Market Update for Leasing in Eugene/Springfield

By: Brent McLean

Industrial Leasing:

The market is becoming much more active in first quarter of 2010 than any quarter in 2009. I have been deeply involved with several strategic negotiations for Tenants for ideal space for their relocation needs.

In talking with several other commercial brokers that are actively working industrial leasing market, they have all noticed a recent increase in activity. A lot of Tenants are looking to move now and I sense that will continue as many Tenants feel that the recession could be subsiding a bit. I just completed a 60,000 sq ft lease last week and have two more 10,000sq ft sized Letters of Intent to lease on my desk right now. Another firm that I work closely with indicated that they have signed two industrial leases last week. This will bring down the number of vacancies in our area.

Commercial/Industrial Sales:

I currently am working with two different clients that desire to take their money out of the bank due to the low rate of return they are receiving and invest the money into a passively leased property that would generate a 8% to 9% cap rate property. We are seeing some great buying opportunities today compared to what we saw in the 4th quarter of 2007, and all of 2008, and 2009. Timing has always been a key element to real estate and in my opinion the time is now to jump in. Waiting until it totally turns around, it will be much harder to find a bargain.

Retail Leasing:

I attended the CCIM marketing session in Portland on February 3, 2010. The luncheon speakers consisted of a panel of experts from First Service PGP Valuation. They provided an overview of the Portland markets for industrial, retail, and offices. They address key items like leasing rates, absorption timelines, cap rates, and vacancy factors. We usually see a trend where Eugene is very similar to the Portland area. While Portland may have more inventory due to being a larger city, Eugene often mirrors the Portland market in cap rates, leasing rates, vacancy, and overall trends.

The panel of experts provided these details regarding vacancy: Nationally the retail vacancy factor has been hitting between 9-11%. Portland had a remarkably low 6%. The Eugene market has an unbelievably low 4.6% vacancy factor! This indicates to me that the restricted Urban Growth Boundary expansion has a mixed blessing by keeping our inventory low throughout a recession and has not effected us like it has elsewhere in the US. There is even some new development talk in the near future and the City of Eugene mentioned there is a flurry of new permits being requested for retail and commercial space remodeling. If you are looking for this type of space, now is the time to jump into some great concessions before the market tightens up and you will have to pay the piper.

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