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Tuesday, March 19, 2024
March 19, 2024

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Commercial vacancies at 17 percent downtown

Brokers report rising interest, are optimistic that rate will decline

By , Columbian Business Editor
Published:
3 Photos
A space is offered for lease in downtown Vancouver on Thursday.
A space is offered for lease in downtown Vancouver on Thursday. The downtown vacancy rate of 17 percent is more than double the vacancy in downtown Portland. Photo Gallery

If you’re looking for commercial space to lease in downtown Vancouver, you won’t have to look far.

Buildings with “For lease” signs dot the downtown landscape, with at least one promoting reduced rates for tenants. Even as downtown has attracted new real estate investors and small businesses in recent years, nearly one-sixth of its building space that is typically devoted to commerce sits empty, waiting for workers who would bring more energy and dollars to the area.

Several recent commercial lease deals, either actual or announced, are office relocations that don’t increase downtown occupancy rates. And last year’s opening of the renovated former Vancouver City Hall at 213 E. 13th St., now called Block 56, added another 21,000 feet of office space to be filled. Still, commercial brokers say they’re seeing rising interest in downtown offices and expect that by year’s end vacancies will decline from the current estimated rate of 17 percent.

Eric Fuller, president of the Eric Fuller & Associates commercial real estate firm, predicts a net “positive absorption” of downtown space this year. Tamara Fuller of Norris Beggs & Simpson also is bullish, saying that every one of her current commercial listings is attracting interest.

“Last year I was cautiously optimistic. This year I’m optimistic,” she said. “There’s definitely an uptick in the right direction.”

Downtown has seen some business movement. The engineering and environmental consulting firm BergerABAM last year took about one-third of Block 56, creating a vacancy in downtown’s Main Place building just before it was sold to Menashe Properties, a Portland investment firm. Last week, at a groundbreaking ceremony for Killian Pacific’s 101 Building at Sixth and Main streets, company officials announced that the building’s major tenants would be Killian Pacific, the Mackenzie design firm, and Pacific Continental Bank — all of which are relocating from other downtown offices.

“Are we moving the deck chairs around?” asked Eric Fuller. “There is a lot of that going around. Every once in a while we see somebody new.”

DiscoverOrg

One of the biggest newbies is DiscoverOrg, a fast-growing firm that provides sales leads information to technology vendors and staffing firms.

The company is moving into 27,000 square feet of office space on two floors of the 10-story building at 805 Broadway. But it’s replacing CenturyLink, which moved out of downtown to various locations.

DiscoverOrg relocated from the Orchards area with 120 employees. Tim Pfeiffer, a commercial broker at Norris & Stevens in Portland, said the fast-growing company chose downtown to be closer to prospective employees in Portland and suburban Washington County.

“They were out of talent locally and were having trouble sustaining growth,” he said.

Pfeiffer is looking for tenants for the MJ Murdock Building at 703 Broadway, advertising with a sign that offers reduced rates and a full floor of office space. The Murdock building lost Columbia Credit Union as an office tenant when the credit union consolidated offices at its Cascade Park operations center last year. Pfeiffer said the building recently secured a tenant for a portion of Columbia Credit Union’s former fifth floor space, and that the open floor is a fourth-floor location that has yet to be built out for tenants.

Proximity to Portland’s booming tech economy is the kind of marketplace dynamic that could increasingly work in downtown’s favor, commercial brokers believe. Portland’s downtown vacancy rate is just 8.7 percent, compared to the 17 percent rate for the West Vancouver area that includes downtown. Portland’s downtown lease rates for top-quality commercial space range from the low-20s in dollars per square foot to a high of $39 per square foot, said Tamara Fuller. In Vancouver, tenants can expect to pay $22 to $24 per square foot for full-service offices, she said.

Pfeiffer said he sees plenty of interest in Vancouver office space, with many companies considering the city because of Washington’s tax advantages over Oregon for some types of businesses. “There are people from out of the area circling around,” he said. But much of that circling isn’t leading to closed deals.

In Vancouver, “the rates have not proven the value quite yet,” he said. “We aren’t there yet but we’re definitely getting closer.”

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Columbian Business Editor