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

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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

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