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Amazon putting its stamp on Portland

By: Chuck Slothower//October 27, 2017//

Amazon putting its stamp on Portland

Chuck Slothower//October 27, 2017//

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Amazon has drastically expanded its real estate presence in the greater Portland area, including a package pick-up location in a downtown storefront. (Sam Tenney/91Ƶ)
has drastically expanded its real estate presence in the greater Portland area, including a package pick-up location in a downtown storefront. (Sam Tenney/91Ƶ)

Amazon, one of the nation’s largest companies, is increasingly making its presence felt in the Portland area with a major industrial footprint and intriguing moves in the office and retail markets.

The company has firmly planted its flag in Oregon’s largest city, and Portland is among the hopeful applicants to host Amazon’s massive second headquarters.

What was once merely a book-selling website located in Seattle is now increasingly a physical force in local economies throughout the nation. And in Portland, Amazon’s dizzying pace of development has sent shockwaves through the industrial market, where it’s far outpacing any other client.

The company is surrounding the Portland-metro area with massive distribution facilities. Consider:

Amazon last year opened a 303,000-square-foot sortation center at Hillsboro’s Majestic Brookwood Business Park.

Last month, Amazon announced it would build a 1 million-square-foot facility on a Port of Portland parcel on North Lombard Street, with Co. as developer.

In Troutdale, Amazon is building an 855,000-square-foot fulfillment center, also with Trammell Crow.

And in Salem, is the developer of a 1 million-square-foot facility where Amazon will distribute large items such as gardening tools and pet food.

Individually, these large projects are a boon to the developers, contractors and subcontractors who all benefit from the retailer’s local growth spurt. Collectively, they indicate Amazon will be a major force in Oregon’s 21st-century economy, employing thousands of workers, spurring development and changing how consumers shop.

Amazon’s wave of industrial development is coming amid a constrained supply of industrial land. Much of the Portland area’s industrial land is spoken for, and Oregon’s urban growth boundaries make expansion difficult.

In comes Amazon with more than 3 million square feet of industrial development in the past two years.

“Amazon clearly is a major player in the market and is affecting the supply side,” CEO Greg Specht said.

Amazon’s logistical strategy is designed to get packages to customers in hours, rather than days, said Tom Forte, a senior research analyst for . Amazon is gradually adding to its Prime Now service across the country.

Forte noted that Prime Now is available in New York City, where’s he’s based, but not at Stanford, where he’s currently working. Forte predicted Prime Now will spread first to major metropolitan areas, and then nearby suburbs.

“They’ll add that capability over time,” he said.

Amazon offers Prime Now in Portland, with two-hour delivery of Amazon products, groceries and local restaurant takeout. The new fulfillment centers will help Amazon promptly deliver a range of products, Forte said.

Amazon's new package pick-up space at the Sky3Place building in downtown Portland is part of the company's expanding real estate footprint in the metro area. (Sam Tenney/91Ƶ)
Amazon’s new package pick-up space at the Sky3Place building in downtown Portland is part of the company’s expanding real estate footprint in the metro area. (Sam Tenney/91Ƶ)

Amazon’s fulfillment centers are an important part of its Prime service, spokeswoman Ashley Robinson stated in an email message.

“There are a lot of contributing factors that go into our thought process on where to place a new fulfillment center,” she stated. “Most importantly, we want to make sure a fulfillment center is placed as close to the customer as possible to ensure we can offer a great Prime service and fast shipping speeds to customers. We also look at the workforce and we’ve found great talent in abundance in both the Salem and Portland communities.”

In some ways, Amazon is mimicking and furthering the logistics of Walmart Inc., which was known to build warehouses and retail stores in clusters.

Amazon’s strategy in recent years has been to “build first, buy second,” Forte said. In Portland, the company has done both.

Amazon bought into Portland with Elemental Technologies. Now , the company was acquired by Amazon and tucked into its profitable Web Services division. Elemental has its office in the former Oregonian building at 1320 S.W. Broadway.

Amazon is rumored to be seeking additional office space in Portland. Some brokers have suggested Broadway Tower, a building now under construction that will offer 175,000 square feet of office space, would be a natural fit. The office space is represented by .

The office space at Broadway Tower is approximately 50 percent leased, said Kevin Joshi, senior vice president at Kidder Mathews. He could not disclose the tenants, he said.

Joshi said he expects the office space to be more than 90 percent occupied when Broadway Tower opens in October 2018.

Amazon is well-known for its use of nondisclosure agreements for local firms it works with, and several of its local business partners did not respond to requests for comment.

Amazon has also dipped its toe into brick-and-mortar retail sales, with the Portland-metro area again in the forefront. Amazon in 2016 chose Washington Square in Tigard for the third location of its brick-and-mortar bookstore.

Amazon recently opened a delivery center in south downtown to speed shipping to Prime customers.

Amazon also expanded its presence in Portland with its acquisition of Whole Foods. The grocery chain has eight Portland-area locations, and another in Vancouver, Washington. Amazon announced in June it would acquire Whole Foods for approximately $13.7 billion and integrate the grocer into Amazon Prime.

Portland was one of 238 cities to submit a proposal for Amazon’s second corporate headquarters by the Oct. 19 deadline. Greater Portland Inc. is leading the effort to woo Amazon. The centerpiece of Portland’s pitch is the soon-to-be-vacant U.S. Postal Service property.

Yet Amazon’s needs may exceed the space available in Portland. Amazon says it wants a second headquarters equal to its base in Seattle, where the retailer has an astonishing 8.1 million square feet, spread across 33 buildings.

In total, the Portland-metro area has only 27.2 million square feet of Class A office space, with a 9.1 percent vacancy rate, according to a Jones Lang LaSalle report.

Robinson declined to comment on the HQ2 process beyond Amazon’s issued materials.

Portland’s Broadway Corridor master plan, a guiding document for development of the Postal Service site and surrounding blocks, calls for building only 582,237 square feet of office space as part of 3.8 million square feet of total development. That’s smaller than one lease Amazon confirmed in downtown Seattle earlier this month, with the company reportedly taking 722,000 square feet in Rainier Square, a skyscraper now being built.

Amazon expects to spend up to $5 billion in construction for the second headquarters, which could eventually be used by up to 50,000 employees. For Portland, that raises the question of where the employees would be housed in the metro area’s already-tight housing market. Portland had fewer than 6,000 active single-family home listings in September, according to the Regional Multiple Listing Service ().

Geographic proximity will be a major factor in Portland’s bid, for good or ill. That hasn’t stopped even cities in Washington and British Columbia from trying.

Portland will point to its burgeoning tech scene and cheaper labor pool as selling points.

“They’ve been so successful in Seattle, it’s driven up the cost of talent,” Forte said. “Now they either need to diversify or spread out.”



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