Amazon‘s massive PDX9 distribution center in Troutdale has sold to a San Diego-based real estate investment firm for $113.5 million.

At 857,379 square feet, the distribution center is one of the largest buildings in the Portland metro area to ever change hands, according to CBRE. It represented the seller, Clarion Partners, a major investor based in New York City.

The buyer was CIRE Equity. The California firm owns several other Oregon properties, including 829,087 square feet at 224 Logistics Park in Milwaukie, and others in Hillsboro and Eugene.

The property “is one of the most significant industrial transactions in Oregon this year — if not the largest,” CBRE’s Brett Hartzell, who along with Chris Reeves represented Clarion Partners, stated in a news release. “With few comparable assets in the region, its scale, strategic location and modern design set it apart. The long-term lease at favorable rates further enhances its value, making this a truly exceptional investment opportunity in the Portland market.”

The sale equates to $132.38 per square foot. The property, developed by Trammell Crow Co. and built by Sierra Construction Co., is part of the Troutdale Reynolds Industrial Park. Amazon’s neighbors at the former brownfield development include FedEx, C&S Wholesale Grocers, Bonneville Power Administration and NextEra Energy Resources.

“We’re certainly looking forward to working with them,” Port of Portland Development Manager Chris Damgen said of the new ownership.

The industrial park still has three undeveloped lots.

CIRE Equity did not respond to a message seeking comment. The firm operates the CIRE Real Estate Income Trust. CBRE’s news release stated that the acquisition “reflects CIRE’s ongoing commitment to strategic growth and its ability to capitalize on opportunities that deliver long-term value for investors by combining income generation with capital appreciation.”

The building is on a 73.7-acre lot and features 41-foot clear heights, ample parking and electrical resources.

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Amazon has announced Trammell Crow Co. will serve as developer of a major distribution facility in Portland.

The 1 million-square-foot warehouse will be located on a parcel owned by the Port of Portland at 15000 N. Lombard St. Clarion Partners, based in New York City, is the project’s major lender.

“This is yet another example of the strong market fundamentals for industrial development in the Portland metro (area),” Steve Sieber, senior vice president with Trammell Crow Co., said in an email message.

Amazon will lease the building from Trammell Crow and Clarion, Amazon spokeswoman Ashley Robinson said in an email message.

Trammell Crow, based in Dallas, is the Portland area’s most prolific industrial developer. Last year, Trammell Crow completed a 600,000-square foot Subaru shipping facility at Gresham Vista Business Park.

Amazon’s fulfillment center adds to an existing facility in Hillsboro and recently announced centers in Troutdale and Salem. Amazon also opened a Prime Now pick-up center near Portland State University.

The Portland center will employ 1,000 workers, who will sort large items such as pet food and gardening tools, Amazon said in a news release. Combined with its other operations, Amazon will employ 3,500 workers in Oregon when all of the facilities open in 2018.

Amazon’s center in Salem is being developed by Portland-based Capstone Partners.

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As residential development begins to show signs of slowing in Portland, industrial development is booming with no end in sight.

Projects totaling more than 3.5 million square feet of industrial space are under construction, according to Jones Lang LaSalle. That will be a major addition, as only 1.1 million square feet were delivered between January and September 2016.

Portland’s vacancy rate for industrial properties fell to only 3.4 percent during the third quarter of 2016, according to JLL.

Users are seeking space in the northeast Columbia corridor, with its proximity to interstate highways and Portland International Airport, as well as the Sunset Highway corridor near Hillsboro and along Interstate 5 south of Portland.

Average rents for Portland-area industrial space grew 16 percent annually at the end of the third quarter, to $0.58 per square foot, according to JLL.

As online shopping has gained popularity, the need for shipping has exploded. To reduce shipping times, fulfillment centers must be located close to consumers. Developers are busy meeting the demand.

Tenants including Amazon, Bunzl, UPS, Logistics Insights Corp., OnTrac and Wymore Transfer signed leases for at least 100,000 square feet in 2016.

PDX Logistics Center III, from Capstone Partners, is under construction near the airport. The third phase consists of two buildings. The first is 134,400 square feet and is scheduled for delivery in early September. The second will be 122,747 square feet, with delivery set for mid-October.

“I wish it was up now, because I think there’s good demand now,” said Chris Nelson, co-founder of Capstone Partners.

The project is in a pre-loading phase on the last building pad.

“The more conspicuous construction will resume again in March,” Nelson said.

Interest has been strong for the space, but leasing remains in discussions for now.

“We’ve had proposals going back to a few users, but we don’t have anything leased,” Nelson said.

A previous phase, PDX Logistics Center II, sold in November to Clarion Partners of New York for $36.2 million. The 355,200-square-foot industrial building was fully leased with tenants UPS and Cummins Inc.

Capstone is in no rush to sell PDX Logistics Center III, Nelson said.

“We aren’t 100 percent committed to holding or to selling it, necessarily,” he said.

A fourth phase, geared toward a large industrial user, is in the design phase, Nelson said. Capstone plans to start on that project in the spring.

The initial phase attracted tenants Gateway Express, a Singapore-based online shipping company; packaging company Ernest Packaging and KeHE Distributors, a food distributor for New Seasons Market and other customers.

Perlo Construction and Mackenzie have been engaged on the PDX Logistics Center projects.

For all of the recent activity, rising labor costs could prove a threat to future industrial projects. Construction employment in the Portland-metro area jumped 10.6 percent for the 12-month period ending in November, according to a report from Christian Kaylor of the Oregon Employment Department. Portland’s construction industry gained 6,100 jobs during the 12-month period.

Competition for construction services is driving costs up too.

“I think there’s going to be more of a challenge making projects work just because costs are up so much,” Nelson said.

The boom in industrial development comes as residential development shows some signs of easing, with rent growth slowing and vacancies rising.

Other industrial developers are busy as well.

Crews are building Vista Logistics Park for Specht Development in Gresham. The business park will have three buildings totaling 732,824 square feet on a 37.42-acre site at Southeast 223rd Avenue and Stark Street.

The largest building will be 494,464 square feet. Two smaller buildings will be 124,420 and 112,940 square feet, respectively.

Perlo Construction is at work on the $61 million project, which was backed financially by New York Life Real Estate Investors, a limited liability company.

Specht purchased the property from the Port of Portland last year for $9.28 million. Capacity Commercial Group is representing the property.

Vista Logistics Park is set to be constructed in one phase and completed in late summer.

In Hood River, Key Development is at work on two industrial projects at the Port of Hood River. Sheppard’s, a tractor and industrial equipment dealer, is building a new dealership on the waterfront that will be completed in spring 2017.

“There’s a lot going on,” said Anne Medenbach, development and property manager at the Port of Hood River.

The port offers easy access to Interstate 84 and shipping on the Columbia River.

Much of the demand is driven by the continued rise of online shopping.

“It’s definitely a driver of demand,” Nelson said. “More and more customers are buying on the Internet. There’s just more demand coming through the system for handling and shipping.”

Amazon raised eyebrows last spring when it signed on for 303,000 square feet at Hillsboro’s Majestic Brookwood Business Park. The online retailer moved into the building on Nov. 1 so that it could operate during the holiday shopping season.

Since then, D.B. Schenker, a German logistics company that works with Intel, has signed on for an approximately 138,000-square-foot lease. Also, an as-yet-unannounced company has taken a 90,000-square-foot space, said Phillip Brown, executive vice president of Majestic Realty.

“The size requirements are increasing,” he said.

Some new tenants are bringing more employees than typical for industrial space.

“Even in some other parts of the Portland-metro market, that’s been a nice bright spot,” Brown said.

Multistory warehouses are a newly emerging trend in the U.S. market that hasn’t yet showed up in Portland.

In November, Prologis Inc. announced that it would build the nation’s first multistory warehouse in Seattle, the Wall Street Journal reported. The three-story, 580,000-square-foot warehouse is scheduled for completion in 2018.

A Prologis spokeswoman did not return messages seeking comment.

Multistory warehouses are common in Asia, and could make sense in dense urban environments as industrial space becomes scarcer. That is the case in Portland, Nelson said.

“There’s not a lot of land,” he said. “There’s a pretty decent limit to the amount of high-quality sites that are available.”

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A property converted into creative office space has sold for $94.35 million – the latest high-dollar sale in Portland’s active market.

The asset, known as the Park Square campus, comprises two buildings and 295,767 square feet at 100 S.W. Market St.

Holliday Fenoglio Fowler LP (HFF) marketed the property on behalf of New York-based Clarion Partners LLC, while acting as an adviser to a separate account client. A separate account client advised by CBRE Global Investors purchased the asset and was assisted by HFF in securing a fixed-rate acquisition loan from Deutsche Bank.

The HFF investment sales team representing the sellers was led by senior managing directors Nick Kucha and Michael Leggett.

HFF’s debt placement team was led by managing director Casey Davidson.

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Clarion Partners has purchased PDX Logistics Center II, a major industrial development near Portland International Airport, for $36.2 million.

The seller was Portland-based developer Capstone Partners LLC and investor PCCP LLC.

Industrial development has been booming in Portland and other major cities as consumer demand surges for online shopping. A third phase of the PDX Logistics Center is under construction and due for delivery in summer 2017.

The industrial vacancy rate in the Portland area is just 3.6 percent, JLL Managing Director Buzz Ellis stated in a news release. Ellis brokered the sale along with JLL managing directors Mark Detmer and Bo Mills and Senior Vice President Paige Morgan.

PDX Logistics Center II gives investors secure cash flow in a newly constructed building, Detmer stated.

The buyer, New York-based Clarion Partners, also has an investment stake in the 600,000-square-foot Subaru distribution facility at Gresham Vista Business Park.

PDX Logistics Center II includes features such as Early Suppression Fast Response (ESFR) sprinklers, a 140-foot truck court, a 32-foot clear height, 65 dock-high doors and four grade-level doors. The building also is equipped with low-cost T-5 lighting and 6,000 square feet of office space.

Perlo Construction was the lead construction contractor on the project and is at work on Phase III.

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