Bend commercial space sees drop in number of leased buildings; vacancies rise in Q2

(Update: Adding video, comments from Compass Commercial Services)

BEND, Ore. (KTVZ) -- According to Compass Commercial Real Estate Services, Bend vacancies in all types of commercial space, including office, retail and industrial, rose in the second quarter of 2023.

Compass says they surveyed over 900 commercial buildings totaling 13.7 million square feet to provide the most accurate and up-to-date data on commercial space absorption and vacancy rates in Bend.

Jay Lyons, a principal broker for Compass Commercial, told us Thursday, "Bend, and Central Oregon for that matter, have been the beneficiary of Covid and the work-from-home kind of trend that's spread across the country."

The Bend office market experienced 7,088 square feet of "negative absorption," with an increase in vacancy rates from 3.94% in Q1 to 4.29% in Q2, while the retail market experienced 7,487 SF of negative absorption and a slight uptick in vacancy, from 2.60% in Q1 to 2.81% in Q2.

Meanwhile, the Bend industrial market saw 15,779 square feet of negative absorption, resulting in a vacancy rate of 1.26%, a slight increase from the 0.80% recorded in Q1.

"For the most part, Central Oregon has been insulated from the headlines that you read about big vacancies in downtown San Francisco or Seattle or Portland," Lyons said. "We've actually seen a ton of in-bound migration."

The Supply Depot, a military surplus store in Bend that opened in 1992, announced they are closing their doors for good earlier this week.

Their building is currently up for lease, offering thousands of square feet, albeit with no interested parties ready to move in yet.

"I think the market can't continue to go up indefinitely -- it has to show signs of correction at some point," Lyons claimed.

"But I'm not concerned about the increase in vacancy rates," he added. " think Bend and Central Oregon will bounce back fairly quickly."

Bend's westside saw the biggest drop in office and industrial space, with over 7.5% of tenants not renewing leases in Q2.

Meanwhile, the 97 Business Route in Bend, home to multiple retail stores, saw an almost 3% increase in available space during Q2.

"I also expect to see strong demand in retail and industrial here in Bend," Lyons said. "And the office market, I think is just seeing a slight correction in how people utilize their office space."

Compass Commercial closed 97 deals total in Q2, including eight sales and 70 leases, totaling almost $23 million in considerations.

"I think the market is poised for sustaining any sort of downturn or pullback or softening, so to speak" Lyons concluded.

According to Compass, retail spaces were the most sought-after in Q2, tallying half of all sold spaces.

In Redmond, industrial spaces saw the biggest increase in vacancies, with an extra 5.24% becoming available last quarter.