The first lesson of economic development is that it pays to be in the right place at the right time. And in today’s economic climate, the right place is the Southeast 192nd Avenue corridor.
Tom Files and Dean Kirkland are now developing about one mile of this corridor. This project started as a typical private stand-alone development to a site that benefited from city of Camas improvements. It has evolved with the city’s project of extending Southeast 20th Street out to Prune Hill, thus connecting Camas to 192nd and points west with an easy thoroughfare.
This project has led to yet more private development, including office projects such as Fisher Investments’ 150-acre campus, as well as new retail and hotel development.
The city of Vancouver’s master plan describes this area as “primed for major expansions in professional services and advanced manufacturing industries, which leverages the significant presence of the existing high-tech cluster and newcomers: Fisher Investments and PeaceHealth Medical.”
A second lesson of working with economic development teams is learning to go with the flow. The intersection of real estate, land use, and economic development brings together the public and private sector. Success requires a mutual respect by all parties involved in the processes at work.
The most successful developments are those done by private and public sector personnel who understand each other’s strengths and challenges.
This is happening at 192nd and 20th in east Vancouver.
So how does this region of east Vancouver figure into the total employment of the area? Basic employment drives the economic base multiplier.
As we see increased opportunities of a major “import/export” employment base, such as by the opening of more land to accessible travel routes such as the Southeast 20th Street corridor, the positive economic impact major employers will have on the area can be a three- or four-fold employment increase.
Barbers, coffee shops, dry cleaners, and convenience stores all hire employees who are needed to support the new basic employment businesses that are coming to the 20th Street corridor.
Fisher Investments is an example of a basic employer. Its income stream is derived from customers worldwide, of whom only a small percentage are Clark County customers. Many Fisher employees are transplants from other areas, and they need goods and services that should be found in a convenient location to their offices.
The 192nd corridor offers just that, with neighborhood shopping centers that have a combination of everything from medical services to coffee shops.
Nationally, the retail market is in recovery, with vacancy rates falling to extremely low levels. However, retail development is at historic lows. Construction starts fell to 5 million square feet in the fourth quarter of 2012, according to CoStar, a major commercial real estate data tracking firm in Washington, D.C.
Ryan Severino, a senior economist at REIS real estate research group, expects that, without much construction activity, even weak demand will push down vacancy rates and push up rents this year.
Locally, and specifically in the Southeast 192nd corridor, reports show that the “retail leakage” rate is high.
Put simply, that means that folks who live in the Prune Hill area of Camas have been willing to travel to Portland to do their shopping for retail goods. Part of that has been the “no sales tax” incentive Oregon offers. But another aspect has been the routing of traffic and the convenience factor.
The old route off Prune Hill to state Highway 14 was via Brady Road. The new route out 20th will put the shoppers going past new neighborhood centers such as 192nd Station, 192nd Plaza and 192nd Plaza West, which will offer an aggregate of 176,000 square feet of retail, office and medical office space. Currently only about 75,000 square feet is built and occupied.
As the cost of fuel increases and the value of shoppers’ time trumps the “sales tax” savings, more shoppers will opt for the convenience of these centers.
This will increase the center’s profitability — net operating income — and will drive more development.
As the opportunities to reduce the retail leakage (which includes non-vital medical services) continues to increase, be assured that developers will seize opportunities. As the accompanying graph shows, net operating income of neighborhood centers and community centers is improving.
That gives investors and developers strong reasons to continue to build more retail and office space. And that equates to more jobs for Clark County residents.
R. Tom Smith is designated broker at Columbia Pacific Commercial Properties in Vancouver. The company specializes in sales and leasing of Class A office, retail and multifamily real estate.