Speculative industrial buildings are underway for the first time since 2007
From an electrical supplier to craft beverage makers, Central Oregon businesses are finding brand-new industrial buildings to lease for the first time in more than a decade.
Several developers in Bend and Redmond are working on speculative projects totaling 266,886 square feet worth an estimated $26.7 million. That total includes planned future phases, which could be put on hold if demand disappears.
Most of the activity is in Redmond, where the first speculative project since 2007, 611 Jackpine Court, has been fully leased since August, said Collier Ehlers, a broker with Fratzke Commercial Real Estate.
Four more projects are underway or close to breaking ground at 1167 NE Jackpine Ave., 1263 SW Lake Road, 688 SW Veterans Way and 4620 SW 23rd St.
“It’s putting us in a really good place,” said Jon Stark, senior director of Redmond Economic Development Inc. “Not all communities have choices when it comes to industrial space.”
Bend is also gaining industrial buildings. Construction is underway at High Desert Industrial Park, 2561 NE Fourth St., with at least two buildings expected to be complete this year. High Desert’s plan calls for seven buildings totaling 127,292 square feet — nearly double the available vacant space in Bend right now, said Brian Fratzke, principal broker and founder at Fratzke Commercial Real Estate.
In 2013, Bend’s industrial landlords had 2.1 million square feet available, he said.
“Low vacancy rates, high lease rates tend to be a catalyst for new development,” said Graham Dent, a broker with Compass Commercial Real Estate Services who represents the landlord at 688 Veterans Way in Redmond.
“Almost immediately after the beginning of construction, we signed up an electric supply company to take the entire 10,000 square feet,” Dent said.
Dent said he’s seeing consistent demand for small spaces, ranging from 1,000 square feet to 3,000 square feet, from all sorts of mom-and-pop light industrial businesses.
At Jackpine Court, three of the tenants are craft beverage makers — Porter Brewing, Dry Fields Cider and Gomper’s Gin.
At 1263 SW Lake Road, three buildings totaling 26,000 square feet are under construction. “I have no fear we will have them leased shortly,” said Louie Hoffman, principal broker at John L. Scott Real Estate.
The developers, Paul Cahill of Cahill Construction Co. and JR Faulkner of JR Faulkner Excavation, will work on a second phase if demand remains strong, Hoffman said.
“Nobody knows how deep the market is for new space,” said Jonathon Keith, project manager of the Red Barn Industrial Center, which is expected to break ground in the spring at 1167 NE Jackpine Ave. “Everyone’s being cautious.”
The fact that so many speculative projects didn’t begin until 2018 shows that the Great Recession had a lasting impact on land owners, said Tim Duy, professor of practice in economics at the University of Oregon and author of the Central Oregon Business Index.
Duy predicts the next recession will be milder. “I suspect that momentum holds very well in the next recession,” he said. “The region will be much less affected.”
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