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SUNDAY FOCUS: COMMERCIAL CONSTRUCTION Builders are hopping with retail projects but must go elsewhere for large-scale construction Comment By Greg Stiles Mail Tribune Follow @@GregMTBusiness MailTribune.com By Greg Stiles Mail Tribune Follow @@GregMTBusiness Posted Jun. 12, 2016 at 12:01 AM By Greg Stiles Mail Tribune Follow @@GregMTBusiness Posted Jun. 12, 2016 at 12:01 AM » Social News A small army of construction workers is erecting the latest phase of Northgate Marketplace, where Dick's Sporting Goods and other retail shops plan to open later this year in north Medford. Scattered across town are crews putting up smaller buildings, remodeling others, and installing infrastructure for the 141-unit, $20 million Bonaventure Senior Living at Springbrook and McAndrews roads. For a 12-month period ending May 22, the city of Medford issued 469 commercial building permits valued at more than $118.6 million. Ten years ago, nearly the same number of permits — 463 — were issued, but for about $92 million. Even after accounting for inflation, the added value is good news for Jackson County contractors and developers, who are hopping with smaller-scale projects at home and with large-scale industrial construction elsewhere on the West Coast. "If you're a contractor and you're not busy right now, then something's wrong," said Russ Batzer, president of Batzer Construction. "We're doing over a million square feet of building right now, but 90 percent of the volume is out of town, where they are doing more industrial and manufacturing buildings. You have to go to where the work is. "We're not seeing the industrial and manufacturing building other places are seeing on the West Coast," Batzer says. "You just don't have that in Southern Oregon." This year's local permits follow another strong year for construction in 2015, when the city issued 390 permits valued at nearly $87.8 million. "I judge it very strong, particularly various projects from Northgate to Costco and Rite-Aid in Phoenix," said Bill Thorndike, president of Medford Fabrication. "You're not seeing fancy commercial buildings, but the bottom line is that there is very heavy activity." People's Bank of Commerce pores over trends and projections in formulating its three-year strategic plans, drawing a picture of what the Rogue Valley and the institution will look like in the near future. "In the last five to eight years, commercial customers have been very cautious," said President Ken Trautman. "Southern Oregon was the last area in the state, and maybe the nation, to start recovering from the recession. The good news is that we weathered recessions other than the last one pretty well." Batzer and others bemoan the dearth of industrial manufacturing building here that would lead to higher-wage jobs. "There are limits to what we can do in manufacturing, and we've got excess capacity in retail and commercial space," Trautman said. "We just don't see the demand." In the medical arena, Providence Health and Services, Asante Health System and other entities continue to build. The largest on the drawing boards is Providence's three-story, 64,000-square-foot medical office slotted for construction in 2017 at KOGAP Enterprises' Stewart Meadows Village in southwest Medford. "We know in retail trade there is a certain amount of churn and turnover," Thorndike said. "But with Dick's and Costco making commitments in that environment, it's got to be judged as positive." If the state Land Use Board of Appeals gives its blessing to the proposed Costco Wholesale Corp. project off Table Rock Road in Central Point, there will be a ripple effect in the surrounding blocks. On the cusp of what would be the city's single-largest project, Central Point Development Director Tom Humphrey eagerly rattles off a list of commercial relocations, remodels and expansions ranging from a drug store and pet eye care center to a tire shop in recent months. "Costco could promote a lot of property development on the east side of the freeway," he said. "There is optimism on the part of Walmart people who are thinking they will be able to take advantage of Costco's presence and sell their property (on the north side of Pine Street)," Humphrey said. Property marketed by Pulver & Leever or owned by Batzer Construction and developer John Hamlin would come into play. Humphrey said there has been a steady trickle of Medford businesses moving to Central Point, creating a need for commercial space. "I don't know what's motivating people, whether it's the cooperation or the proximity to the freeway and the small-town feel," Humphrey said. "I'm not worried about being overbuilt, because our tendency in the past isn't to overbuild. We often see where a successful business wants to expand, but we don't have an inventory of buildings for them to acquire for expansion, and they're not in position to build a new one." Even the Mountain View Plaza in Central Point, anchored by Albertsons and furniture stores, has taken years to build out. "They built three Albertsons at once and when the developer saw the vacancy rates at the other two, he backed off in Central Point," Humphrey said. Ashland developer Russ Dale, who had a hand in the early development of Northgate Marketplace and redevelopment of the Woolworth and Miller buildings in downtown Medford, believes access to capital expansion dollars is more readily available to large corporations. Without signed leases, banks aren't willing to lend on new commercial construction. "You can't possibility build a new building for somebody for an average price the average user would be able to afford," Dale said. "Unless they're a very large entity spread across the nation with a large enough cash flow to support that, it's difficult to accommodate that. Small, family-owned businesses can't simply afford construction and the low interest rates are getting to us." Helping fuel the small-scale construction boom locally is the 120-room Hilton Garden Inn Hotel rising off Ellendale Drive in south Medford, and those in the tourism industry say there's room for more. A decade ago, hotel space mushroomed with Marriott and other hotel chains opening new properties. Even the Hilton Garden Inn was broached during that period. Although no new hotels have been announced recently, Bruce Hoevet, former general manager at Rogue Regency Inn, thinks the market can handle more rooms. "The fact we keep bringing people up for U.S. Cellular Park has been a godsend for the hotel industry," Hoevet said. "Anytime you build something new it will affect some of the older properties that haven't been refurbished." Thorndike points to a pending makeover of the Medford Center as an indicator of what's ahead. "When I drive on Jackson Street now, I see vibrancy at (Hawthorne) Park, with all the kids and families," he said. "It makes you feel maybe we aren't going to be a city of silver hairs with walkers." Reach reporter Greg Stiles at 541-776-4463 or [email protected] . Follow him on Twitter at www.twitter.com/GregMTBusiness , on Facebook at www.facebook.com/greg.stiles.31 . By Greg Stiles Mail Tribune Follow @@GregMTBusiness MailTribune.com By Greg Stiles Mail Tribune Follow @@GregMTBusiness Posted Jun. 12, 2016 at 12:01 AM » Comment or view comments Reader Reaction » STAY INFORMED Email NewsLetter Sign Up Today Sign up for our newsletter and have the top headlines from your community delivered right to your inbox. Southern Oregon Directory Featured Businesses Loading... 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