ScanlanKemperBard, a real estate merchant bank based in Portland, has purchased Parkway Woods Business Park, in Wilsonville, for $32.3 million.

The property has 390,233 square feet of office, production and manufacturing space on 88.28 acres east of Interstate 5.

Parkway Woods is 79.5 percent leased to Xerox, 3D Systems, Dealer Spike and the Tualatin Valley Water District. The offices are in a single story and offer ample parking, with 3.3 spaces per 1,000 rentable square feet.

Newmark Knight Frank arranged $36.1 million in acquisition financing from Bridge Investment Group on behalf of SKB.

“Bridge understood the Portland industrial market dynamics and shared SKB’s belief in the city’s attractive long-term secular growth trends driven by its accessibility to transit, a growing amenity base and meaningful amount of high-quality residential development,” NKF Vice Chairman Ramsey Daya stated in a news release.

Daya, Senior Managing Director Chris Moritz and Associate Director Stephen Scarpulla of NKF’s Debt and Structured Finance team in the San Francisco office executed the financing on behalf of SKB.

Information on the seller was not immediately available.

The property, 26600 S.W. Parkway Ave., previously sold for $32.7 million in December 2015, according to Clackamas County records.

CBRE is representing Parkway Woods leasing. The brokerage was advertising 106,050 square feet available for lease, divisible to 50,000 square feet.

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As Portland developer Walt Bowen builds one downtown tower, he’s exiting another.

The office space within the 19-story Broadway Tower has sold to Principal Real Estate Investors for $132.3 million. The price equates to $756 per square foot.

The sale comprises 175,000 square feet of office space on floors nine through 19. The office space was 99 percent leased to tenants including Amazon, Markowitz Herbold, Cable Huston, Chicago Title and Lawyers Title.

The seller was a limited liability company, BDC/Broadway Office, linked to Bowen. His BPM Real Estate Group opened the building in November 2018. BPM is the developer of the Block 216 mixed-use tower now under construction in downtown Portland.

The transaction closed in early March. The purchase does not include the Radisson RED hotel on the first eight floors of Broadway Tower, which is located at 1455 S.W. Broadway, near Portland State University.

The buyer, Principal Real Estate Investors is based in Des Moines, Iowa; it’s a group within Principal Global Investors.

Newmark Knight Frank represented the seller. The sale includes “some of the very highest quality office space that Portland’s seen,” said Nick Kucha, an NKF vice chairman based in Portland.

“There have been very few high-quality modern office towers built in Portland in the last few years,” he said.

Because of that, Broadway Tower attracted high-quality tenants and eager buyers, he said.

Besides Kucha, James Childress (managing director) and Jeff Hodson (director) represented the seller in cooperation with Kevin Shannon (co-head of U.S. capital markets) and James Ikeguchi (senior financial analyst). Principal Real Estate Investors represented itself.

Available office space in the building was being offered at $35 per square foot on a triple-net basis.

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A nine-building office and flexible business campus in Hillsboro has been sold to a California-based real estate investment firm.

AmberGlen Business Center comprises 578,808 square feet in three class-A midrise office buildings and six single-story flex structures. The buyer, PCCP LLC of Los Angeles, represented itself. The firm is partnering with Talon Private Capital as joint venture operating partner.

The seller, Principal Real Estate Investors, part of Principal Global Investors of Des Moines, Iowa, was represented by Newmark Knight Frank. The purchase price was not disclosed.

“Buyers are very thoughtful when selecting suburban office investments,” Newmark Knight Frank Vice Chairman Nick Kucha stated in a news release. “AmberGlen Business Center offers the scale, quality and exceptional location that generated significant interest from a number of qualified parties.”

The office portfolio is located near the Nike campus and the Intel campus in the Sunset Corridor southwest of Portland.

In addition to Kucha, Managing Director James Childress, Director Jeff Hodson and Senior Financial Analyst James Ikeguchi served as advisers.

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Construction of a 25-story tower in Portland’s West End is due to begin in early 2020 after the development team received a substantial investment from a Chicago-based group.

Cresset Partners and the Goodman family will be equal partners in a large-scale opportunity zone fund to kick off Eleven West. The mixed-use building planned at Southwest 11th Avenue and Washington Street will hold 222 multifamily units, 116,000 square feet of office space and 7,900 square feet of retail space.

The building will be a sister structure to Twelve | West, which was completed in 2009 and fetched $206 million when it was sold to Greystar Real Estate Partners in July 2018. Both projects were designed by ZGF Architects, with Gerding Edlen serving as developer.

Eleven West was approved by the Portland Design Commission in October 2017, but construction was delayed while the Goodmans sought financing.

The Goodmans hired Newmark Knight Frank in San Francisco to attract an opportunity zone partner. The firm found Cresset.

Critics say opportunity zones haven’t met their intended purpose of sparking investment in impoverished areas. Instead, across the nation, opportunity zone funds have presented investment opportunities in areas much like Portland’s West End – one of the hottest and most expensive real estate submarkets in Oregon.

Greg Goodman, president of Downtown Development Group, said if not for opportunity zones, Eleven West would have been the receiving end of a 1031 exchange – a tax treatment that allows investors to defer paying capital gains on real estate sales. Instead, state, county and city governments will receive taxes from the Eleven West project, he said.

“The state will get a big tax check they wouldn’t have otherwise gotten,” Goodman said.

Opportunity zone rules also encourage investors to hold onto properties for longer terms to fully realize tax advantages.

“It allows investors to take a longer-term approach and not be worried about building into an overbuilt market,” Goodman said.

Another opportunity zone fund is being used to attract investors to the 35-story Block 216 project in downtown Portland. That fund is managed by Baker Tilly Capital of Philadelphia.

Also, Sturgeon Development Partners is using an opportunity zone fund for a hotel project in Salem and possible future development projects.

Construction of Eleven West is slated to begin in late January, with Turner Construction serving as general contractor, Goodman said.

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The Leland James building in Northwest Portland has attracted a trio of tenants to the fast-developing Slabtown area.

Software and analytics firm Jet Reports International Inc. is moving its corporate headquarters from Tigard to take 30,000 square feet in the Leland James building. Jet Reports will be joined by local coffee maker Good Coffee and Orange Theory Fitness on the ground floor.

The building has 117,000 square feet of space on four floors. Jet Reports’ office will be on the fourth floor, including a heavy-timber penthouse pop-up built inside and a portion of the third floor.

The office space is about one-third leased, Capstone Partners co-founder Chris Nelson said. The rest of the building remains available.

Capstone Partners and Cairn Pacific developed the building at Northwest 22nd Avenue and Raleigh Street in a partnership. It was designed by SERA Architects and constructed by JBA-Andersen Construction. Dave Squire and McCoy Doerrie of Newmark Knight Frank represent office space in the Leland James building. Andrew Rosengarten and Jake Lancaster of JLL represented Jet Reports in the transaction. LRS Architects is assisting Jet Reports with design of the internal space.

“Our Tigard location no longer meets the dynamic needs of our staff, and we’re excited to see how this beautiful new space will spark our creativity and improve employee engagement,” Jet Reports vice president of finance and operations Michael Smythe stated in a news release.

The Portland office market had an overall vacancy rate of 10.3 percent in the fourth quarter, according to Cushman & Wakefield. Almost 1.5 million square feet of office space was under construction at the end of 2017, with 500,000 square feet pre-leased.

The office market, Nelson said, is “good, not great.” He pointed to a couple of newly signed large leases as signs of strength – Amazon agreed to take 85,000 square feet in the Broadway Tower now under construction, and Oregon State University signed up for nearly 40,000 square feet in the newly renovated Meier & Frank building.

“There’s good activity,” Nelson said. “It could certainly be better.”

Capstone Partners is nearing completion of the Custom Blocks, which will offer 72,000 square feet of creative office and retail space in Southeast Portland.

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A cohort of prime office properties for sale is setting new expectations for high-end commercial real estate in Portland.

A parcel including two superblocks and an aging office building in the North Pearl District is for sale and is expected to fetch an aggressive price, industry insiders say. The Wells Fargo Center is on the market and could go for more than $200 million. And Wieden + Kennedy‘s Pearl District office building is also for sale, and is expected to earn a healthy premium on the $65 million it sold for five years ago.

Taken together with the sale of the former Oregonian building earlier this year for $95 million, the high-dollar listings will soon test how valuable Portland office property has become.

In some cases, the listings are pricing out local investors who believe the real-estate cycle has reached maturity, and prompting head-scratching among locals who see little value in matching the fast-escalating values placed on Portland properties by major out-of-state firms.

“Either I’m really, really wrong, or they’re really, really wrong, but it’s a new normal,” said Noel Johnson, a principal at Portland developer Cairn Pacific.

Institutional buyers can be more aggressive on their pricing, said Buzz Ellis, managing director at Jones Lang LaSalle.

“They will tend to see growth in our market,” he said.

Several office properties for sale are likely to fetch record or near-record prices in coming months.

The remaining portions of the Con-way master plan site represent a unique opportunity for developers. The properties, offered by Eastdil Secured, include two 200-foot-by-400-foot superblocks, two smaller surface parking lots and a retired 129,148-square foot Con-way office building. The total developable area spans 6.7 acres of highly valuable urban infill in the fast-emerging Slabtown area.

The office building is being offered separately from the vacant blocks, and is under contract. The office is viewed as a repositioning opportunity that could yield $500 per square foot when it’s eventually resold.

The blocks are along Northwest 21st and 22nd avenues, and three of the four blocks are bounded by Raleigh Street, which is envisioned as Slabtown’s commercial corridor.

The parcel, now owned by XPO Logistics, is regarded as particularly valuable because it is not subject to Portland’s inclusionary housing requirements. Developers could conceivably complete build-out of the entire 17.49-acre Con-way site without including a single affordable housing unit.

Portland’s Bureau of Development Services issued a zoning confirmation letter to an attorney representing XPO Logistics on June 6. The letter confirms the entire XPO site is subject to zoning according to rules in effect on April 24, 2012, when the site’s master plan application was filed. That’s long before the city’s inclusionary housing regulations went into effect earlier this year, and before a package of mixed-use zoning regulations that were approved last year by Portland’s City Council.

A property that is not subject to inclusionary zoning may be worth three times as much as a comparable property that is subject to the affordable housing requirements, Johnson said.

Eventual buyers of Con-way properties could opt to build office, multifamily or retail space, or spaces featuring a combination of uses.

XPO Logistics is accepting “best and final” offers on the site, and is seeing strong interest.

“It’s just a good signal of a really bullish market right now,” Johnson said.

The area is booming with office development, including the 300,000-square-foot Field Office development from project^, and the rehabilitation of the Leland James building by Cairn Pacific and Capstone Partners.

For the office market, the sale of the Oregonian building at 1320 S.W. Broadway was a new watershed moment. The sale valued the renovated creative-office building at approximately $540 per square foot, a record for Portland office space. The buyer was Credit Suisse, through a Delaware-based limited liability company, Portland 1320 Broadway Real Estate Holding LLC.

The building had been subject to a thorough renovation by the previous owner, Urban Renaissance Group of Seattle, with a design by Allied Works Architecture.

A Credit Suisse spokeswoman declined to comment on the bank’s investment in Portland’s market.

Several factors are pushing office properties to record valuations. Average asking rents rose to $28.04 per square foot during the first quarter, with Class A office space in Portland’s Central Business District fetching $34.94 per square foot, according to Jones Lang LaSalle. Office vacancies were unchanged at 9.4 percent.

Office properties for sale are likely to fetch eyebrow-raising prices. These include Wieden + Kennedy’s Pearl District corporate headquarters at 224 N.W. 13th Ave. The owner, J.P. Morgan Asset Management, has placed the property on the market, and is being represented by San Francisco-based brokers of Eastdil Securities.

The 190,151-square-foot building last sold for $65 million, or $342 per square foot, in 2012. It’s likely to fetch even more this time around.

The 109-year-old building was renovated in 2012 in another Allied Works-designed project.

“It’s really a quite remarkable building,” Johnson said.

Wieden + Kennedy will continue as the main tenant in the building, a spokeswoman for the advertising agency said. (The building is also home of the Bluehour restaurant).

The listing of the Wells Fargo Center looms over the Portland office market. Earlier this month, the bank announced it would sell the full-block, 689,840-square-foot building – Portland’s tallest skyscraper. The listing includes the tower and podium.

The bank leases approximately 40 percent of the building to other tenants. Wells Fargo plans to lease space back from the building’s eventual buyer. The company will also move employees to other locations in the Portland-metro area.

While some locals see Portland office space as increasingly unaffordable, it still represents a value compared to San Francisco or Seattle.

“Those markets have seen similar strong rent growth,” said David Hill, senior managing director at Newmark Knight Frank in Portland.

One sign to watch: when companies begin forsaking Portland’s office market for cheaper properties elsewhere in the West.

“Does Portland get to the point where people are looking at Boise or Salt Lake as a more affordable option?” Hill said. “We haven’t seen any evidence of that yet.”

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