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A few months ago, Cort O’Haver could look out his office window in downtown Portland and see eight construction cranes dotting the cityscape.

“That’s the most I’ve seen in five years,” said U.S. Bank’s senior vice president and western region manager for commercial real estate.

High-density housing projects, especially in the urban core, have been the drivers of a strengthening metro-area construction market in 2004, according to real estate and development sources. Contrast that with soft office and industrial markets, particularly in the suburbs, which continue to be weighed down by high vacancy rates in an economy still trying to right itself.

But when it comes to the availability of private financing, the stage is set, they say, for a better environment in 2005 for developers, contractors and others in the construction field than they experienced the previous year.

“It’s a great time to be a borrower,” O’Haver said. “There’s a lot of competition on the banking side. When a good deal comes up, all of us (banks) are swinging for the fences.”

That optimism comes with a few caveats, however. Among them: The Northwest needs to continue experiencing job, personal income and business investment growth as well as stable energy prices, said John Mitchell, economist with U.S. Bank’s western region.

Evidence of a strengthening economy – and a more robust construction sector -came in a state forecast released in September by the state’s Office of Economic Analysis. While pointing to a job-market recovery overall, the forecast specifically indicated that construction was expected to reverse its jobs decline of last year and post a 5.7 percent jump in 2004, a 2.7 percent increase in 2005 and a 2.6 percent rise in 2006.

“The national economy is projected to continue its growth path into 2005, and the Oregon economy will be pulled along for the ride. The questions of uncertainty that now loom are: How strong, and how long?” the report stated.

In a surprise result, Oregon’s seasonally adjusted jobless rate edged higher over the summer from 6.8 percent in July to 7.4 percent in August, marking the first time since March that the state’s unemployment rate eclipsed 7 percent.

“It’s (the area of) vital business investment (that) keeps growing. We are so investment driven, whether it’s airplanes or the (computer) chip sector,” Mitchell said. “Given the lack of employment growth up until a year ago, and in the Portland market more recent than that, non-residential construction is going to lag. The critical thing you have to have is job growth to fill space. Assuming it continues, and I think it will, you will see the office and manufacturing markets strengthen as we get into 2005. I don’t think it is going to be quick.”

Art DeMuro, president of Portland-based Venerable Properties, said the major challenge for his company is finding attractive projects, not the capital to make them happen. Venerable Properties’ portfolio includes smaller office and residential projects, among them downtown Portland’s historic Telegram Building and, now under development, the renovation of a 6,646-square-foot grocery store in Northeast Portland’s Irvington neighborhood into commercial spaces.

DeMuro said construction and permanent loans are readily available to developers who meet a bank’s requirements. “The markets have been awash in capital for a few years now, and I’ve not seen anything to change that,” he said.

Bob Hill, chief financial officer with Pence/Kelly Construction, agreed, saying quality projects can find financial backers. While the economy in general has been slow to recover, the general contractor, which concentrates mostly on negotiated, commercial projects, has registered a “good year,” with nearly $50 million in volume under its belt, he said.

One challenge some developers have faced is tougher pre-leasing requirements. Those changes reflect an environment of slow job growth and flat office and industrial markets in the metro area, said Luther Barker, vice president with West Coast Bank. One factor that has helped is continued low interest rates, he added.

Bond measures voters approved in the last four years touched off a blizzard of school construction in the Portland-Vancouver area that kept contractors busy. Though many of those projects are well into construction or winding down, some projects remain in limbo because school districts put them on the back burner due to the rising costs of steel and concrete.

Nonetheless, a significant amount of publicly funded projects, including building, road and bridge construction, is under way, on tap or being considered.

The Oregon Transportation Investment Act is the largest increase in transportation funding in the state since the interstate highway system was built five decades ago. Combined with the state’s normal capital construction program, the result will be more than $700 million in road and bridge work in both 2004 and 2005, according to Jay Remy, the Oregon Department of Transportation’s strategic communications coordinator. All told, the investment act alone provides $2.96 billion to improve roads and bridges during the next eight to 10 years, funded by bonds from increased Department of Motor Vehicle fees.

In addition, Oregon’s publicly funded colleges and universities have proposed spending about $1.1 billion on capital construction projects in 2005-07. The budget, approved during the summer by the State Board of Higher Education, includes everything from millions of dollars of maintenance work at the system’s seven campuses to a $30-million Community College Partnership Building on Portland State University’s campus. The budget will wind up on Gov. Ted Kulongoski’s desk and in the hands of state legislators, who convene in January.

Diane Saunders, communications director for the Oregon University System, said half of all state-owned facilities are located on college and university campuses. Those facilities need some $600 million in deferred maintenance alone.

“If we get a continuum of reasonable monies to complete deferred maintenance projects over a decade, we’ll be able to make up some lost ground,” she said. “We are far behind the eight ball at this point.”

Saunders added that the colleges and universities have been turning to donors to a greater degree in recent years to help fund construction projects as state financial support for higher education has dwindled.