Sunday, April 12, 2009

Hey, kids let's turn this big box into a playpen!

I've been concerned since the beginning of this blog, that there is a Commercial Real Estate (CRE) bubble in Bend equal to exceeding the residential bubble. Because it takes a couple of years longer to play out, up until now we've seen building still going on.

An example of the disconnect between real economic conditions and CRE would be the sad spectacle of Gottshalks opening a new store -- with a surrounding complex -- and closing almost immediately.

Downtown, the Oxford Hotel is nearing completion, as is the completion of the outside of the parking garage. All those flaggers and hardhats I see every day on the way to work are going to be looking for something else to do.

The Bulletin article this morning, Empty Stores, points out that we're probably lucky that we didn't have a Circuit City in town, and -- despite the stated desire on the part of one of the commercial leasing agents quoted in the article -- we're lucky that we don't have a Borders. (I just don't believe Borders is going to last the year.)

Anyone who reads this blog knows that I've been calling for one of the news agencies in this town to do the research on retail square footage in Bend. I've tried with my limited web-fu skills to ascertain that figure, but haven't found it.

One of the brokers quoted in the article, Stephen Toomey, of Compass Commercial, says, "You would have to think that Bend is over retailed, but how much I don't know. The market will tell."

This seems disingenuous to me. He should be able at least to compare per capita square footage with other towns in Oregon. With the added caveat that towns like Eugene, for instance, are located on an interstate, have a four-year college (ditto Medford, Corvallis); Salem with it's state capital; and so on, almost every comparable town has more going for it than Bend, and much larger populations within a short distance.

In other words, even per capita wouldn't tell the real story -- because of Bend's isolation.

Still, it would be a start.

My guess is, this information can only be accessed by the CRE industry themselves -- and they have no incentive to tell us.


matt weagle said...

Hi Duncan,
I thought you might like to read today's Seattle Times article about the Bend bubble.

My wife and I visited Bend for the first time in March and fell in love with it. We've had just about enough of Seattle's sodden, ashen-colored skies and the idea of fly fishing the Metolius sounds like a great day. Please keep writing, it helps us keep our Bend hopes alive.

Pedro Hemes Valdes Ortega said...

Well dunc, the #'s I read is that the USA currently has $18 sq-ft/person for retail, the average for the West is 4 sq-ft/person, and of course in the rest of the 'real world' (east) where there is growth its not even 1-sq-ft/person. Thus it doesn't take rocket science to figure that 95% of USA retail space needs to be converted to wind-mills or solar-panels.

USA not being the smartest toad on the block, will wallow for awhile, but the big-box is all dressed up but with nobody to rob. Sort of like building 20X retail capacity in Nairobi-Kenya ( Nai-Robbery to locals ), whats the point of 20X retail in a place where nobody has Money?????

We both know that it was easy stock-market money that fueled the Starbucks, ... box & more box boom, and now that the wall-street stock machine is Bend Broke, well stupid shit no longer has an investor.

Who could have Bend Guessed?

Jeff said...

At least with commercial buildings, it seems like they can sit for 5+ years and still be useful. They are just an empty shell.

Homes, on the other hand, have a much shorter shelf life -- especially when sitting vacant and surrounded by a dead/dying neighborhood.

Commerical RE, by contrast, can serve a variety of purposes . . . workshop, school, clinic, firestation (?)

blackdog said...

The whole damn COUNTRY is over-retailed. I read somewhere that the US has several times more square feet of retail space per capita than any other country on the planet.

blackdog said...

"We've had just about enough of Seattle's sodden, ashen-colored skies"

Our skies are pretty ashen-colored much of the time too. Don't fall for the Chamber of Commerce BS about "300 days of sunshine."

"and the idea of fly fishing the Metolius sounds like a great day"

The Metolius is over-fished and the trout are over-educated. Try the Crooked River or the John Day instead. Or the Lower Deschutes when the steelhead are running.