This spring Prineville is starting to feel some momentum in commercial real estate as a result of two new large scale building projects – and the halo effect of two data centers.
St. Charles Prineville, the community’s new $30 million hospital, is being built on the east side of the city. Replacing the aging Pioneer Memorial Hospital, the new health care campus in Prineville will include a primary care and specialty physician clinic along with hospital services including inpatient beds, an emergency department, surgery suites, a laboratory, imaging services and much more.
The east side of the city will also have a new, as yet unnamed, elementary school when its doors open for classes in September 2015. Voters approved a $33 million bond measure in 2013 that will fund the construction of a new school costing $18 million, allocating the remaining $15 million to other district-wide building renovations.
The two existing schools, Ochoco and Crooked River Elementary, will close their doors at the end of the 2014-15 academic year.
These two commercial projects, in addition to the two data centers (Facebook and Apple) on the “rim” above the city are stimulating interest in commercial projects within Crook County.
Josh Smith, senior planner with the City of Prineville, is optimistic that these projects will “prime the pump” of additional development. “Although the amount (of commercially zoned land) has not changed much the improvements the (new) hospital is doing on the Ochoco Mill site will vastly increase the likelihood of new development on that property.”
Steve Uffelman, a real estate broker and Prineville City Councilor, is also feeling the momentum. “With the new hospital and the grade school I do expect to see additional activity once construction of those buildings begins.”
One sure sign of momentum in a region is when inquiries about available commercial property increase.
“Prineville is unique for its opportunities so there are always inquiries from larger businesses searching to see what Prineville has to offer,” said Michael Warren II, a real estate broker and the City of Prineville Realtor of Record.
Another reason for increased commercial interest in Prineville could be a fear of rising interest rates and inflation. Don Wood, an architect in Prineville, senses that developers want to get their projects done as soon as possible.
“People know that interest rates are going to go up soon and want to get work done prior to that time. And the current high inflation rates are creating fear in the market regarding whether they will be able to afford the rising cost of construction in the future.”
Additional commercial projects, not yet in the construction phase, include the Prineville Airport Master Plan update and a large-scale Sports Complex designed for use by traveling sport teams, tourists, and residents. An $80,000 study, funded by Facebook, showed that a sports complex could “get Crook County working” by providing 700 constructions jobs and 200 post-construction positions.
Prineville ResidentialResidential real estate, on the other hand, has not picked up substantially over 2013. While home values and inventories have increased over 2013, unit sales have not.
“Not only locally, but nationally, home sales are down. In general, election years tend to be a hesitant time for people to buy. Interest rates are still outstanding,” said Warren.
Multiple Listing Service (MLS) records indicate that home sale prices in Prineville are up about ten percent (through February 2014) compared to one year ago. And there are currently ten to fifteen percent more homes on the market this year. As of February there were eight and a half months of inventory based on the current selling rate.
Uffelman is happy to see values increasing. “Values are back enough now and there are very few distressed sales compared to last year. Prices are up substantially in Bend and Redmond and that drives our prices up as well.”
Looming interest rate hikes, however, may put a damper of residential home sales and new construction.
“Several factors are influencing slower sales. Interest rates are up slightly, though still far below traditional rates. And with price increases some investors have become more selective,” said Uffelman.
According to Smith the weather has played a role in slowing construction. “The decrease in residential construction this spring is in some ways due to the weather and the uncertainty of interest rates.”
Michael Warren II sees both a price ceiling and a lack of inventory hampering sales. “There is not much activity in very high end properties. And, in some markets, there is a shortage of your average family home, three-bed two-bath homes below the $120k mark. The options are limited. But what some may consider a shortage; this could very possibly be the new norm.”
SISTERS BANKS ON FACELIFT TO INCREASE REAL ESTATE ACTIVITY
The City of Sisters is optimistic that their Cascade Avenue Improvement Project, which began on March 3, will improve both the tourist and resident experience when traveling through town. The main thoroughfare, the $6.6 million project, funded by both the city and the Oregon Department of Transportation, will replace the existing road (a state highway) and include wider sidewalks and curb extensions. New landscaping and street lights should improve the community’s street appeal.
But the question is “will it increase commercial and residential real estate development and sales?”
Commercial property development and sales have been very slow in the community since the “great recession.” The city’s two industrial parkways north of downtown have seen very little activity, even though they are part of the city’s economic development zone.
Peter Storton is the owner and principal broker of RE/MAX Revolution in Sisters. “Commercial property has been quiet for some time. Office and retail space has been plentiful. Sisters downtown is presently having its beauty treatment and this will bring renewed interest.”
According to Catherine Black, a broker with Ponderosa Properties, five commercial properties have sold over the last year with prices ranging from $235,000 to $679,000. Two commercial property sales are pending – Bronco Billy’s Ranch Grill and Saloon in the historic Hotel Sisters and Cork Cellars.
Realizing that Sisters’ largest assets are its natural beauty, good schools and access to year-round outdoor recreation, city leaders are beginning to target entrepreneurs and new start-ups.
“We could use additional light industrial flex space for a number of start-ups and expanding businesses,” said Caprielle Foote-Lewis, economic development manager, Sisters Country.
Residential property-wise during the first quarter of 2014 the total number of “conveyances” in Sisters Country totaled 61. For the same period in 2013 the number was 94.
Year-to-date there have been 49 residential sales with prices ranging from $120,000 to $2.4 million. During the same period in 2013 there were 60 sales with prices from $45,000 to $875,000.
For calendar year 2013 the median sale price for a single family residence on one acre or less in Sisters was $306,500. There were 121 sales. In comparison the median price for a single family residence in Bend was $267,000. (Data provided by the Bratton Appraisal Group LLC.)
Like Prineville there is a shortage of residential inventory this spring.
“There is an extreme shortage of listings at this time….we need inventory – new homes and re-sales. There are fewer sales this year again because there is nothing to sell,” said Storton.