Office space vacancy tightens

I am against unsustainable runups in prices. Period. They always end, and they end badly. Unsustainably high housing prices drive OUT workers, and think what you want, but all economies need worker bees. Drive out worker bees, and your left with a Queen bee or two that wonders who's going to get things done. Additionally, Bend downtown lease prices have skyrocketed to the point that many Mom-and-Pop type stores are closing. Progress marches on, and I'm all for that, but it's changing Bend in a way that I personally don't really enjoy. I like quirky little shops, and restaurants, and even cranky store owners. It gives the place some personality. If I wanted sterile, impersonal shopping, I'd move to a big city.

But if there is a runup in prices that I can vaguely support, it's in "industrial" office space and it's demand-led. The Bulletin has a piece today, "Office space vacancy tightens" that details the price increases in commercial leases. David Evans & Assoc. is moving from a space they've occupied downtown (across from the library) for 20 years, to The Old Mill. The lease rate for their current space is being jacked up to $2.75/sf. Luckily they aren't abandoning this space on pure cost reasons: they actually need more room. This is a good thing. Professional services firms typically pay a living wage (which has become damn hard in Deschutes County in the past 5 years), unlike many of the restaurants, retail and knick-knack shops downtown.

My worry, is this: It's my own opinion that Bend is "high beta"; it goes up farther and faster than many other parts of the country on the upswing, and conversely gets ravaged when things go South economically.

(And I know: "Things are different this time". They always are. But actually this time they "might" be different. I'll admit that Bend is having a economic "renaissance" unlike any it's ever had... so things might actually might be different this time.)

And Bend housing has worked its high-beta magic on the way up, and I think that we'll get smacked on the way down, hard. Harder than most of the country. But a mitigating force will be "living wage" jobs, how many are there and will they survive. If they can survive the cost explosion that is pertebating throughout this area without a commensurate payroll cut, the housing bomb I see coming could actually be far less severe.

"Living Wage" jobs is what we need more of here. Not more retail clerk jobs, not more Mt Bachelor lift assistant jobs, not more housekeeping, low-level secretarial, waitress, or any other "leisure" type jobs that pay minimum wage. We need jobs that start at $50 - 60 - 70 thousand. Longtime residents will say that's just unrealistic. And I would agree... if median home prices were $170K. But they're around $400K. And in places where medians are $400K (Boston, Chicago, San Diego...) starting pay IS $75K. It has to be for people to survive. We've got San Diego prices, and Burns pay (well, close). Something's gotta give.

My question is this: Bend housing has had its run, and is now deflating. And it's going to be hard to say how far and how hard the fall will be. Is Bend commercial space Bends ultimate high-beta real estate? Is it about to bust more spectacularly than our housing bubble? Or is it in a demand-led boom that will survive despite poor economic conditions that may be brought on by a housing bust? David Evans office manager Jim Carnahan seem to thing the latter:

"And then there's the pressure to expand - a need that Carnahan doesn't see subsiding, despite the slackening in the local housing market.

"Frankly, we haven't seen any real slowdown," Carnahan said. "It's more like we hear about a slowdown, but we're all busy."

What do you think?