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On the heels of a dismal year, industrial development in Portland may not worsen in 2011, but real estate professionals don’t believe it will improve soon either.

In 2010, new industrial construction hit a low point for the decade, according to Grubb & Ellis. It reported that only a quarter of Portland’s 10-year annual average was delivered throughout 2010, all in the first three quarters. Local commercial brokers say the trend will likely persist because of a lack of available land, a surplus of vacant space and tight lending conditions.

鈥淓ven if the economy became surprisingly robust, I wouldn’t expect any speculative industrial construction to start until the end of 2011 or the beginning of 2012 at the earliest,鈥� said Roger Qualman, executive vice president and partner with commercial real estate firm NAI Norris, Beggs & Simpson. 鈥淭he fundamentals of supply and demand say no new construction, and that is only compounded by the fact that lenders are still being conservative.鈥�

Mark Hush, vice president at the Portland branch of Grubb & Ellis, said a few bold developers are considering the possibility of breaking ground on some small, speculative projects by the end of the year. But he doesn’t expect any such potential developments to move forward until the second quarter of 2012.

Grubb & Ellis reported that only 600,000 square feet of new industrial space was delivered to the market in 2010, including 450,000 square feet in one project: the FedEx shipping facility in Troutdale. The average annual new product delivery for the Portland industrial market over the past 10 years is 2.3 million square feet, according to that data.

Presently, four buildings 鈥� with a total of about 650,000 square feet of new space 鈥� are under construction, and not much more is expected this year. Three of those projects, all in Portland suburbs, are being built for owners. The other is the 413,000 build-to-suit project being constructed for Subaru at the Rivergate III Corporate Center near the Port of Portland.

Dave Ellis, a principal with Capacity Commercial who has been marketing the 110-acre Rivergate III Corporate Center through development, said his business has focused mostly on leasing and selling the existing product on the market. But he added that his team also is in the process of laying out four additional buildings at Rivergate, ranging from 170,000 to 765,000 square feet.

鈥淲e are on the hunt for the next big box warehouse for the big space,鈥� Ellis said. 鈥淚t may be a ways out, but with the price of fuel rising we expect retailers to start building more regional distribution centers, so we are looking to capitalize on that.鈥�

Qualman does not expect any speculative development to move ahead soon because a significant number of spaces are available. He has identified seven available buildings in the Portland area that have more than 200,000 square feet, 25 that have between 100,000 and 200,000 square feet and 26 that have between 75,000 and 100,000 square feet.

鈥淐onsidering the big sites are the ones that are hard to find, we are looking into new markets that are still close enough to meet that demand,鈥� he said. 鈥淲e are keeping a close eye on the 400 acres of industrial property in Woodburn that are expected to be included in an urban growth boundary expansion, as well as some old berry farms in Woodland (Wash.) that have been converted to industrial land.鈥�

Qualman also is searching for properties that are served by rail presently or could be in the future. He believes rail will become more important as loading/unloading becomes more efficient and gasoline prices continue to rise.

Hush added that a lot of talk about new speculative development is centered on the Sunset Corridor. The area has vacant industrial land available, and developers see opportunities now that Intel has committed to investing $4 billion in its Hillsboro campus, he said.

Hush also is optimistic about two pieces of property 鈥� a 20-acre parcel in Northeast Portland and a 30-acre parcel south of Wilsonville 鈥� that he is holding. But he doesn’t believe anything will happen this year.

鈥淏uilt-to-suits are really the only thing driving the construction market, and if you can find a company that needs a specialized facility, there is opportunity,鈥� he said. 鈥淏ut there is still a 10- to 20-cent premium on new space, and until the price of existing space goes up, businesses are getting sticker shock on the price tag of new product.鈥�