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A Fourth-quarter 2020 National Association of Realtors, Commercial Real Estate Trends & Outlook Report indicates the continuing impact of the pandemic on the volume of transactions and on commercial business practices. The impact of the pandemic is still evolving but the survey results are providing an indication of where changes are heading. In the office sector, 62 percent of respondents reported an increase in companies moving to smaller offices, and 58 percent of respondents reported an increase in short-term leases of two years or less. In the retail properties market, 52 percent reported they are seeing more vacant malls being repurposed for other uses, such as mixed-use, industrial use, hospitals or as churches.
REALTORS reported a decline in sales and leasing transactions, except for industrial properties, clearly the strongest leg of the commercial sector. The land market has also been a strong sector, especially sales of land for recreational use, as the pandemic has curtailed leisure activities in the urban areas.
Locally, Central Oregon continues to rise in national visibility as a popular destination for those who are leaving big cities amid the COVID-19 pandemic and the growing ability to work remotely from anywhere.
Local commercial real estate professionals and economic development managers point to the limited amount of developable land as the next big issue affecting new businesses coming to the area and locals needing to expand. The City of Bend is counting on the 500-acre Juniper Ridge industrial park as a major part of their answer to the shortage, and that property will be more viable as utilities and roads are developed into the area. Phase II of the North Interceptor Sewer Line Project began last June. The City of Redmond is considering a rezone of their Desert Rise Industrial Park from light industrial to heavy industrial zoning and have other industrial land projects underway including a 945-acre “large lot” industrial park that was recently annexed into the City.
Another part of the solution for the increased demand is to build more industrial and commercial buildings. Industrial building vacancy in Bend and Redmond is three to four percent. Economic Development managers in Bend and Redmond are working with developers to create more options. Currently, between the two cities, there are ten industrial projects planned or being built. Redmond recently announced a major business recruitment bringing 150 jobs on a 46-acre campus located at Ninth and Antler.
As the nation recovers from the pandemic, an article in the February 8, 2021 issue of Forbes magazine predicts, “In 2021, we will see a K-shaped recovery that favors certain industries and economic groups. Under this scenario, we see companies like Amazon, Google, The Home Depot and Walmart benefit while mom and pop shops, local restaurants and other service-based professions lag. Tech fortune will reach all-time highs while lower-income, blue-collar workers will suffer the most. This inequality will be especially pronounced in commercial real estate.” Expect to see continued impact in our region on national chain retail, restaurants and event venues with continued competition for available industrial and certain commercial space due to the desirability of Central Oregon for relocation.
Bruce Barrett is a commercial real estate broker with Windermere Commercial and a Certified SCORE Mentor. He can be reached at email@example.com.