Kenneth Fosag of Des Moines works on the Confluence on Third apartment project in downtown Des Moines on Tuesday, June 21, 2016.(Photo: Rachel Mummey/The Register)Buy Photo

Des Moines' commercial real estate industry is still basking in healthy growth, with another strong year ahead, according to a leading market survey.

Rental rates for office and retail space are increasing, while apartment and warehouse construction continues to boom, the 2017 CBRE/Hubbell Commercial Market Survey reports.

"We're firing on all cylinders," said Kyle Gamble, senior vice president and managing director at CBRE/Hubbell Commercial. "We may be closer to the plateau than we were a year ago, but I think 2017 will be a lot like 2016."

The report provides anannual measuring stick for the local real estate industry. Here's a look at three trends highlighted in the report:

The office market has been characterized by slow and steady growth, said Bill Wright, a senior vice president with CBRE Hubbell Commercial.

Much growth is being driven by owner-occupied office expansions. EMC Insurance Cos., IMT Group, Holmes Murphy, Kum & Go, Hy-Vee, KeminIndustriesand Two Rivers Bank are all building or planning office expansions.

But the metro has seen some speculative office construction. R&R Realty is buildingan 180,000-square-footoffice at Country Club Plaza in West Des Moines, and new office buildings are planned in downtown's Gray's Landing area and in Ankeny's Prairie Trail.

Employee recruitment and retention are the biggest factors driving office development, Wright said.

"Right now, it's about creating an office culturewhere their employees are excited to come to work and will want to stay, so they can retain those employees," he said.

Rental rates for office space have been steadily increasing, and landlords have begun requiring annual escalators, or yearly increases in rental rates for tenants, Wright said. Annual escalators make Des Moines-area office space more attractive to outside investors and, as aresult, have driven up the value of local office space.

"It's been a huge change for our market," he said.

MORE:Des Moines-area renters may finally be getting a break

Small retail centers and strip malls have been popping up around the metro, too. Tyler Dingel, a first vice president with CBRE/Hubbell Commercial, says there are at least 36 of such retail projects under construction or being planned.

"I don't expect all of those to be built. In fact, if 50 percent of them get built, that would be a lot of space to add to our market at one time," he said.

Much of the growth is being driven by demand for quick-serve restaurants (think Chipotle, Five Guys Burgers, Potbelly Sandwich Shop), fitness centers and experience-related retailers like golf simulators and painting studios, Dingel said.

Owners of retail space are also charging higher rents than ever seen in the metro area, he said.

The development of neighborhood retail centersisevidence that the Des Moines real estate market is in a growth cycle, Gamble said.

"Retailers are aware that the consumer is very active and confident today and that drives retail tenants to want to expand," he said.

Gamble said the sector with the most room for growth is the warehouse market.

Developers have added nearly 2 million square feet of warehouse space in the past two years, according to the report, and Gamble said there is demand for more.

"The supply has been fairly conservative and, for the most part, has been absorbed," he said.

Nearly 1 million square feet of warehouse space will be under construction in 2017, according to the report. The projects are concentrated in Ankeny and around Highway 141, near Grimes.

E-commerce is indirectly driving the demand for warehouse space, Gamble said. While Amazon and other online retailers have not opened facilities in Iowa, the growth of e-commerce affects the entire supply chain, creating demand for suppliers, distributors and third-party logistics companies, he said.

Warehouse owners are also seeing demand from less conventional users. Recreation businesses, such as gymnastic studios, trampolinecentersand batting cages, are leasing warehouse space.

Office tenants also arefindingusesfor warehouse space. Hy-Vee is leasing 130,000 square feet in Grimes to create a hip office for its technology and creative staffs.

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Des Moines real estate 'firing on all cylinders,' survey says - DesMoinesRegister.com

Indianapolis Mayor Joe Hogsett has selected the site of the former Citizens Energy coke plant at 2950 Prospect St. for a new criminal justice center.(Photo: James Briggs / IndyStar)Buy Photo

Construction of Mayor Joe Hogsett's proposed criminal justice center could cost up to $575 million, according to figures released by the city.

Hogsett'scriminal justice task force on Tuesday recommended a four-building campus, includingan assessment and intervention facility, a consolidated county jail, a courts building and an office building. The campus is slated to be builtat the former Citizens Energy coke factory siteat 2950 Prospect St. on the east side.

The estimated construction price tag for Hogsett's plan ismore than $160 million higher than a similar proposal from former Mayor Greg Ballard. Ballard in 2014 called for a criminal justice center at the former General Motors stamping plant site that would have cost $408 million to build. Ballard's plan had an overall price of $1.75 billion thatincludedthe price ofinterest, maintenance and day-to-day operations.

Democrats on the City-County Council criticized Ballard's plan as unaffordable, and itdied in 2015. Joey Fox, executive director of the Marion County Republican Party, said the county will end up paying morefor a new jail because of rising interest rates.

"Once the mayor provides enough details, the taxpayers can do an honest analysis," Fox said. "There's a lack of transparency in the numbers he's providing because they're not an apples-to-apples comparison."

But Andy Mallon, corporation counsel for the city,emphasized that Hogsett's plan is still forming.

"We're at fundamentally different stages in the process," Mallon said. "We're talking about estimates. They got all the way down to bids. We anticipate, once we get this project out on the street and bid, it willbe a different project."

The latest proposal is more comprehensive than Ballard's, Mallon added. Hogsett's plan includes a 70 percent larger courthouse, including civil, criminal and juvenile courts, he said.

"They didn't have any sort of estimates for what it would cost to move the crime lab or coroner," Mallon said.

City-County Council President Maggie Lewis, a Democrat, said in a statement that the council is "continuing to examine our processes for managing our criminal justice system."

"I support the work being done by the task force and look forward to our discussions about their recommendations of how we finance and construct the new justice center," Lewis said. "There is still a lot of work to be done.This is a lengthy process, but I am confident that we will create a campus that will meet the needs of our community."

The Hogsett administration has yet to say how the county would pay for a new criminal justice center. The county is scheduled to release financing details by the end of March.

The task force estimatesa new criminal justice center would save county offices at least$35 million a year that could be used to pay for development and construction of the campus over 30 years.

Under Ballard, the county spent more than $16 million on studies and planning in an effort to move the countyjail out of Downtown. The county might reap at least some benefits from that spending. The Hogsett administration has retained HOK, an architecture and engineering firm that worked on the Ballard plan.

"HOK drafted the original (requests for proposals) for that project and gained a great deal of familiarity with project cost estimates, as well as space and other requirements of the project," the criminal justice task force said in a memo.

The construction estimate does notinclude an office building for the prosecutor or public defender, which eventuallycould be part of the campus. The price tag also excludes an estimated $74 million cost for "off-site renovation projects for other agencies," according to the memo.

Judges in the Marion County court system have yet to announce whether they would move their operations to the proposedcriminal justice center. Judges have until May 1 to decide whether they want to move from Downtown to theTwin Aireneighborhood.

Call IndyStar reporter James Briggs at (317) 444-6307. Follow him on Twitter:@JamesEBriggs.

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New Marion County jail could cost $575M - Indianapolis Star

Fresno Bee (blog)

Fresno-area office building sales and leasing hit highest volume in a decade Fresno Bee (blog) Not included in the total are government-owned and occupied office buildings which would push the total office market space to nearly 25.5 million square feet. The market has seen little new construction just a few buildings in the Palm Bluffs area ...

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Fresno-area office building sales and leasing hit highest volume in a decade - Fresno Bee (blog)

Rockports Planning Board will begin its review March 1 of a new physicians building proposed for the Pen Bay Medical Center campus on Route 1 in Rockport. The two-story, 41,566-square-foot building has been sited for the northwest corner of the 63-acre hospital parcel, just southwest of the Sussman House, on Glen Cove Drive.

The meeting begins at 5:30 p.m. at theRockport Opera House meeting room.

Preceding the meeting, the board will conduct a 5 p.m. sitewalk at Camden Glass, at the corner of routes 17 and 90, in West Rockport, where that business wants to add a new used car sales area to its existing parking lot.

The physicians building is designed by SMRT Architects and Engineers, the Portland-based, privately-owned company with offices in Virginia, New York, New Jersey, New Hampshire and Massachusetts.

With a proposed footprint of 20,888 square feet, the medical office building is positioned in an area of undeveloped woods with southerly slopes toward the ocean. There will be no clearcutting, according to the plans on file at the town office.

According to Rockport zoning, the parcel is in the townsSection 909 Hospital and Resort district.

Plans call for the building to contribute approximately 1,700 gallons per day of wastewater to the sewer system that runs to the City of Rockland.

In 2011, the average daily flow to Rockland was 82,313 gallons per day, and Rockports current agreement with Rockland allows the town to send 100,000 gallons per day to the Rockland sewer treatment plant.

Of the current average flow, Pen Bay Medical Center sends approximately 32,376 gallons per day to Rockland.

According to the plans filed at the town office, construction of the new physicians building will entail some blasting.

The engineers are also pursuing permits from the Maine Department of Environmental Protection (air license amendment and a Natural Resources Protection Act amendment), the Department of Transportation, and the U.S. Army Corps of Engineers (Tier 2 Wetlands permit).

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Plans for new Pen Bay Medical Center office building to get reviewed - PenBayPilot.com

Island Packet

Beaufort County plans new office building, hopes to draw business to Bluffton Island Packet Beaufort County is planning to construct a new $4-million office building on land it owns adjacent to the Myrtle Park facility off Bluffton Parkway. Google .... Construction of the office will paid for using a low interest loan from Santee Cooper ... and more »

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Beaufort County plans new office building, hopes to draw business to Bluffton - Island Packet

Charlotte Observer (blog)

Are the Charlotte Knights still planning a multistory office building next to BB&T Ballpark? Charlotte Observer (blog) A block away, the Kimpton hotel and 300 South Tryon office tower are wrapping up construction later this year. The Ascent apartment tower is nearing completion, at Third and Poplar streets. And a slew of other office buildings and hotels is preparing ... and more »

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Are the Charlotte Knights still planning a multistory office building next to BB&T Ballpark? - Charlotte Observer (blog)

Upscale property developer Arthaland Corp. has signed a $166-million engineering, procurement and construction (EPC) deal with a unit of Chinese construction giant China Railway Group Ltd. (CREC) and Malaysian construction and property firm Knusford Berhad for a 38-storey office building project in Cebu.

CREC unit China Railway Dongfang Group and Knusford will form a joint venture company in the Philippines to execute the EPC contract for office property Cebu Exchange, Arthaland disclosed to the Philippine Stock Exchange on Monday.

The collaboration among the three groups brings together strengths in design, building construction, project management and expertise in the Philippine property sector, the disclosure added.

Arthalands Cebu Exchange will rise on an 8,440 square meter property. It is designed to accommodate information technology and business process management (IT-BPM) locators who are expanding their operations in the region. It is expected to be the first and only Grade-A office building in Cebu on target to achieve dual green building certification from the United States Green Building Councils Leadership in Energy and Environmental Design (LEED) program as well as from the Philippine Green Building Councils Building for Ecologically Responsive Design Excellence (BERDE) program.

CREC is one of the largest construction conglomerates in the world. It was responsible for over 60 percent of the railway construction of China in addition to major projects in the construction of bridges, tunnels, airports, high-rise buildings and municipal facilities. While CREC is present in over 60 countries worldwide, the agreement signed with Arthaland is the first venture for CREC in the Philippines.

Knusford Berhad, on the other hand, is a Malaysian publicly listed construction company involved in major construction works, property development and investments. This group also provides machinery reconditioning, sales and rental of light, medium and heavy machinery and equipment, as well as the trading of building materials.

The agreement signed with Arthaland and CREC is also the first venture for Knusford in the Philippines.

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Arthaland teams up with CREC, Knusford for Cebu project - Inquirer.net

The AIDS Healthcare Foundation oversees a global philanthropic empire that extends from its Hollywood headquarters to 15states and 38countries.

The 30-year-old nonprofit organization treats hundreds of thousands of patients. It hands out tens of millions of condoms annually. And it puts up provocativebillboards urging people to get tested for sexually transmitted diseases.

But in recent months, it has become known forthe kind of activism usuallyassociated withhomeowner groups, spurring criticism that it has strayed too far from its mission.

In April, the foundation sued to stop construction of two residential towers next toits headquarters on the 21st floor of the Sunset Media Center. A few months later, the group filed a lawsuit challenging plans for a 15-story office building down the street.

And over the past year, the organization has been the driving force behindMeasure S, which would impose new restrictions on the construction of housing, shops and offices in Los Angeles.As of last week, the grouphadspentmore than $4.6million or nearly99% of the campaigns contributions to support the controversial measure,bankrolling billboards, door-to-door canvassers and splashy brochures, a Times analysis found.

Michael Weinstein, the foundations top executive, says the March 7 ballot measure falls firmlyin line with the groups mission to help residents with HIV and AIDS, as well asits track recordof waging social justice battles against governments that fail to serve the people.

Measure S, he argued,would take aim at high-priceddevelopment projectsthat are gentrifying neighborhoods and driving up housing costs. Those projects are making it difficult for people with AIDS and HIV to remain in L.A., Weinsteinsaid.

We have witnessed how San Francisco, where AHF has clinics for testing and treatment, has become a rich ghetto, he said. Low-income people by the tens of thousands have been displaced and diversity is harder and harder to find. The same thing is unfolding in Los Angeles.

Opponents of Measure S accuseWeinstein of using millions in nonprofit moneyto pursue a personal grudge over a building that would block his office views. Weinstein, they say, is just another NIMBY obstructionist, restricting the supply of new housing and jacking up rents across the city.

If voters want toavoid San Franciscosfate, they should reject the ballot measure, opponents say.

MeasureS is going to hurt the people the foundation serves,said Silver Lake resident Bobby Peppey, afoe of Measure S who was diagnosed withAIDS more than a decade ago.The people they serve are mostly lower-income persons, and people of color. And this is going to affect their ability to get affordable housing.

Proponents of Measure S say it would crack down on the citys long-standing practice of amending the General Plan the document that regulates what gets builtcitywide to enable big projects proposed by well-connected real estate developers. Foes warn the measure would eliminate thousands ofjobs and halt construction of affordable housing, since those projects frequently need changes to the General Plan to getbuilt.

The AIDS Healthcare Foundationhas waded into politics before. In the past five years, it hasspent millionsonballot measures to require condoms on pornography shoots in Los Angeles County and statewide. It has also backedcampaigns in California and Ohio torestrict the prices that state agencies pay for prescription drugs.

During those fights, critics accused the foundationof floutingrestrictions on political activityby charitable organizations.But the battle over so-calledmega-developmentshas spurred a new round of criticism of how the foundation and itsleader are spending its money.The Los Angeles County Federation of Labor, one of the biggest opponents of Measure S, recently released a video accusing Weinstein of funding campaign activities that have zero to do with healthcare.

The foundation has definedits mission asthe provision of hospice and healthcare services to AIDS, HIV and other patients, and engaging in related educational activities, according to state records. Michael Eisman, a critic of the group, said money spent on Measure S should have gone toward HIV medication or other services.

Measure S is a blatant abuse of the resources of AIDS Healthcare Foundation, considering it has absolutely nothing to do with the mission of the organization, said Eisman,who worked closely with the foundation as part ofa volunteer group until 2015.

Foundation representatives say that they have no difficulty serving their clients while fighting for Measure S.

The foundationhas a wide array of operations, running 43 pharmacies and 20 Out of the Closetthrift stores across the U.S. It has nearly400 clinics and employsmore than 5,000 people worldwide.

Under federal law, nonprofits like the AIDS Healthcare Foundation are allowed to weigh in on legislation, but too much lobbying can jeopardize theirtax-exempt status. To preserve their status, charitable organizations can either comply with spending limits or refrain from spendinga substantial part of their time, money and other resources to influencing legislation.

Legal experts say there isno clear rule about what is substantial, though past cases have given attorneys some guidance.If you start to engage more than 5% of your resources toward lobbying, its probably time to consider whether youre violating the test, said Gene Takagi, managing attorney of the NEO Law Group in San Francisco.

In federal tax filings, the foundation reportedthat itspent more than $253 millionduring2015, dwarfing the nearly $7 million less than 3% of the reported total spending it said it spent to influence legislation that year. Financial statements provided by the group indicatethat the foundationand nearly a dozen other affiliated entities collectively spent more than $983 million that year.Foundation spokesman Ged Kensleasaid that, historically, no more than 2% of its expenditures go towardadvocacy efforts an insubstantial portion of its budget.

California also requiresnonprofits to use donations for their declared charitable purposes. After the foundationlaunched its campaign for Measure S,a coalition of business, labor and community groupssent a letter to the California attorney general, accusing the groupof misusing its charitable donations by funding the ballot measure.

That letter cited concerns raisedby the Free Speech Coalition, an adult entertainment industry group that clashedwith the foundation over condoms in porn shoots. That group hasbeen urging state and federal authorities to investigatewhether the foundation underreported its political spending and exceeded federal limits on such expenditures.

Kensleasaid neither the IRS nor the state attorney general had contacted the group about anycomplaints. The grouphasrelied on itsindependent accounting firm to determinehow to categorize political expenditures, he said. Both the ballot measure and the lawsuit over the towers proposed next doorare financed by revenue from its businesses such as its pharmacies and thrift stores, notgrants or donations, Kenslea added.

The foundation entered the debate over L.A.s recent real estate boom two years ago,after the Miami-based firm Crescent Heights proposedtwo 30-story towers next to the AIDS Healthcare Foundations headquarters.

City officials welcomed the 731-unit Palladium Residences project, noting that it would be a block from a subway station and go up on an empty lot, avoiding the demolition ofexisting apartments. But the foundationopposed the development, arguing that itwas too tall and too dense for its location on Sunset Boulevard.

Early in that fight, public affairs consultant Steve Afriat, who was lobbying City Hall on behalf of Crescent Heights,asked for a meeting with Weinstein to hear his concerns. Afriat said that during that meeting, Weinstein complained that the Palladium would block his views of the Hollywood Hills.

He saidif we loweredit to 12 stories, he would no longer oppose the project, Afriat said. If we didnt, he threatened to sue and do a referendum.

Weinsteinsaid he never said anything to Afriat about his view and did not recall mentioninga referendum. But he confirmedthat he wanted Afriat to drastically reduce the sizeof the towers and thought a dozen stories would be more acceptable.

Within months, the foundation had dozens of people showing up at Palladium Residences hearings wearing AIDS Healthcare Foundation T-shirts. The groups lawyer testified that construction in Hollywoodhad already caused hertwo-mile commute to drag out to 25 minutes.

Around the same time, the nonprofit drafted aballot measure that wouldimpose a moratorium on changes in city rules that permitbuildings to be built bigger than ordinarily allowedthe kind being sought by Crescent Heights for its two towers.

The foundation began puttingmoney into the Coalition to Preserve L.A., the campaign group set up to support the ballot measure, which they labeled the Neighborhood Integrity Initiative.

Crescent Heights quickly became the biggest donor to the opposition campaign, providing nearlyhalf of the more than $3.2millionin money and services raised so far. Sunset Bronson Entertainment, another developer being sued by the foundation, has donated at least $100,000.

With the election twoweeks away, its not entirely clear just how deeply the foundation isimmersed in L.A. real estate fights.

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In an interview with The Times, Weinstein refused to say whether his nonprofit is bankrolling a lawsuit by Friends of the Neighborhood Integrity Initiative seeking to overturn the citys approval of a 1,210-unitresidential complex on Jefferson Boulevard.

Weinstein also would not disclose whether his group is paying for a legal challenge against the Martin Cadillac project, which would bring offices, stores and 516 apartmentsto Olympic Boulevard on the Westside. In addition, hedeclined to say how many lawsuits over L.A. real estate development his group is funding.

Whatever were doing is between us and our lawyers, he said.

emily.alpert@latimes.com

Twitter:@LATimesEmily

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So why is an AIDS nonprofit suing to halt construction and pushing ... - Los Angeles Times

The Parker County Hospital District Board of Directors Thursday voted unanimously to move ahead with a medical office building project.

The district has been in discussions with Weatherford Regional Medical Center for some time about the possibility of a medical office building, which would help alleviate some of the hospital space problems and benefit the community, attorney and PCHD interim administrator Brian Jackson said.

What we are contemplating moving forward with is an arrangement by which, on district-owned land, we would construct a medical office building that would be used by Weatherford Regional Medical Center for its physicians, Jackson said.

A building is expected to be constructed on property owned by the district in the 700 block of Anderson Street near the hospital.

Community Health Systems would pay rent in addition to the rent it pays for use of the hospital.

Calculating the amount of rent is always difficult to do. However, the arrangement that I think would be favorable for the district would be for the district to charge a percentage of the cost of the construction of the building, Jackson said.

Jackson said he is hopeful that they can reach an agreement for annual payments of 6 percent of the construction cost of the building.

That would be cheaper than rental rates WRMC can get on the open market, Jackson said.

The details of the building, such as size and cost, havent been decided.

Legal documents detailing occupancy, upkeep and other arrangements would need to be worked out and any agreements between the Weatherford Regional Medical Center and the hospital district would come to the districts board of directors for approval, Jackson said.

Jackson does not expect the hospital district to use the building for its own expansion needs.

This is more an opportunity for Weatherford Regional Medical Center to bring in more physicians, more specialties, support the existing physicians [and] have an office building for them thats close to the hospital that that can access, Jackson said.

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WRMC to get new medical office building - Weatherford Democrat

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Construction continues on the Holiday Inn Express at Keizer Station on Friday, Feb. 17, 2017.(Photo: ANNA REED / Statesman Journal)Buy Photo

If 2016 seemed like it brought a slew of bulldozers, rebar and hardhats, the upcoming year will bring more of the same: construction, renovation and retrofitting of buildings throughout the Salem area.

The flurry of construction, officials said, is the sign of a robust and growing economy.

"The developments we see today throughout our region are simply amazing," said Dan Clem, CEO of the Salem Area Chamber of Commerce. "A few short years ago, to you, they were dreams and plans and sketches. Today, for us, for all of us, they are a reality."

At the recent 2017 Commercial Real Estate Economic Forum, guest speakers addressed different aspects of the local real estate market agricultural, industrial, retail, multifamily housing, and office. Each emphasized a similar theme: Supplies are tight, demand is strong and exciting new projects are forthcoming.

As many tenants across the Valley can attest, waitings lists, lowturnoverand increasing rents arecommonplace in the rental market.

The Salem-Keizer area seems to be in catch-up mode, said Katherine Powell Banz

, principal and certified general appraiser with Powell Banz Valuation. Vacancy rates showed a slight uptick in 2016 to 2.6 percent. The Portland metro area, which is already one of the tightest markets, was listed as 3.1 percent at the end of 2016, according to a recent article on OPB.

Rents in the Salem area spiked by almost 20 percent from last year, but the addition of more than a thousand new units in the next coming months could help offset the imbalance.

The Keizer Station Apartments in the 5000 block of McLeod Lane NE are adding 180 units to the market, and River Valley Terrace on River Valley Drive NW will bring 60 apartment units to West Salem in 2017.

Construction of the Keizer Station Apartments is set to conclude in the summer but is almost fully reserved, said property manager Ashli Morett. Only 12 one-bedroom units remain. The complex's amenities andproximity to shopping, dining and entertainment have been a major draw for people, Morett said.

Six projects are in various stages of planning, and seven properties are under construction, Powell Banz said. Combined, they will bring 1,372 more homes to the region.

From a new drive-through Starbucks in downtown Salem to a long-anticipatedgrocery store in Keizer, the region is expected to add several restaurants, stores and possibly even a roller skating rink to its new and revived retail properties.

Closures of big box and department stores like Kmart, Macy's and Sears and changing shopping habits could lead to a nationwide slowdown of retail in 2017.

Two major closures left vacant spots in Lancaster Mall, but the shopping center is poised to embark on a retrofit that will "turn the design inside out providing a fresh look to the mall," said Ryan Imbrie , managing director for SVN Imbrie Realty.

Details of the remodeling and new tenants for the mall have not yet been announced.

Who may move into Lancaster Mall? The mystery remains

Several new properties are expected to come to Keizer in 2017. Construction of an 80-room Holiday Inn Express and Suites is underway at Keizer Station. WinCo's Waremartis set to open a grocery store on North River Road, and there are rumors of a roller skating rink replacing the former Roth's storefront at Schoolhouse Square, Imbrie said.

Strong prices for hazelnuts, blueberries and vineyards, plus a burgeoning marijuana industry,are keeping land values high in the Willamette Valley, according to George Grabenhorst , senioradviser at SVN Commercial Advisors.

Cattle, nursery goods, hay, milk and grass seed top the list of the more than 220 agricultural products Oregon produces. The markets for each commoditywill fluctuate in the coming year, but overall growth will keep land prices high andavailability low.

Most farm land in the region sold in 2016 were smalleracreages, but two notable dealsincludethe pending sale of the 623-acre former Mallorie's Dairy in Silverton and an $8 million, 410-acre swath of land in Gervais.

Construction continues at the Henningson Cold Storage at Mill Creek Corporate Center on Kuebler Blvd. and Turner Rd. SE in Salem on Friday, Feb. 17, 2017.(Photo: ANNA REED / Statesman Journal)

The vacancy rate for industrial buildings dipped even further from a low 3.5 percent in 2015 to 1.7 percent in 2017. With new buildings opening in Hubbard, Salem and Donald and more developments in the works, 2017 is expected to be a big year for industrial space construction.

Construction is continuingat theMill Creek Corporate Center near Kuebler Boulevardand Turner Road SE in Salem.Henningson Cold Storage is expected to constructa total of 607,700-square-feet, and PacTrust is planning a multiple building, 26-acre business park.

Construction continues at the Park Front at 230 Front St. NE in Salem on Friday, Feb. 17, 2017.(Photo: ANNA REED / Statesman Journal)

Curt Arthur , managing director of SVN Commercial Advisors, said vacancy rates at office buildings are also decreasing.

With a vacancy rate of 6.8 percent down 23 percent from last year and down 58 percent from 2015 demand is completely outpacing supply, Arthur said.

Leasing activity in 2016 was the highest on record with 137 office and medical building leases, and downtown Salem continues to gain momentum. Park Front LLCis constructing a 30,000-square-foot office building at230 Front Street, on a portion of the North Block parcel of the former Boise Cascade site.

Currently, there are only two office vacancies of more than 20,000 square feet in the market. This limited selection could discourage large companies from relocating or expanding in the coming year, Arthur said.

For questions, comments and news tips, email reporter Whitney Woodworth at wmwoodwort@statesmanjournal.com, call 503-399-6884 or follow on Twitter @wmwoodworth

What's going up there? Seeking new Salem development examples

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2017 set to bring new retail, housing, office construction to Salem area - Statesman Journal