Oregon Metropolitan Elite Gymnastics Academy (OMEGA) has leased 20,014 sf at the Harvest Court Industrial building in Beaverton. NAI Norris, Beggs & Simpson Senior Vice President Scott MacLean represented the lessor, Lynch Properties, LLC and Vice President Ken Boyko represented OMEGA.
OMEGA’s successful program, which recently produced the first Oregonian on the USA Junior National Team, was bursting at the seams. With 300 students split between two locations, OMEGA needed a state-of-the-art facility that could accommodate growth. Whereas a Portland location would require retail space at twice the cost, Beaverton allows the zoning of industrial space for recreational use. Harvest Court Industrial was an obvious choice, offering large contiguous space and creative options.
“Not only were we able to consolidate our program at Harvest Court Industrial, but we can reimagine that space as a state-of-the-art gym” explained Jacob Crabtree, Director of Operations at OMEGA. “We can finally build a much needed foam pit, and with the extra office space, explore possible new programs such as preschool and afterschool care.”
Though Harvest Court Industrial proved to be the perfect location, it was not without its challenges. Located at 9700 SW Harvest Court, the 31,708 sf warehouse building had existing tenants to consider. Scott MacLean and Ken Boyko were tasked to blend the traditionally industrial space with OMEGA.
“Harvest Court Industrial strived to become the best space for OMEGA and ensure a safe environment,” Scott MacLean remarked.
This included working with the city on meeting specific parking requirements since OMEGA would attract heavy traffic. Additionally, with the building’s change in usage, any possible industrial hazards within shared tenant space needed to be addressed. Necessary precautions were taken and an upstairs judging platform, extra restrooms and large windows were built.
Ken Boyko recognized the impact of OMEGA’s new location. “It will undoubtedly secure OMEGA’s competitive edge as the region’s premiere gymnastics academy. It separates them from other local facilities and puts them on the map,” he said.
OMEGA is expected to move in August 1, 2014.
The Arc of Clark County building, a 4,470 sf office property located at 9415 NE Fourth Plain Boulevard, has sold for $550,000. NAI Norris, Beggs & Simpson Principal and Director of Vancouver Production Charlie Kleier and Vice President Tamara Fuller represented both the buyer, Bridger Properties, LLC and the seller, Arc of Clark County. The property will be repurposed as the new headquarters for Tuscany Homes, a home construction company based in Southwest Washington.
During the recession, Vancouver’s suburban office market soared to a staggering 22.9% vacancy rate at its peak during Second Quarter 2010. A few months later in January 2011, the Arc of Clark County building was put on the market. Now, exactly four years later, the city boasts a robust 11.32% vacancy and the Arc of Clark County building has sold.
“It’s no coincidence,” Tamara Fuller remarked. “Its purchase signals a dramatically improved local market, as well as a trend in owner occupied buildings. The Arc of Clark County needed an owner that appreciated its prime location, value and potential.”
With easy access to Washington State Route 500 and Interstate 205, the Arc of Clark County is ideal for Tuscany Homes’ growing business, especially with the booming housing market spurring new development.
Our Second Quarter 2014 Market Reports have just been released. Overall activity was on par with the rebounding local economy, which encourages a healthy forecast for the remaining year.
- Central City office space showed encouraging signs of a tightening market during Second Quarter 2014. Vacancy dropped to 10.5% with positive absorption of 70,398 sf.
- Tech firms were by and large the common denominator of activity this quarter.
- The Suburban market’s vacancy rate saw little change at 14.62% with positive absorption of 17,402 sf.
- The Vancouver office market’s vacancy bumped up a whole basis point from First Quarter to 11.32% with 42,626 sf negative absorption, but the city followed the regional tech trend.
- Industrial vacancy continued its downward trajectory to another record low of 8.33% with positive absorption of 327,916 sf. The industrial market hasn’t reported such numbers since Second Quarter 2001, legitimizing growing concerns for much needed development.
- The 10.88% Flex vacancy rate also benchmarked another record low since 2001.
- Motivated by the signs of another strong development cycle, 8 more speculative industrial projects are in the works with low vacancy and rapid absorption projected to persist the next 36 months. More than 2.5 million sf of additional space are expected to flood the market.
- The retail vacancy rate increased marginally to 6.40% with 97,033 sf of positive absorption during Second Quarter. The concentration of activity was once again in the suburbs.
- In Vancouver and Clark County, vacancy rose to 8.56% with 95,088 sf of positive absorption. Grocery stores continued to be a prime area of growth.
- With consistent low vacancy rates and rising rents, Portland poised itself as a main attraction for out-of-state investors, especially since the metro-area offers more affordable opportunities than other cities.
- Portland’s hot multifamily market cooled ever so slightly during Second Quarter with a 2.62% vacancy rate. However, rents, permits and construction all expectedly increased in preparation for the surge of new space over the next 18 months.
Forging a partnership to ensure lasting preservation of a historic building, the Oregon Historical Society (OHS) has sold the 52,379 sf Sovereign Hotel to the Randall Investment Group. NAI Norris, Beggs & Simpson Senior Vice President Robert Black negotiated the transaction.
The Sovereign Hotel opened to the public in February 1923 as Portland’s first skyscraper. The pricy construction costs of $650,000, which equate to roughly $9 million today, were unprecedented for an extended-stay hotel. Yet, the Sovereign towered at 9 stories and offered the first sweeping views of the city. Unequivocal in both its architecture and scale, the iconic Georgian style peach terra-cotta and brick façade is credited to the brilliance of local Portland architect Carl L. Linde. Linde’s vision earned the Sovereign its recognition as a National Historic Place.
In 1982, the OHS purchased the Sovereign Hotel to expand the Oregon History Center. The natural romance and cultural grandeur of the building proved to be the perfect medium to commission a public mural and renowned artist Richard Haas was tasked to the challenge.
The iconic murals were completed in 1989 with over 14,000 sf in paint. The impressive project covers four sides of the six-sided building and depicts the very heart of Oregon in its spectacular renditions of the Lewis and Clark expedition, the Oregon Trail and the John Jacob Astor Fur Trade.
OHS Executive Director Kerry Tymchuk said, “The OHS Board reached a unanimous decision that the Sovereign deserved an owner who had the expertise and resources to give it the full attention and care it deserves.”
For over two years, the OHS searched for a local philanthropic enthusiast who would serve as a valuable partner in the restoration and active maintenance of the Sovereign Hotel. The new owner needed to have a deep appreciation of the building’s historical and cultural significance, as well as its relationship within the OHS superblock on 1200 SW Park Avenue. The OHS didn’t seek to divorce itself entirely from the Sovereign Hotel, but rather find a new guardian who could assume the building’s great responsibility under their expert advisement. In a highly selective bid, the Randall Investment Group committed to the Oregon Historical Society’s cause.
“The Randall Investment Group respected and understood the cultural value and mission of this deal,” Robert Black said “It was always about doing this the right way and protecting the building’s best interest.”
Today, the Sovereign has 4 stories of office and 44 apartments. NBS Multifamily Management President Susan Stratton will manage the property, while the Randall Investment Group is devoted to its deserved restoration.
Justin (JT) Sand has joined NAI Norris, Beggs & Simpson as the newest addition to the Portland brokerage office team. Sand specializes in the leasing and sales of office properties throughout the Portland metropolitan area.
Portland-born and raised, JT Sand returns to the City of Roses after having worked in Los Angeles as an executive charter consultant. His extensive sales experience and degree in Regional Development from the University of Arizona will prove invaluable as he focuses on office tenant and landlord representation.
JT is a licensed real estate broker in Oregon and a member of the Commercial Association of Brokers Oregon/SW Washington (CAB).
Carter Beyl on office
The Portland office market continues to see promising signs of improvement in the second quarter of 2014, with decreasing vacancy and net absorption on the rise. With once-stalled projects coming back to life and redevelopments of older property under way, the Portland office market will see an increase in inventory with a majority of it being dedicated to creative users.
Block 300, the U.S. Bancorp Tower and 2 & Taylor continue to lead the repositioning efforts downtown by catering to the ever-growing creative office user. Recently inked deals include Puppet Labs signing on for 75,000 square feet in Block 300, Webtrends opening up its new 65,000-square-foot office in the remodeled base of the U.S. Bancorp Tower, and Jama taking half of 2 & Taylor with 35,000 square feet.
Portland’s burgeoning new office development is also heating up the market. With more than 10 stories, Park Avenue West continues to rise, and the Pearl District is now home to the newest Class A office tower at 14th and Irving; they will deliver 273,000 square feet and 150,000 square feet of office space respectively. These projects are already absorbing tenants fast, as evidenced by Stoel Rives’ claim to over 131,000 square feet in Park Avenue West, and more than 1.5 floors already preleased at 14th and Irving.
The revival and repositioning of downtown historic buildings – specifically the Yeon, Spalding, Hamilton and Electric buildings – continue to push rates higher with increasing levels of occupancy. With favorable market conditions expected to remain, Portland’s office market is projected to gain steady momentum for the latter half of 2014.
Michael Merino on industrial
At the close of the first quarter of 2014, the industrial market touted the lowest vacancy and highest absorption since 2007, confirming a trend that has since inspired much confidence in developers. Demand is outpacing supply, especially for desirable distribution properties in the Northeast submarket. Motivated by the signs of another strong development cycle, eight more speculative industrial projects are now in consideration, with low vacancy and rapid absorption to continue over the next 36 months. Currently, more than 2 million square feet of additional space will flood the market.
Last year, Capstone Partners was behind the first post-recession project with the PDX Logistics Center, a three-building complex totaling 833,000 square feet. Now with today’s increasingly limited leasing and sales activity, Capstone is joined by two other developers in an effort to alleviate the robust demand for distribution centers. Specht Development Inc. committed to build Interstate Crossroads, a 493,000-square-foot building located in the Northeast submarket, and New York Life Investment Management just announced a 215,250-square-foot speculative warehouse in Gresham. Ground will be broken on both projects in June.
The domino effect of these speculative projects continues the need for more modernized distribution space in the Portland-metro area, reprising a breed of industrial product last seen before the Great Recession. The cutting-edge amenities of 2008 are now considered standard, catering to distribution tenants with higher clear heights, efficient space and low office build-out.
The cost of such new construction standards will be noticeable. The project budget for Specht Development Inc.’s Interstate Crossroads is an expected $64 million, so rental rates will reflect the current costs of construction as well as the healthy competition these new projects generate. Yet, this is simply the growing pains of yet another development cycle, and one that Portland’s industrial market sorely needs.
Pam Lindloff on retail
The identity of America’s grocery store is up for grabs.
Between warehouse clubs, value supermarkets, specialty and gourmet retailers, and now Amazon’s expansion into fresh delivery services, the grocery aisles are a bit crowded with options.
The generic mainstream ‘one-stop shop’ experience of traditional and supercenter is facing competition, and not just on price. The monumental merger between Safeway and Albertsons announced in March 2014 highlights this change in the marketplace. When major grocery chains consolidate, they can achieve greater economies of scale, which may result in lower prices. But a consolidation between such ‘super value’ retailers also fortifies against mounting competition for consumer dollars, and that battle is echoed throughout the Portland-metro area.
Upon the shuttering of two Albertsons stores in Vancouver, Wash., earlier this year, a new Walmart Neighborhood Market opened in May and then another 154,000-square-foot superstore opened in Battle Ground. Walmart’s deep discounts fill the Albertsons void, but its trendy ‘neighborhood-centric’ atmosphere is its own answer to the high-end experience.
More consumers are moving away from coupon-clipping and opting for the targeted experience of specialty stores. Whole Foods, New Seasons and Trader Joe’s all focus their identity on creating a specific experience rather than competing on price, and this strategy has proven quite successful. The market has absorbed this new demand with more specialty locations opening each year. Indeed, Tigard welcomed a new Whole Foods Market at Greenway Town Center, Nyberg Rivers at Tualatin broke ground to feature New Seasons Market and Natural Grocers opened in Vancouver.
The niche of experience beating out the dollar is also a result of stores choosing to anchor shopping centers. Freestanding buildings don’t drive the same foot traffic found in grocery-anchored retail centers. This is especially true as the American grocery store continues to redefine itself as a reflection of lifestyle rather than a chore.
Carter Beyl specializes in the leasing and sales of office properties at NAI Norris, Beggs & Simpson, a real estate brokerage and asset/property management company. Contact him at 503-273-0359 or firstname.lastname@example.org.
Michael Merino specializes in the leasing and sales of industrial properties at NAI Norris, Beggs & Simpson. Contact him at 503-273-0354 or email@example.com.
Pam Lindloff specializes in the leasing and sales of retail properties at NAI Norris, Beggs & Simpson. Contact her at 360-852-9622 or firstname.lastname@example.org.
In the June issue of Oregon Business Magazine, experts J. Blake Hering, Jr., Ken Griggs, and Chris Johnson, weigh in on the expanding market in Portland. The biggest takeaway? With the market still climbing, Griggs, Johnson, and Hering all agree that the peak has yet to be reached. “Portland is primed and ready as a strong contender for investment opportunity,” Johnson affirms. “The city is poised to gain momentum in 2014.”
A 96,077 sf cross dock terminal in North Portland was sold for $13,212,500. It was purchased by Madrona Cutter, LLC and Gulsons Cutter, LLC. NAI Norris, Beggs & Simpson President Chris Johnson and Senior Vice Presidents MaryKay West and Michael Merino represented the seller, NATMI Truck Terminals, LLC.
As one of the largest cross-dock distribution centers in the Portland-Metro area, the YRC Cross Dock Terminal’s prime location at 6845 North Cutter Circle is essential to the service of the greater Pacific Northwest. The building is named for its occupant, YRC Freight, which is the second largest less than truckload (LTL) carrier in the US. Featuring 176 loading docks, the YRC Cross Dock Terminal is not a standard industrial product, so educating investors on the building’s use and substantial regional impact proved challenging.
“The YRC Cross Dock Terminal is unique in size, location and function,” West explained. “Madrona Cutter, LLC and Gulsons Cutter, LLC understood the facility’s role as a major transfer hub in the Pacific Northwest so it was an ideal transaction.”
Lake Oswego Crossing, a 10,782 sf medical office building, has sold for $2.35 million. The property, bought by Dr. Mo Saleh, will become a dental clinic. NAI Norris, Beggs & Simpson Senior Vice Presidents Jennifer Medak and John Medak and Real Estate Broker Alexandra Ionescu represented the seller, Kalberer Company and Kalberer Properties.
Ideally located at 17437 SW Boones Ferry Road, the building’s purchase underscores a recent upswing in the market with demand heating up and triggering an increase in local property values. This trend seems to support the objectives proposed by the City of Lake Oswego in its 2024 Vision Statement, one of which is to transform Boones Ferry Road into a great street full of commerce and community.
“You can see the domino effect happening where properties are evolving block-by-block,” Jennifer Medak said. “The purchase of Lake Oswego Crossing supports the city’s long term development plan for the district, and it proved to be an attractive opportunity for both the buyer and seller because of its prime location.”
With easy access to I-5, the single-story brick office building also overlooks beautiful natural wetlands.
In light of the Portland Business Journal’s recent 2014 Women of Influence Awards, we’d like to take the opportunity to honor the contributions of our extraordinary women associates. Jan Robertson became the first woman to head a major brokerage firm in 2011 when she was promoted to CEO – proving that behind our great company are even greater women.