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.

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A Gresham industrial property has been purchased by a food distributor for a build-to-suit warehouse.

Preliminary plans call for constructing an approximately 135,000-square-foot facility on a 12.6-acre site at the Portland Portal Distribution Center in Gresham.

Panattoni Development agreed to sell the property in a fee development arrangement, according to a CBRE news release. Delivery is expected in early fall 2018.

Panattoni was represented by CBRE Vice President Andy Kangas. The buyer, whose identity was not disclosed, was represented by Rod Brokenshire and Stu Peterson of Macadam Forbes. Terms of the deal were not disclosed.

Located at Northeast 172nd Avenue and Sandy Boulevard, Portland Portal Distribution Center offers access to Interstate 84 and benefits from enterprise zone tax incentives.

Panattoni previously developed speculatively the Big Eddy Commerce Center at Northeast Riverside Parkway. Anixter, a distributor of communications and security products, recently leased 80 percent of the 153,000-square-foot industrial development.

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An industrial campus in Tualatin has sold for $26.5 million.

The three-building campus is fully leased by Nortek Air Solutions. The company uses the 329,474-square-foot space as its headquarters and manufacturing facility.

The seller was Huntair Properties, a limited liability company. The buyer was an affiliate of Meriwether Partners.

The 25.14-acre property is located at 19855-19866 S.W. 124th Ave. in Tualatin, close to Oregon Route 99 West and the junction of interstates 5 and 205.

Cushman & Wakefield brokers Jim Lewis, Gary Griff and Aaron Watt represented the buyer in the transaction. Stu Peterson and Rhys Conrad of Macadam Forbes represented the seller.

“This is a prime example of a buyer looking outside of the traditional real-estate boxes in search of higher yields,” Lewis stated in a news release. “This campus represented a high-quality and highly functional asset in an excellent Tualatin location occupied by a strong tenant – all desirable attributes for an investor.”

Lewis stated it’s become more challenging for buyers to find good assets at reasonable prices.

“Buyers are beginning to look at more unique opportunities that have potential to provide higher returns,” he stated. “In this case it was a manufacturing campus instead of a more traditional big-box distribution warehouse.”

According to Cushman & Wakefield’s report for the third quarter of 2017, Portland’s industrial market remains healthy, with 3.5 percent overall vacancy. Net absorption in the third quarter was 870,000 square feet.

The Tualatin submarket ranked among the strongest growth areas in the region, the brokerage firm reported.

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