Clark County office, retail and industrial buildings continued to jog in place in the three months ending Sept. 30.
The stagnant third quarter could usher in an equally sluggish fourth quarter, according to commercial real estate experts who predict leasing activity would continue to experience slow growth due to a down job market, tepid consumer spending and a tightened business-lending environment. Others say it could be even tougher to fill empty space if Washington voters pass a ballot measure to launch a state income tax.
“It’s slow, without question. I think people just want to get this year behind them,” said Roger Qualman, an executive vice president with NAI Norris Beggs & Simpson’s Vancouver office.
Qualman’s firm just released its third-quarter “Market Summaries” report showing little change in the office market in Clark County. Of 3.95 million square feet of office space here, 18.32 percent was vacant in the third-quarter, about even with last year’s rate, and slightly lower than the 18.55 percent vacancy rate in the second quarter.
Others say with uncertainty surrounding the election, many executives are frozen, afraid to hire or make other long-term plans.
“It seems as though we’ve hit a plateau of demand,” said Terry Phillips, owner of The Phillips Group Inc. Real Estate Group in Vancouver.
Most commercial agents agree that the local office market’s biggest news is the recent start of construction on California-based Fisher Investments’ $30 million office complex in Camas.
The company already employs 325 workers in Clark County and could bring hundreds more to the area. It won’t if voters enact Initiative 1098, a proposed state income tax on people who annually make $200,000 or more, according to company chairman and chief executive officer Ken Fisher.
Fisher’s company isn’t the only business closely watching the outcome on I-1098, said Adam Roselli, an associate broker who specializes in the office market for Eric Fuller & Associates Inc. in Vancouver.
If I-1098 fails, Roselli said he would lose a potential manufacturing client interested in office space at Vancouver’s EastRidge Business Park. The 6,000-square-foot space is being eyed by a company that would move about 17 jobs from Oregon to Clark County.
“I don’t know how Seattle or other parts of the state will be affected (by the income tax measure), but Clark County will lose its ability to retain and attract new jobs,” Roselli said.
In the meantime, some industry experts say Clark County’s commercial real estate market has been hit just as hard by contractions at existing companies, such as Nautilus. Within the last two years, the Vancouver-based fitness company reduced its office space requirements from 482,500 square feet to 70,000 square feet in an east Clark County building.
The Nautilus reduction has all but cancelled the gradual gains from small tenant leases, said Ron Kawamoto, an associate vice president with Norris Beggs & Simpson.
“It’s sort of like a balloon; You create a deficit when you push on one end,” Kawamoto said.
But some real estate agents are hopeful that retail business will pick up, if not in the fourth quarter, then in early 2011.
“It’s a buyers market, whether you’re buying land, real estate or leasing a space. It’s really an opportunity,” said Deborah Ewing at Eric Fuller & Associates Inc. She’s optimistic Clark County’s real estate market will improve after Washington’s general election is out of the way.
“We need to get the election behind us,” Ewing said, “and get through the first quarter of 2011.”