quarter positions on a clock starting at the break of the new day and proceeding and continuing clockwise in sequential and interrelated fashion.  The synergy and positive results that come from consistently implementing these types of strategies are a lot more than anecdotal, although telling such a story of your own at the end of 2011 would be quite validating and fun!

Encouraged by Increased Consumer Confidence & Other Positive Economic Indicators
Bruce Kemp, CCIMPartner, Vice President of Brokerage, Compass Commercial Real Estate Services

We experienced a dramatic uptick in activity in 2010 over 2009, especially toward the end of the year. Overall in 2010, Compass Commercial saw 56-percent growth in consideration and 40-percent growth in total commissions. Combined, our brokers closed more than one deal per day throughout the year. These are all good signs that the market has moved into a slow but steady recovery.

We’re also beginning to see lenders willing to loan on investment properties. We feel the market is in a definite bottoming pattern and it’s time for investors to position themselves with great buys today that will result in great returns over the next several years.

Compass Commercial has a 15-year history in Central Oregon, and our partners and brokers have seen the booms and busts in the market over the years—real estate always goes through cycles. At this time, we’re encouraged by increased consumer confidence and other positive economic indicators that have, in the past, accurately forecasted future performance of the market.

We are in the early stages of the recovery phase, where we are seeing the lease rates begin to stabilize and absorption of vacant spaces increasing. Thus, we expect vacancy rates to begin to fall during the year.  Job creation is likely as businesses expand. With all that in mind, Compass Commercial has issued a strong buy signal to our clients, and we’re all looking forward to the opportunities we believe 2011 will offer investors and tenants.
Local city and county government can have a major positive or negative impact on commercial real estate. The more government agencies are business-friendly top to bottom, the more businesses will be enticed to move to and open in our area.

Our local municipalities can have a positive impact by streamlining the application processes for land-use actions, building permits, conditional-use applications and tenant improvements. These processes have been rather cumbersome in the past, but local municipalities are making good strides to be more user-friendly.

Another area that quite often becomes a roadblock is the cost of building or developing in one locality versus another. The more our local municipalities can keep their system development charges (SDC), application fees and other costs of doing business at or below competing areas in the Pacific Northwest, the easier it is for economic development to occur in our region. Additional incentive packages for companies to locate in Central Oregon can also play a key role in landing new businesses.

Other entities, such as Economic Development of Central Oregon (EDCO) and Redmond Economic Development, Inc., are great ambassadors for recruiting new business to Central Oregon and play a pivotal role in the growth of our markets.

A region that people outside the area continue to vacation to and desire to spend more time and money.

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