SALEM\KEIZER OFFICE & RETAIL SURVEY 2007
ProAPOD Real Estate Software would like to share excerpts of the Salem/Keizer Office & Retail Survey published recently by C. Spencer Powell, MAl and his associates at POWELL VALUATION INC located in Salem, Oregon. We believe that readers who might have an interest in investing in real estate here Salem will find this helpful. Others might find it helpful as a comparison to other real estate market areas. This is not the complete survey. If you are interested in reading the entire survey, including all comments, charts and tables, please visit the website for POWELL VALUATION INC posted below.
2007 OFFICE SURVEY
The 2007 office survey compiled data from 113 properties totaling 2,462,701 square feet. As in years past, office space is adjusted to reflect an annual full service rent structure. Under these terms, the tenant’s rent is a composite of all expenses (including parking) related to office space operation. Overall, office vacancy rates have decreased, while all surveyed sectors have shown office rental rate increases since 2006…
OFFICE VACANCY
Overall, office vacancy totaled 8.06% in 2007. This reflects a significant downturn since last year, continuing the decreasing trend seen since 2005. The decrease from 9.30% seen in 2006 may be an indication that overall office vacancy rates are stabilizing…The South Salem submarket reflected a large decrease in office vacancy, while vacancy in West Salem and Keizer increased. East Salem only shows marginal change since last year…The larger submarkets all reflected a decrease in office vacancy from last year except for medical. The largest decrease was seen in Class C space, with a decrease of 4.39 percentage points…
OFFICE RENTAL RATES
Overall, rental rates for office properties in Salem and Keizer saw an increase from 2006, resulting in a weighted average annual rent per square foot of $19.43. The overall rental rate in the office sector remained fairly constant from 2002-2005. This year, the market has experienced record highs. All sectors, including all suburban submarkets, experienced rental rate increases from last year. These increases are reflected in the overall office rental rate, which indicates market stabilization. The largest annual increase was seen in the CBD-A sector at a $1.05 per square foot increase. This trend in CBD rents further illustrates the CBD revitalization. Suburban office space also experienced a significant increase of $0.69 per square foot on an annual basis.
2007 RETAIL SURVEY
The 2007 Retail Survey included 88 properties totaling nearly 4,000,000 square feet. As in years past, we have adjusted the retail rent to reflect an annual triple net rent structure in which the tenant is responsible for all expenses associated with the operation of the space, whether charges are billed directly or passed through as a pro rata share of leasable area. Common Area Maintenance (CAM) and triple net expense pass through charges continue to vary widely from property to property.
RETAIL VACANCY
Overall, vacancy decreased slightly in retail properties during 2007 (0.56 percentage points), indicating overall retail vacancy of 8.03%. The 2007 retail vacancy rate is nearly equal to that of last year, suggesting a leveling off after the downturn experienced in 2002-2004. The CSD has returned to its previous high vacancy rate after a two year lull…North Salem and Keizer have decreased in vacancy 5.62 percentage points, bringing total vacancy to 8.73%. This is the largest decrease in retail vacancy in this market. One property in this sector accounts for nearly half of all North Salem/Keizer vacant retail space, thus the large decrease in vacancy rate. West Salem saw an increase in vacancy from last year; however, the rate remains below the accepted stabilized level (5%).
RETAIL RENTAL RATES
Overall. rental rates for retail properties increased from last year to $17.69 per square foot, NNN. When looking at the overall retail rents since 1999 the Previous 2004 high of $17.06 has been surpassed in 2007. However, with the exclusion of regional malls, which represent a different market than most retail locations, the overall retail rental rate decreases to $13.72…Since 1999, rent in West Salem has fallen 45%, but now has since regained ground with the addition of multiple buildings. North Salem saw a significant increase in rental rates, possibly due to the large decrease in vacancy. East Salem saw an increase in rental rates as well from including additional properties. Overall, the Salem/Keizer retail market reflects stable to increasing rents with an 8% vacancy.
POWELL VALUATION INC
VOICE: 503.371.2403/ Fax: 503.371.2613
EMAIL: spowell@pvinc.us
WEB: www.powellvaluation.com
MAIL: 3220 State Street, Suite 100, Salem, Oregon 97301
