The Steigerwald Commerce Center at the Port of Camas-Washougal will become one of Clark County's largest shovel-ready industrial tracts. Foods in Season, a specialty food company, built a new distribution center at the industrial site.Photo Gallery
The commercial real estate market in 2014 was the third year of a continued recovery from the post-recession years. As jobs, population and retail sales matrix improve in 2015, all commercial real estate fundamentals will follow with positive leasing absorption, increasing rental rates and, eventually, new construction for commercial real estate projects.
The Class A multitenant office market is recovering at a slower rate than the Portland metropolitan area, as Clark County’s job growth has had minor positive year-over-year job growth increase. The Vancouver vacancy for multitenant Clark County office is 16.7 percent compared with the Portland metropolitan area of 8.5 percent.
Class A office rates have increased slightly over last year at an average annual rate of $21.52. There are no new multitenant speculative office developments planned for 2015; however, the waterfront project may have several single tenant build-to-suit transactions over the next several years.
Significant lease transactions in 2014 were the relocation of Integra Telecom to the Vancouver Tech Campus (85,000 square feet), Banfield Pet Hospital’s relocation to Vancouver (240,000 square feet) and Stairmaster’s renewal of its lease of 26,000 square feet of space at Westfield Vancouver mall. PeaceHealth purchased the 500,000-square-foot building it was leasing at Columbia Tech Center for slightly more than $25 million.
Clark County’s retail market had more than 100,000 square feet of positive lease absorption during 2014; however, the vacancy rate of 7.7 percent is significantly higher than the greater Portland metropolitan area vacancy rate of 5 percent. Vancouver welcomed its first Natural Grocers store during 2014. In addition, Wal-Mart has started the construction of a super Wal-Mart center on Fourth Plain and Ward Road. Hazel Dell Square sold for more than $322 per square foot, which is a high value since the recession years. As retail sales increase 6 to 8 percent per year, new construction will be announced to meet the increasing retail consumption demand.
The industrial market has been quite brisk, with positive lease absorption of more than 200,000 square feet in 2014. The Clark County industrial market for multitenant buildings has a vacancy factor of 4 percent versus a Portland Metropolitan Area vacancy factor of 4.9 percent.
Vacancy will continue to decrease, as there is minimal new construction announced for 2015. The LogisticCenter 205 industrial park on Northeast 121st Street, with slightly more than 90,000 square feet of space, is the only industrial park ready to start construction in 2015. Multitenant industrial lease rates are continuing to increase as a shortage of prime industrial spaces is available to lease in the market. More new multitenant industrial building construction will be announced during 2015 to meet the pent-up demand.
As Clark County continues to recover with positive job creation, population increases and sales tax growth, the commercial real estate market will also improve over the next several years. The warning signs for users are that the available multi-tenant vacant building options for lease are rapidly reducing and the number of alternative sites for new businesses or expansion of existing businesses is extremely limited, and the cost for all multitenant spaces will continue to increase year over year.
Eric Fuller is president of the Fuller & Associates commercial real estate firm.
