These are some surprising positives for Whatcom County’s spring economic outlook
Despite inflation, rising interest rates and the lingering impact of COVID-19, business activity in Whatcom County remains in relatively good shape heading into summer.
More people are interested in starting a business, business debt is being paid down while vacancy rates for retail, office and industrial space continue to remain tight, according to several local reports about the first quarter.
At the Western Washington University’s Small Business Development Center, advisors dealt with twice as much activity in the first quarter of 2022 compared to the first quarter of 2019, before COVID-19. CJ Seitz, director at the center, said it’s an exciting time for innovation and problem-solving as start-ups and existing businesses try to figure out an economy that recently saw many pandemic restrictions lifted.
That doesn’t mean every business is doing great. Companies involved in industries that were hit particularly hard with pandemic restrictions and lockdowns are still trying to get back on their feet. Eric Grimstead, an advisor at the Western center, said gyms, yoga studios and other indoor exercise facilities had membership levels “drop like a rock.” During the harsher periods of the pandemic restrictions people found other ways to exercise, so it’s been tough getting them back.
For those industries that weren’t hit as hard, there’s a bit more optimism. That optimism appears to also carry over into those interested in starting their own business. There’s an eagerness to try something new that might be a part of the “great resignation” trend, Grimstead said.
Business recovery
According to the Small Business Development Center’s quarterly report, many clients were reported paying down or completely paying off COVID-19 Economic Injury Disaster Loans. Grimstead added that the all loans he’s seen from the Paycheck Protection Program have been forgiven.
“While the cost of capital is low, many owners just do not want to have additional debt on the books if business cash flows are sufficient to meet operating needs,” according to the report.
When it comes to projects, like construction work, there’s plenty of opportunities but other challenges are slowing things down. That includes finding workers, supply chain issues and rising prices for materials.
Inflation is a big concern among economic professionals, said Don Goldberg, director of economic development for the Port of Bellingham. The lack of workers is also a concern, “which does relate to lack of housing and childcare but it also seems to be a cultural shift that we all are trying to figure out,” he said in an email.
Few spaces to lease
Vacancy rates for Bellingham business spaces also remain low, a sign that companies are sticking with brick-and-mortar locations despite so much change resulting from the pandemic.
The vacancy rate for retail spaces was at 3.5% at the end of March, while the office space vacancy rate was at 3.4% and available industrial space was almost nonexistent, with a vacancy rate of 0.2%. The vacancy rate is down for retail and office space compared to the same period a year ago, according to a report prepared by Ryan Martin co-owner and broker at Pacific Continental Realty in Bellingham.
With the easing of border testing restrictions by Canada on April 1, Martin expects retail sales to increase in this area, resulting in fewer vacant store spaces.
The increase in demand for office space could be considered a surprise on the surface, given the popularity of working from home even as pandemic restrictions are lifted. Martin is noticing another trend.
“We are currently seeing a trend of tech companies downsizing their office footprint, as they continue to allow employees to work from home,” Martin said. “While some of the larger tech companies downsize, we are seeing the remaining office space backfilled by smaller businesses coming back to office buildings as the worries about COVID continue to fade.”
The industrial market in Bellingham continues to struggle to keep up with demand, Martin said. There is currently less than 15,000 square feet of industrial space available to lease in Bellingham and no new industrial buildings are currently under construction.
This story was originally published April 15, 2022 at 5:00 AM with the headline "These are some surprising positives for Whatcom County’s spring economic outlook."
