Commercial contractors have shaken off the doldrums and are cutting loose on a big list of Clark County projects this year.
Construction activity in 2014 won’t break any records, but the project list keeps growing as the economy gains strength. A new round of retail stores and developments, some started in 2013, is leading the way. Wal-Mart Stores Inc. has two stores under construction and set to open this year including a big-box Supercenter store in Battle Ground and a grocery-only Wal-Mart Neighborhood Market at East Fourth Plain and Grand boulevards. Also, three national hotel chains are in various stages of development to add more than 300 new guest rooms to the Vancouver lodging scene. National retailers Ross Dress for Less and Jo-Ann Fabric and Craft are each developing new stores in the area this year.
The national retailers will be joined by coffee shops, convenience marts and fast-food vendors as part of the wave of rebounding construction in the county, according to local developers.”The retailers have some good expansion plans going on,” said Mike Jenkins, a developer with Vancouver-based MAJ Development. His company will start on several retail projects for specific, signed tenants this year, including a redevelopment of the former Ruby Tuesday’s restaurant site at Southeast Mill Plain Boulevard and 164th Avenue in Vancouver.
“You saw the retailers go dormant for a few years and now they’re rolling into full expansion mode,” said Jenkins, who has developed numerous local and West Coast properties for retailers including 7-Eleven.
Contractors took out construction permits worth a combined value of nearly $250 million within Vancouver’s city limits and in unincorporated parts of Clark County, according to building reports issued by the two jurisdictions. The total represents a 72 percent increase over 2012, when $144.2 million worth of commercial construction permits were handed out to contractors.
The increased activity signals continued job growth for construction businesses, among the community’s most dominant industries. It also offers opportunities for subcontractors and vendors seeking to work on the projects, driving demand and pushing development costs higher.
“We’re seeing some more aggressive, competitive pricing,” Jenkins said. He attributed the rising prices to demand and the fact that some construction companies did not survive the economic downturn, leaving a pool of fewer competitors to bid on the rush of new retail projects.
Office projects
Higher costs are one of several trends shaping the commercial real estate market this year. The community also is seeing a trickle of new office projects being built with specific users in mind, said Eric Fuller, principal at Vancouver-based brokerage firm Eric Fuller & Associates.
Among the projects is a five-story, 150,000-square-foot office building under construction at the Camas campus of Fisher Investments and a two-story office building that is set to open next fall at Northeast 136th Avenue and Ninth Street. The latter project will house five separate state agencies that are part of the Department of Social and Health Services.
“What these have in common is they are user-based,” Fuller said, adding that most lenders require office projects to be spoken for, with pre-leasing that occupies at least 60 percent of the space before construction loans are issued.
Clark County’s office vacancy rate is still about 18 percent, lower than the 20 percent vacancy rate at the height of the downturn, but not low enough to trigger speculative construction, Fuller said.
“New construction happens when business recovery is in midterm mode and I don’t think anybody thinks we’re there yet,” he said. “But we are higher than the bottom we experienced in 2010 and 2011.”
Fuller and other real estate experts anticipate improving employment numbers and increasing home sales will continue to spur absorption and, in turn, new commercial development.
“We’ll see a strong surge in leasing up and the reduction of current available inventory,” said Ryan Hurley, with Hurley Development in downtown Vancouver. Hurley’s company continues to focus on redevelopment projects in the downtown core, where a walkable grid and retro space provide an opportunity to foster a budding urban enclave of small Web-based businesses that employ the young, the entrepreneurial and the hip.
He sees the area’s up-and-coming craft beer industry and culinary culture as keys to revitalizing a downtown long in need of an energy infusion.
“We really need to be more thoughtful and creative to get those smaller companies here,” Hurley said.
Although few public projects will be taking center stage in 2014, Fuller said some projects built with public money will begin to spur private development. As an example, an $8 million office, the Salmon Creek Medical Plaza at Northeast 139th Street and 10th Avenue, is an outgrowth of ongoing work on the $133 million Salmon Creek Interchange Project.
Jenkins also expects to start work this year on a $7 million retail redevelopment project at 406 N.E. 139th Street, an area that will receive greater exposure to vehicle traffic when the overpass opens this year.
The new crop of projects along the route provide evidence that public investment formed the foundation of Clark County’s commercial construction comeback.
“The public invested in the darkest days of recession and those projects are visible now,” Fuller said.
by Cami Joner
The Columbian – January 19, 2014
Photo by Steven Lane