When looking at commercial real estate in Eugene—with all activity in the market—investors often wonder where vacancies and rents are headed. In this episode of our blogcast series, René looks at trends for both.
Listen or Read
Patrick: Today we’re talking with René Nelson CCIM, a well-known multi-family expert and commercial real estate broker, about commercial real estate in Eugene.
René, how do you see vacancies and rents in commercial real estate Eugene right now?
René: Well Patrick, right now Eugene has a historic low rate for vacancy. As of December 31st, we were at 2.8% and yet market rents continued to grow and remain strong. The average rent for a one bedroom is around $890. That’s up about a full percent from last year. A two bedroom is closer to about $1100 – $1150. Overall, average rents have increased about $55 in the last six months. That’s simply because of the low vacancy, the limited inventory, and it just really proves that we have a robust market right now for multi-family.
So to follow up on that, René, is there much new growth in Eugene for multi-family?
René: Well I think Eugene has finally arrived and we’re kind of on the map. The Department of Housing and Urban Development recently estimated that the Lane County housing market, which is at 351,000 so that includes Eugene and Springfield and outlying areas. We’re growing steadily. HUD’s forecast of the existing apartment supply is strong and they have clearly identified the shortage that we have of inventory. They’re anticipating that we’re going to have strong growth and high demand.
Also we’re seeing job opportunities and rapid growth in the tech industry. Eugene was recently labeled as the Silicon Shire because we’ve got a commuter from here direct into San Jose. We’re seeing great job opportunities coupled with that easy lifestyle here. It ranks Eugene as one of the top places to live in Oregon. That also then brings apartment developers to our area because they see the opportunity. Since 2014, about 1700 new units have been built and there’s another 725 that are on the drawing board for 2017 and 2018. We’re definitely in a great market.
René, is there still room for more multi-family development in Eugene?
René: You know, I think there is. Here’s one unique thing: most of the time, universities do not have an impact on the local apartment dwellers. Most kids go to college and then gravitate away, but we have noticed the University of Oregon, a lot of students once they graduate, they like to stay. The University has a graduation rate of 69%, which is pretty good considering that the national average is at 47%. We see a lot of students that graduate but then want to become permanent residents. The average household income for Eugene is around $100,000 to $102,000, so you can see why many of the kids want to stay, great lifestyle, easy city to live in, and they can make pretty decent money.
We are seeing that there are some pockets of land still available for development. Often I just see that developers that are coming into the market, they either build or they look at an opportunity where they can buy an existing apartment complex and rehab it and put some value into that property. Then they’ve got almost like new property at that point.
Patrick: Thank you René. Now our listeners know what’s new with commercial real estate in Eugene right now. If you need more information, go to eugene-commercial.com or call René at 541-912-6583.
If you’re involved in commercial real estate in Eugene right now, it’s more important than ever to stay fully informed and up-to-date. Be sure to follow our regular series of blogcasts for René’s expert analysis and advice.
Recent Comments