The commercial real estate market in Clark County has resembled a desert of late: bleak, with the occasional oasis.
"Construction has stopped to a slow trickle," said Lance Killian, president of Vancouver-based commercial construction firm Killian Pacific.
For example, Prestige Development's The Luxe, originally proposed as a 56,000-square-foot mix of commercial and residential condos at 13th and "D" streets, is now "on hold until the market improves," according to Elie Kassab, Prestige's president and CEO. And, he said, there is a good possibility the site use may change from office condos to luxury apartments when the project does move forward.
Another project that is not progressing as planned is Killian Pacific's former Riverwest development, now renamed "Library Square." Located at 901 "C" Street, the project originally included a regional library, office and retail space, residential units and a hotel. Currently, only the library portion is moving forward – hence the project's name change.
"The overall plan for Library Square has not changed," said Killian, "but the private elements of the project are on hold." Killian stated that they would review the regional economy and project pro forma in 2010 and then make a decision to proceed with the project.
Incremental Progress Killian Pacific's 101 Building, formerly referred to as the Frontier Building, has received land use entitlements and construction drawings have been substantially completed. Killian said his company was "marketing the project on a select basis to potential users." The 65,650-sqaure-foot building on the corner of 6th and Broadway includes ground-floor retail and three stories of offices and underground parking.
The Prestige Plaza, a proposed apartment complex located on the site of the former Vancouver police department at 13th and "C" streets, is also progressing. Project developer Kassab said they were in the "schematic stage," determining the ideal number and size of units, stories and parking spaces. Kassab said they anticipate approximately 173 units and hope to start construction late next year.
"The market conditions are fairly attractive for apartments," Kassab said, drawing a clear contrast between the Prestige Plaza project and his stalled Luxe condo development.
Prestige also has a new project on the books – a new bank building at 409 E. Mill Plain, across the street from the Angelo building. Prestige purchased the lot last June "for a premium," according to Kassab. Originally occupied by what Kassab called an "old yellow house" he claimed was a graffiti target, crime attraction and home to transients, the lot is now ready for development. Chris Briggs, senior vice president and senior project manager at Prestige, said they anticipate site plan approval by the end of January, permits by April and to start construction next summer.
Briggs also said that there was "strong interest" from several banks to finance the project – located in an area Kassab called "bank row," with iQ Credit Union, Umpqua Bank and Columbia Credit Union nearby.
Prestige's site plan for the project calls for a 3,000-square-foot base with a 1,000-square-foot mezzanine and a drive-thru. The building lot is adjacent to a 10,000 square-foot parking lot that is one of the few parking lots to meet the Vision for City Center Vancouver Plan requirements, including being engineered and ready for pervious pavement.
And then there is the Waterfront Access Project, partially funded by federal stimulus money to clear the way for $1.3 billion in private riverfront development.
Eric Holmes, Vancouver economic development services manager, stated they hope to start construction of the bridges and underpasses in the next six months, with Portland-based Gramore Development shooting for 2012 to begin construction of the first phase of the waterfront mixed-use project.
Tough Times Ahead
Although the active downtown development projects are sparse, commercial real estate developers remain optimistic for the long term.
"The general feeling," said Killian, "is that the next two to three years will be extremely challenging for commercial construction companies; but those that weather the storm will be poised to participate in the continued growth of our economy."
Killian and Kassab agreed on one thing – before recovery could occur, three things need to happen: the current office and retail vacancy rate of around 17.6 percent needs to decline to 5 or 6 percent; banks need to start lending and regulators need to ease up on banks. In the absence of these conditions, said Kassab, "we will not have recovery."
Library Taking Shape
Sue Vanlaanan, Communications Director for the Fort Vancouver Regional Library District, said the new Main Library project, located at the corner of "C" Street and East Evergreen Blvd., broke ground in August, and they have poured the deep foundation and are constructing support pillars. Funded by a bond passed by Vancouver voters in September 2006, the project is slated for completion in the first half of 2011.
The 83,000-square-foot structure features terra cotta and lots of glass, to "reflect and respect" the historic Academy building across the street. The site's significant slope defined the building's design, which features four full levels and a fifth "half story."
The library, said Vanlaanan, will include reading rooms, meeting spaces, computers, and an early learning center that will "nurture early literacy skills." Karin Ford, manager of the Vancouver Community Library, said most levels feature a raised-floor design that will make accessing cables and wiring easier for future technology changes.
"We're thrilled with the project, and seeing it take shape," Vanlaanan said. "It will be a wonderful resource for the community."
Ford stressed that the "support of Killian Pacific has been crucial" to the project's success. Several other local companies have been involved with the project, such as the general contractor, Portland-based Howard S. Wright Constructors, with an office in Vancouver, and Vancouver-based structural engineers Kramer Gehlen Associates and civil engineers Hopper Dennis Jellison.
