Over the past 18 months, both Portland and Vancouver, Wash., have steadily ascended as major employment epicenters on the West Coast, rivaling tier one cities like Seattle and San Francisco.

Deterred by skyrocketing rents and limited space options, employers have targeted the Pacific Northwest as an alternative, but idyllic solution to relocate, grow and expand. After all, the Portland metro-area is comparatively cheaper than other markets and it offers a deep and highly educated workforce, as well as a plethora of enviable lifestyle amenities.

Office activity for the third quarter of 2015 only confirmed the hot streak of employers sucking up space. Portland’s Central Business District reported a low 9.48 percent vacancy rate and Vancouver benchmarked a healthy 12.55 percent.

With the secret out about the Pacific Northwest, major tech companies especially have flooded the market. From Google to Amazon to Vancouver’s DiscoverOrg, the tech effect on the metro-area has been apparent. Yet, Vancouver in particular has an advantage with its designation as an Innovation Partnership Zone (IPZ).

In 2013, the Washington State Department of Commerce designated three new IPZs to help spur economic growth throughout the state. As one of the three communities awarded a designation, the was designed as an applied digital technology accelerator to grow and support the burgeoning tech cluster in the Greater Vancouver area. Since then, the Vancouver-Camas IPZ has been focused on the downtown startup community and the technology campuses located along the 192nd Avenue corridor.

As a result, the Vancouver-Camas IPZ has attracted significant growth and partnerships between higher education, private businesses and local government. According to the Vancouver-Camas IPZ’s website, downtown Vancouver is now home to nearly 40 digital technology companies and counting.

The Vancouver-Camas IPZ has undeniably fostered Vancouver’s reputation as a tech hub and sanctuary, which has only bolstered recent market activity. As demand for office space outpaces supply, the market has responded with much-needed development. The Hudson Building, a new creative office building at 101 E. Sixth St., will provide 45,000 square feet of Class B office space by December 2015. Columbia Tech Center, a long-term master-planned project being developed in five phases, is the largest commercial project in the area this year.

Columbia Tech Center, situated on 410 acres, has more than 3.4 million square feet of office, industrial, medical and retail space. One of its major tenants, Banfield Pet Hospital, broke ground on its new corporate headquarters in 2015. Banfield Pet Hospital is relocating from North Portland, and its 206,000-square-foot office is expected to open in late spring 2016.

Yet, the most anticipated and buzzworthy metro-area development of late is the Vancouver waterfront project led by Gramor Development. Heralded as a game-changer for both Vancouver and Portland, the Vancouver waterfront project is finally making headway this year, sustained by Vancouver’s robust and thriving economy.

The Vancouver waterfront project was announced in 2008 as the brainchild of Columbia Waterfront LLC, the controlling entity that had acquired the 32-acre property. Columbia Waterfront LLC proposed a master-planned development for the site, and the city of Vancouver unanimously approved the project in 2009.

As a public and private partnership between Gramor Development and the city of Vancouver, the project is a 22-block urban development master-planned to include 1 million square feet of office space, up to 3,300 residential units, 250,000 square feet of retail space and a 200-room hotel.

In January 2015, Phase I of the $1.5 billion project finally commenced with work including underground utilities, sewers and electrical cabling. The construction of Columbia Way, an extension connecting Columbia, Esther and Grant streets, concluded in September 2015. The completion of Columbia Way was integral to the waterfront development as it connects Vancouver’s historic downtown to the waterfront.

Design and development of the waterfront’s 2,600 feet of park and trails is slated to begin in November 2015. The new, $20 million Waterfront Park will open in 2017 with majestic views of the Columbia River. The park’s half-mile trail, for bicyclists and pedestrians, will connect to the 5-mile-long Waterfront Renaissance Trail. A fishing dock accessible by disabled persons will anchor the park’s west end, but the central feature will be a sleek, triangular pier; it will be suspended from cables, jutting 90 feet over the Columbia River.

Construction of buildings is set to begin in spring 2016. The first building on Block 6 at 605 Columbia Way will be 7 stories and contain 61,000 square feet of office space and 17,000 square feet of ground-floor retail space. The development also coincides with the Vancouver-Camas IPZ designation, which undoubtedly will prove to be a major attraction for preleasing tenants. M.J Murdock Charitable Trust has already signed a letter of intent to occupy 18,000 square feet of the top two floors. Block 6 will also include an apartment tower with 150 units and retail space.

The Vancouver waterfront project is definitely a game-changer, much like the city’s IPZ designation. With a labor force of 104,000 employees within 5 miles of the site, the Vancouver waterfront is projected to create 8,000 construction jobs and 9,000 permanent jobs upon completion. When all is said and done, the local economy will have gained serious traction, and Vancouver will be poised as the Silicon Forest’s gatekeeper.

Tamara Fuller is a vice president at NAI Norris, Beggs & Simpson, a real estate brokerage and asset/property management company. She specializes in office leasing and sales. Contact her at 360-852-9624 or tfuller@nai-nbs.com.

Doug Bartocci is an associate vice president at NAI Norris, Beggs & Simpson, a real estate brokerage and asset/property management company. He specializes in office leasing and sales. Contact him at 360-852-9621 or dbartocci@nai-nbs.com.

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The Vancouver, Wash., office market doesn’t always get a lot of attention, but it has a lot to offer – and it’s seeing some positive movement and development, especially in its downtown.

Clark County office vacancy was at 12.3 percent during the third quarter, down from 12.9 percent for the third quarter of 2011, according to CoStar Group. This is a significant improvement from highs of nearly 15 percent reached during 2009.

We’re seeing a clear downward trend in vacancy, and though we still consider this a tenant’s market, as vacancy falls we will gradually see rents increase and landlords gain leverage.

Leasing activity has improved this year over 2011. Some larger leases from notable tenants in recent months include Wilbur-Ellis, an agricultural products company, leasing 10,842 square feet at Columbia Shores and a company leasing about 15,000 square feet at Columbia Tech Center for its corporate headquarters.

Tenants are starting to feel more confident in the economy and their financials than at the height of the recession, but they are remaining cautious and taking a conservative approach to decisions that hold a long-term impact.

Many are waiting to make these decisions until after the November elections. The presidential election has been grabbing the most headlines, but there are also races for Washington’s governor and state and local positions.

So, why do office users choose Vancouver? One reason is that rents tend to be considerably lower there than in many other Portland-metro submarkets. Rents in Vancouver averaged $18.70 during the third quarter, according to CoStar Group, while rents in other suburbs can be significantly higher.

Local economic development groups like the Columbia River Economic Development Council, Identity Clark County and Greater Portland Inc. have done excellent work in highlighting the advantages – including tax incentives, port and rail access, an educated employee base and good quality of life – of Vancouver and Greater Portland. They’ve also focused on spotlighting business owners who are pleased they made the choice to come to the area.

There has been a flurry of announcements this year about companies choosing to open new offices or headquarters in Vancouver. Heritage Bank, for instance, will soon open its regional headquarters in downtown, at Vancouvercenter; it told The Columbian that its decision was partly impacted by proximity to the Fisher Investments campus and PeaceHealth’s headquarters. It expects these businesses to draw others in the finance and health care sectors.

Overall, we’ve seen increased interest and office leasing activity in downtown in 2012. Vacancy downtown is at 10.8 percent, below the overall Clark County average. Buildings like the Bank of America Financial Center, Vancouvercenter, the new City Hall and others have gained tenants and had others expand. We are also seeing new retail businesses that are supporting office users who appreciate restaurants and shops existing nearby. They’re also drawn by proximity to the freeway, airport and downtown Portland.

Downtown Vancouver has seen a transformation in the past few decades. The renewal of Esther Short Park in the 1990s paved the way for successful commercial and residential development. As a result, more events and attractions came downtown, including the Vancouver Farmers Market, outdoor concerts and the new library. In addition, Vancouver’s Downtown Association aids beautification efforts and organizes events that keep downtown full of activity year-round.

One of the most exciting long-term projects in downtown is the plan to eventually transform a former industrial site into a mixed-use development along the waterfront. The 35-acre site is expected to offer 1.25 million square feet of office and retail space, more than 3,000 residential units, a large public park, and new roads and railroad infrastructure. The development may produce 20,000 construction jobs and 2,500 permanent jobs.

Though the project is in its early stages and will take many years to complete, construction crews have been working on the rail portion. It’s exciting to see progress in a long underused area so close to the city’s center. It’s a fitting symbol of Vancouver’s growth and future.

Vice President Tamara Fuller specializes in Clark County office leasing and sales at NAI Norris, Beggs & Simpson. Contact her at 360-852-9624 or tfuller@nai-nbs.com.

Senior real estate broker Doug Bartocci specializes in Clark County office leasing and sales at NAI Norris Beggs & Simpson. Contact him at 360-852-9621 or dbartocci@nai-nbs.com.

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