Real estate developers cautious

SCOTT WYLAND THE OLYMPIAN

THURSTON COUNTY -- The state's deepening budget crisis will discourage many developers from building state offices but will have little effect on residential building, real estate experts say.

Nearly everyone has put projects on hold until developers get a better feel for how the state plans to deal with its budget woes, one longtime developer said.

"Everybody is concerned right now, so a lot of things are stalled," said Pat Rants, a partner in The Rants Group, which develops and leases office buildings in South Sound.

However, the state's financial problems will have little effect on current lease agreements with the state, which tend to run 10 or more years, Rants said.

So it's unlikely the state will vacate offices and leave empty buildings scattered through the county, he said.

"They're not just going to start closing down," said Marvin Kaufman, owner of Kaufman Brothers Construction.

Buildings also aren't likely to go up without some guarantee of occupancy, Kaufman said.

He said he won't build anything on speculation in this economic climate, especially for the state. "I don't intend to build anything that I don't have leased out already," he said.

Home buyers confident

In the meantime, residential construction is going strong, as home buyers take advantage of low interest rates, said Alan Lambert, sales manager for John L. Scott Real Estate.

So far, he is seeing no loss of buying confidence among state workers who are shopping for a home, Lambert said.

All agree that the worst case would be the state laying off workers in Thurston County, a move that would reverberate through the entire real estate market.

Lambert said the state's budget problems have prompted a client, whom he declined to name, to postpone developing a Lacey office complex for the state.

Other developers are being cautious as well, he said. "They're gun-shy right now. There's no doubt about it," he said.

If the state decides to forgo leasing buildings that it had planned to move into this year, that will put a damper on the local market, Lambert said.

Still, some builders will initiate projects now in anticipation of better times ahead, Rants said. A large complex takes two to three years to complete from the time it's first conceived.

"A developer might think it (the economy) is on the upswing by the time it's built," Rants said.

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