American Assets Trust has filed a proposal to construct two new mid-rise office buildings totaling 370,000 square feet at the Oregon Square property in the Lloyd District.

The early plans submitted to the Portland Bureau of Development Services show the San Diego-based real estate investment trust is looking to move ahead despite economic uncertainty related to the coronavirus pandemic.

A phased approach would be used to develop the buildings, which are being designed by GBD Architects. Construction would take place on Block 90, at 729 N.E. Oregon St., and Block 103, at 827 N.E. Oregon St. The two blocks make up the southern half of Oregon Square, and are currently occupied by two-story office buildings constructed in the 1940s.

The Block 90 building would be five stories, while the Block 103 building would be six. They would be linked by one level of underground parking.

GBD Architects has entered the BDS‘ early assistance process for design review on behalf of American Assets Trust. The project team recently held a virtual meeting to introduce the project to the Lloyd District Community Association.

“What we’re hearing in the community right now is there’s still a lot of potential for office, especially large-floor-plate office,” said Wade Lange, an American Assets Trust vice president and regional manager of its Portland properties.

During the first quarter, the Lloyd District commanded average asking rents of $36.69 per square foot, compared to $34.08 across the Portland-metro area; also, Lloyd’s 7 percent vacancy rate was lower than the 12.1 percent rate around the region, according to Jones Lang LaSalle.

Portland has remained a strong market for American Assets Trust, Steve Center, vice president of office properties, said during an April 29 earnings call. The company’s existing buildings in Portland were 100 percent leased, he said.

American Assets Trust is “in the early stages of design development of two new office buildings on the two remaining blocks at Oregon Square, which we will continue to evaluate pending market conditions,” Center said.

The company will not build the structures on speculation, Lange said.

“We’d like to find tenants before we begin any construction,” he said.

The Oregon Square project team has been working to meet in person rather than via video, Lange said.

“It’s harder,” he said. “It’s just a slower process than getting in a room and working through everything.”

The new commercial buildings’ ground floors will be adjustable, Michelle Schulz, a GBD Architects principal, stated in an email.

“That’s likely office in the current market environment, but we are keeping the possibility for all commercial uses at the ground floor to be flexible for the future,” she stated.

Portland design guidelines encourage active ground-floor use, often meaning retail. The project is not yet scheduled on the Portland Design Commission‘s agenda.

While the new buildings are being planned, work is about to begin on a remodel of the northwest building at Oregon Square. The project is in the final stages of permitting, Lange said. Turner Construction is the general contractor.

The renovation of the 33,276-square-property is expected to be delivered in early 2021, Center said.

The other building at Oregon Square, at 830 N.E. Holladay St., on the northeast corner of the parcel, is leased to WeWork.

Closures related to the coronavirus pandemic have hit the Lloyd District hard. The neighborhood relies on big venues for events and shopping, including the Oregon Convention Center and Lloyd Center mall.

“It’s a little concerning that the convention center, the Moda Center, (Veterans Memorial Coliseum) and the mall are very important to the neighborhood, and it looks like those types of venues will be the last thing to reopen because of the coronavirus crisis,” Lange said. “So we’ve got a long road ahead of us.”

American Assets Trust is beginning to consider how to reopen office buildings it owns, said Lange, who expressed confidence the Lloyd District will emerge from the pandemic in a strong position.

“I don’t think long term it will have any impact,” he said.

The post Developer evaluating potential for sizable project appeared first on Daily Journal of Commerce.

A warehouse in Northeast Portland has sold for $16.2 million.

The 126,303-square-foot warehouse east of Portland International Airport is fully leased to Johnstone Supply Inc., a distributor of heating, ventilation, air conditioning and refrigeration equipment.

The seller was Stockbridge, a San Francisco-based real-estate investment firm; the buyer was not disclosed. The deed was not yet recorded in Multnomah County. The sale equates to $128.26 per square foot.

Built in 1991, and occupied by Johnstone Supply since, the facility offers a 24-foot clear height, 18 dock-high doors, a drive-in grade-level door, and parking and office space.

The property is also near Interstate 205’s interchanges with I-84 and SR-30B, and Port of Portland terminals. It previously sold in 2014 for $27.8 million.

“11632 N.E. Ainsworth presented a compelling opportunity for institutional buyers of industrial real estate,” stated Buzz Ellis, managing director of Jones Lang LaSalle. “Johnstone Supply’s commitment to the location, coupled with the sustained demand for functional industrial buildings in the Northeast Columbia corridor, came together to create a stable investment with long-term upside.”

Ellis, along with JLL managing directors Mark Detmer and Bo Mills, senior director Ryan Sitov and director Adam Taylor, represented the seller.

The post Northeast Portland warehouse fetches $16.2 million appeared first on Daily Journal of Commerce.

A 137-unit apartment community in Beaverton has sold for $34.1 million.

The buyer was DB Capital Management, via a limited liability company with an address in Santa Monica, California. The entity’s manager is Josh Friedman, according to Oregon Secretary of State records.

Terra Murrayhill, at 14305 S.W. Sexton Mountain Drive, was built in 1985 on approximately 9 acres. The complex recently received renovations and capital improvements totaling more than $3 million.

The buyer purchased the garden-style apartments from Pur Spyglass LLC, an entity that lists Robert H. Kennis of Palo Alto, California, as manager. Washington County recorded the warranty deed on Dec. 6.

The property has 15 residential buildings with a mix of one-, two- and three-bedroom units averaging 891 square feet. Nike’s headquarters and the Beaverton Transit Center are about 3 miles away.

Amenities include an upgraded clubhouse, an outdoor pool, a hot tub, a grilling area, a fitness center, a business center, a dog park, detached garages and access to a hiking trail.

Jones Lang LaSalle, led by Senior Managing Director Ira Virden and Senior Director Carrie Kahn, marketed the property on behalf of the seller. DB Capital Management’s team was represented by Daniel Terranova, vice president for the Northwest region.

The post Apartment complex fetches $34.1 million appeared first on Daily Journal of Commerce.

The Trail Blazers’ Damian Lillard must be helping Adidas sell a lot of basketball shoes.

The company’s North American headquarters is on an expansion kick in North Portland, and generated the construction permit with the single highest dollar amount in the city of Portland in 2019, according to the Bureau of Development Services.

Adidas’ building permit for two new office buildings at 5070 N. Greeley Ave., issued on Sept. 16, ascended above the rim with a $149 million valuation. The permit was for a five-story office building with five stories of underground parking, a second new building, additions to a third building and surrounding East Village site improvements, including required landscaping and screening.

The Adidas permit was by far the most valuable. The one with the second-highest value was $81 million for the Fourth and Montgomery building, a south downtown collaboration shared by Oregon Health & Science University, Portland State University, Portland Community College and the city of Portland. The permit for the seven-story, three-quarter block project was issued on May 16.

Development in 2019 was “a little choppy,” said Sam Rodriguez, senior managing director of Mill Creek Residential Trust, a major multifamily developer. Mill Creek is developing Modera Glisan, which had a permit that ranked fourth on the list.

The economy recovered quickly after flashing recessionary signals in the fall.

“The good news is we’re not at the end of a cycle – at least it doesn’t feel like that,” Rodriguez said.

Rents have remained stable amid deliveries of thousands of new apartments. A slowdown in new proposals offers hope for future projects, Rodriguez said.

“It seems like we’re reaching equilibrium moving forward, which makes development possible,” he said.

The office market appears to be at a similar point as multifamily. Projects totaling more than 1.6 million square feet were under construction or renovation in November, according to Jones Lang LaSalle, but that number is expected to soon decline.

“While the elevated level of office development remains historically high for Portland, it is set to slow down considerably over the next year when all but Block 216, J.K. Gill and Arete will deliver,” a JLL office report stated.

No one type of project dominated the bureau’s list of most expensive projects. The top 10 includes three office buildings, four multifamily buildings, a middle school, a hospital expansion and a hotel. Multifamily buildings were seven of the next 10 most-valuable projects.

The permit data comes from the Bureau of Development Services, which collated the most valuable permits at the 91��Ƶ’s request. It includes new construction permits issued between Jan. 1 and Dec. 19.

The list does not include some large projects, such as the 35-story Block 216 tower for Ritz-Carlton – it has received excavation permits, but not building permits. Other major construction projects under way, such as the Hyatt Regency at the Oregon Convention Center, were working based on permits from prior years.

The data is also necessarily limited to city boundaries – leaving out major projects in, for example, unincorporated Washington County, where Adidas’ largest competitor resides.

Here are the top-dollar building permits in Portland during 2019:

1. Adidas East Campus expansion, 5070 N. Greeley Ave., issued Sept. 16. Two new buildings, a building addition and outdoor improvements. $149.1 million, Turner Construction Co.
2. Fourth and Montgomery, 1810 S.W. Fifth Ave., issued May 16. New seven-story, three-quarter-block mixed-use building with classrooms and offices for Oregon Health & Science University, Portland State University, Portland Community College and the city of Portland. $81 million, Andersen Construction.
3. Legacy Emanuel West, 2835 N. Kerby Ave., issued May 17. Five-story core-and-shell building with two stories of below-grade structured parking. $73.7 million, Andersen Construction.
4. Modera Glisan, 1430 N.W. Hoyt St., issued Feb. 14. A 12-story, three-quarter-block mixed-use building with 291 apartments, 201 parking spaces and retail space for Mill Creek Residential Trust. $63.8 million, MCRT PNW Construction LLC.
5. ART Tower, 1510 S.W. Alder St., issued Oct. 7. A 21-story building with 314 apartments, 5,500 square feet of ground-floor retail space and 215 parking stalls in four undergrounds levels for developer Wood Partners of Atlanta. $55.2 million, Andersen Construction.
6. TriMet administration building, 9800 S.E. Powell Blvd., issued March 5. Administration and operations building for TriMet with expanded employee parking. A separate permit was issued for a bus fueling and washing building. $51.4 million, JE Dunn Construction Co.
7. Kellogg Middle School, 3400 S.E. 69th Ave., issued July 10. Three-story, 100,000-square-foot Portland Public Schools building with a covered play area, play field, parking lot and vehicle access road. $44 million, Todd Construction.
8. E2 Building (Block 40), 3883 S.W. Moody Ave., issued Dec. 9. Seven-story, 245,000-square-foot, mixed-use building with 232 apartments, retail space and two levels of underground parking for Alamo Manhattan of Dallas. $43.5 million, Andersen Construction.
9. Saltwood North, 1650 N.W. 21st Ave., issued Aug. 6. Six-story apartment building with 177 residential units, ground-floor retail space, residential amenity space and two stories of underground parking for Cairn Pacific and Prometheus Real Estate Group. $40 million, Bremik Construction (A separate permit valued at $35 million was issued for Saltwood South, at 2050 N.W. Raleigh St. Bremik Construction is the general contractor).
10. Hyatt Centric Hotel, 601 S.W. 11th Ave., issued Jan. 8. A 15-story, 215-room hotel for Mortenson. $37.4 million, Mortenson Construction.

The post A review of some sizable building investments appeared first on Daily Journal of Commerce.

Greystar has sold a 12-building multifamily property in Hillsboro.

The buyer of Avana Orenco Station – a 264-unit development – was Jackson Square Properties, a San Francisco-based real estate investment firm.

The terms of the deal were not available from Washington County, and were not disclosed by the buyer or seller. The 9.8-acre property previously sold for $51 million in 2014. The county assessed the property’s market value last year at $61.9 million.

Avana Orenco Station is also known as the Grove at Orenco Station.

Jackson Square Properties acquired the property free and clear of existing financing, according to Jones Lang LaSalle, which marketed the property for Greystar.

The buildings have a mix of 156 one-bedroom, 100 two-bedroom and eight three-bedroom floor plans averaging 925 square feet. The property is within walking distance of TriMet’s MAX Blue light-rail line and near Intel’s Hillsboro campus.

The JLL Capital Markets team representing the seller was led by Senior Managing Director Ira Virden and Senior Director Carrie Kahn.

The post Hillsboro apartment complex purchased appeared first on Daily Journal of Commerce.

When WeWork early next year opens its fourth Portland location, near the Lloyd Center mall, it still won’t have the largest coworking presence in the city.

That title goes to Regus, a foreign-owned company with 257,500 square feet of office space in the Portland area, according to Jones Lang LaSalle. WeWork ranks second with 227,000 square feet.

WeWork’s upcoming initial public offering, expected in September, will offer the best gauge yet of how investors value the coworking industry. The coworking giant has rapidly spread across the country and internationally.

But some analysts have raised red flags about WeWork’s financial prospectus, pointing to $17.9 billion in long-term lease obligations and less than $2.5 billion cash on hand. WeWork’s parent company, The We Company, released the prospectus Aug. 14 in preparation for the IPO.

In Portland, flexible space amounts to 1.4 percent of total leasable space, including buildings under construction, according to JLL. That leaves a lot of room for growth, said Jeff Arthur, co-founder of CENTRL Office, a competitor founded in Portland.

“I think there’s still more room,” Arthur said. “There’s a lot of supply. Part of it’s dependent on the overall vacancy in the market.”

Arthur pointed to industry estimates that coworking could total 25 percent of office space a decade from now.

“Depending on the market, that sounds right to me,” he said.

Many employers have adopted more flexible expectations of where employees can work. That can mean working from home, having in-office “hot” or shared desks, moving teams of employees to a coworking space, or all of the above.

“Companies of all shapes and sizes are seeking out a more turnkey office solution than they have in the past,” Arthur said.

WeWork’s breakneck pace of expansion has been reflected in Portland. Most recently, the company signed a lease for 55,395 square feet at American Assets Trust‘s Oregon Square development. The company is expected to take occupancy in the first quarter of next year.

WeWork had the Portland-metro area’s largest office deal of 2018, taking 70,000 square feet in the Power + Light Building. That added to its earlier locations at the U.S. Custom House in the north Park Blocks and the top floor of Pioneer Place downtown.

CENTRL Office has sought cracks in the market, including Lake Oswego and Hood River. The company will have seven locations when the Hood River office opens early next year. It has also established offices in larger cities: the one in Dallas opened recently, joining Los Angeles. Arthur said the San Francisco Bay Area may be an underserved market. Those cities are “markets where we continue to see a lot of demand from corporate America,” he said.

WeWork would be the first coworking company of the tech-economy era to go public. Regus, based in Luxembourg, was founded in 1989 and has been publicly traded since 2000; it has moved into coworking in recent years. Regus did not return a phone call seeking comment.

Arthur said he did not want to comment on WeWork’s financial details ahead of the potential IPO.

“I think it’ll be interesting to see if and when it goes forward, and what the market response will be to it,” he said.

New entrants into the business are focusing on submarkets that may have been overlooked by larger firms. Vida, a coworking space that markets itself as “designed by women, for women” opened July 1 with about 15,000 square feet in the Jantzen Building at Sandy Boulevard and Northeast 19th Avenue. And Knack, a coworking startup that opened in Seattle’s Belltown district recently, markets itself as a resource for all entrepreneurs, but particularly LGBTQ+, women and people of color.

“What we’re seeing happening is coworking spaces are really niche-ing down into being able to offer very curated services to a group that wants those services,” Vida founder Melanie Marconi said. “What WeWork did is set the stage for coworking in general, but they’re too big to offer the specific services we do.”

Vida offers its members drop-in child care and a daily fitness class. Plans are in place for more lunch-and-learn events as well as a health and wellness program.

The Sandy Boulevard location has attracted more than 60 members, including a number of investors who moved in with their businesses, Marconi said. Private offices were first to sell out.

Marconi’s initial round of “friends and family” fundraising raised $101,000. With Vida’s first location up and running, she’s looking to expand with a second round of fundraising, perhaps in January. “We’ll probably go out to proper angels (investors) and bigger pots,” she said.

Marconi mentioned Vancouver, the Southwest Portland suburbs and the Slabtown area of Northwest Portland as possible expansion opportunities.

Like everybody else in the industry, Marconi said she’ll be following WeWork’s offering.

“It’s fascinating to watch, honestly,” she said. “It’s such a monster scale.”

Flexible space in the Portland-metro area

Regus                          257,500 square feet

WeWork                      227,000 square feet

CENTRL Office         102,000 square feet

Spaces                         76,500 square feet

Industrious                  28,500 square feet

Vida                            15,000 square feet

CommonGrounds       14,000 square feet

sources: JLL, 91��Ƶ archives

The post Coworking startups seeking niches in Portland area appeared first on Daily Journal of Commerce.

A California limited partnership has purchased the Wilsonville Medical Plaza for $10.75 million.

Wilsonville Medical Plaza, built in 2009, serves as an outpatient medical center for Providence Health and Sports Medicine Oregon. The 24,057-square-foot facility sits on 2.25 acres at 29345 SW Town Center Loop in Wilsonville, east of Interstate 5.

The buyer, according to Clackamas County records, was Braden 1996 Family LP. That entity is registered in California to Kenneth J. Braden, who is identified as president of VBB Management and Investments Inc., in Hughson, California.

The seller was Gem Capital Investments, a limited liability company that identifies Richard Edelson of Tigard as a member.

The property was one of two in a portfolio that also included the Tigard Medical Plaza; the buyer’s $14.5 million purchase of that property closed earlier this year. That 20,994-square-foot facility is located at 7300 S.W. Childs Road, on 1.74 acres west of I-5.

The purchases were made via a 1031 exchange in all-cash deals. Jones Lang LaSalle represented the seller, led by Managing Director Evan Kovac, directors Andrew Milne and Logan Greer, senior associate Trent Jemmett and analyst Maria Poyer. The deal was secured by Holliday Fenoglio Fowler prior to HFF’s acquisition by JLL.

The post Wilsonville medical property fetches $10.75 million appeared first on Daily Journal of Commerce.

Expensify has moved from downtown tenant to property owner.

The tech company purchased the historic Bank of the West building it occupies at Southwest Fifth Avenue and Harvey Milk Street for $10.8 million.

Expensify had leased the space since 2017 following an extensive renovation by Seven Hills Properties, a San Francisco-based real estate investment firm. Seven Hills had purchased the property for $3.2 million in January 2015.

“Tech companies invest a lot into their space and into their infrastructure,” said Buzz Ellis, managing director at Jones Lang LaSalle, who along with JLL Vice President Adam Taylor represented the seller. “They probably looked at the growth they want to have in the market and the uniqueness of their asset, and (decided) to control their destiny.”

The 30,000-square-foot building at 401 S.W. Fifth Ave. was completed in 1916. ZGF Architects led the modern redesign effort.

The sale price was in line with estimates by JLL and underwriters, Ellis said. The price came out to $360 per square foot.

“It bodes well for our market to see these startups and companies like this invest in the region,” Ellis said.

Expensify, based in San Francisco, has about 40 employees in Portland and is hiring more, spokeswoman Rose Grech stated in an email.

“With Portland being such a fun and creative community, we love its vibrancy as it really speaks to our company’s values,” Grech stated. “So we wanted to take the next step by committing to this unique space and place. We’ve worked with various local groups in hosting one-of-a-kind events and we’re excited to deepen our relationships here.”

Seven Hills’ Jonathan Hill stated in a news release it was “gratifying to see Expensify take the reins as it bolsters its presence in the city.”

Expensify, founded by David Barrett in 2008, is an expense and reimbursement management app and software company.

The post Tech company buys downtown Portland office building appeared first on Daily Journal of Commerce.

A Salem warehouse operated by Amazon has been sold for $105.5 million.

The Mill Creek Logistics Center encompasses 1,018,020 square feet on 61.75 acres east of Interstate 5.

Jones Lang LaSalle represented the seller, a joint venture partnership of developer Capstone Partners and San Francisco-based finance partner PCCP (formerly known as Pacific Coast Capital Partners). Information on the buyer was not immediately available; the owner is still listed in Marion County records as a Capstone Partners entity.

“The one nice thing about being in Salem is you can serve the south end of the Greater Portland area, and you can go south very easily,” said Buzz Ellis, managing director of Jones Lang LaSalle in Portland. “That’s why I think we’ll continue to see logistics centers built in Salem.”

Other developers – most notably Specht Development – are also investing in Oregon’s I-5 corridor. Specht has 60 acres of industrial land in Woodburn that could accommodate up to 2 million square feet of warehouse space, according to the company.

Amazon agreed to a 12-year lease at the Mill Creek Logistics Center. The facility at 4775 Depot Court S.E. was designed by Mackenzie and built by general contractor Perlo Construction.

Capstone Partners may not be done building at the property. The Portland-based developer has remaining parcels large enough for one facility of about 1 million square feet and another of about 570,000 square feet, said Chris Nelson, co-founder of Capstone Partners.

“We’re real bullish on the potential for new projects on that site,” he said.

Capstone was the original master developer of the property, which had been owned by the state of Oregon. Plans to develop the site were delayed by the Great Recession.

“We had a very long-term view,” Nelson said. “We started to circle around the site again, and then this user (Amazon) came along and it made it a little easier go.”

Nelson said he expects future logistics properties will be marketed as build to suit instead of built on speculation because users are demanding a high level of individual customization.

The post Salem industrial property sells for $105.5 million appeared first on Daily Journal of Commerce.

Harsch Investment Properties‘ 7 SE Stark building is either a major new office project with ample parking, or a major new parking project with an office component.

Hoffman Construction has erected the core and shell of the 10-story building in the Central Eastside Industrial District. Exterior and interior work is ongoing, with completion expected in late July.

Works Progress Architecture designed the 200,000-square-foot building to feature a modern concrete-and-steel structure and extensive exterior glass.

Parking is the differentiator at 7 SE Stark. The first six floors are dedicated to structured parking – 275 stalls. The building offers at least two stalls per 1,000 square feet, dwarfing most modern office developments in Portland’s Central City. Some of the parking will be rented out to other users in the fast-growing Central Eastside office market.

The building is a response to a pronounced lack of parking for the Central Eastside’s growing employment base, said Jake Lancaster, managing director at Jones Lang LaSalle in Portland.

“There’s a tremendous need for parking in the neighborhood as it evolves from its industrial roots,” he said.

The area has several adaptive reuse spaces, including Autodesk‘s office at the Towne Storage building, with limited parking.

Parking may be a key selling point for 7 SE Stark, said Macadam Forbes President Kevin VandenBrink, who is not involved in the project.

“While no one wants to admit that parking is an issue, the tenants have told us you still need to find ways to get people into and out of those spaces,” he said.

The Central Eastside is becoming more of a “24/7 neighborhood” where people live and work, Lancaster said. The building is pinched on a half-acre parcel between Interstate 5 and Union Pacific tracks. Eateries such as Olympia Provisions, Steven Smith Teamaker and Wayfinder Beer operate nearby.

On Wednesday, Lancaster led a tour of 7 SE Stark as construction winds down. He pointed to a small, modern lobby that will be decorated with murals commissioned by Jordan Schnitzer, Harsch’s owner and a noted art collector.

The top floor has a floor plate of approximately 17,000 square feet, while the three lower office floors offer about 20,000 square feet apiece. Lancaster said the brokerage would be willing to split the top floor with potentially more than one user, but is looking for tenants willing to take an entire floor for the three others.

The office floors have 12 decks in total, and offer sweeping views, including the Willamette River and downtown to the west.

Lease rates are expected to be $33 to $35 per square foot on a triple-net basis, Lancaster said. Other expenses will add $10 to $12 per square foot.

The entry of 7 SE Stark to the office market comes as construction continues nearby on other office projects, including District Office from Beam Development and Urban Development + Partners, and Tree Farm from Guerrilla Development. Gerding Edlen‘s 5 MLK mixed-use project will bring 120,000 square feet of office space to market in early 2020. Oregon Square from American Assets Trust also has office space on the market.

Central Eastside office tenants are no longer limited to the “funky spaces” in adaptive reuse projects that typified the area a few years ago, VandenBrink said.

“It has kind of grown up on the Eastside now, where you have tenants paying rents even with the Pearl (District) or the (Central Business District),” he said.

With rents even across the area, leasing decisions often come down to noneconomic factors, VandenBrink said.

“It comes down to what feels right, who has the best amenities (and) what spaces are most efficient for the layout and the employees,” he said.

Harsch acquired the property via a limited liability company for $375,000 in 2012, according to Multnomah County records. The seller was Francis Development LLC.

The post A building to meet a district’s growing needs appeared first on Daily Journal of Commerce.