A Washington County shopping center has sold for $25.75 million.

Washington Square II, a smaller neighbor of Oregon’s largest mall, was snapped up by Intercontinental Real Estate Corp. and ScanlanKemperBard Cos.

The 86,636-square-foot shopping center sits on 8.03 acres. It comprises three single-story retail buildings constructed in 1984.

Washington Square II has a vacancy rate of less than 4 percent, stated Tyler Kepler, senior vice president at SKB.

“Washington Square II sits at the center of long-term demand drivers that continue to attract both tenants and capital,” Kepler stated in a news release.

Intercontinental and SKB plan to lead a renovation plan focused on capital repairs, cosmetic upgrades and leasing initiatives, the investors stated. Planned improvements include refreshed facades, new signage, heating and cooling upgrades and parking lot repairs aimed at improving the tenant and customer experience.

“The Portland suburbs continue to outperform the urban core, and Washington Square is the clearest example of that strength,” stated Todd Gooding, SKB’s president and chief investment officer. “This is one of the region’s most resilient retail nodes, characterized by strong household incomes, limited new supply and deep tenant demand — conditions we believe will continue to strengthen.”

CBRE‘s Dino A. Christophilis and Daniel Tibeau represented the seller. According to Washington County records, the seller was a limited liability company, PPR Square Too, that is linked to Pacific Premier Retail Trust of Santa Monica, California. In 2024, Macerich, which also owns Washington Square Mall, announced it had taken a 40 percent interest in PPRT.

“Washington Square II attracted significant interest from investors, supported by strong retail fundamentals and the opportunity to reposition the asset to align with the adjacent Washington Square Mall,” Christophilis stated.

Tenants at the shopping center at 10250 S.W. Washington Square Road include Red Robin, Visionworks, DXL Big + Tall, World Market and Panera Bread.

The property’s visibility, tenancy and proximity to Washington Square Mall “provide a compelling foundation for lease-up and repositioning,” stated Ross Karetsky, associate director for acquisitions at Intercontinental.

SKB, based in Portland, was founded in 1993. The company owns and operates more than 5.5 million square feet of office, industrial, multifamily and retail properties.

Intercontinental is based in Boston and dates to 1959. The company manages a $12.6 billion real estate portfolio.

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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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ScanlanKemperBard has partnered with ReCap Real Estate Investment to acquire the Leftbank property near the Rose Quarter.

The property consists of a four-story building with 60,209 square feet of rentable space, an adjacent parking lot and a vacant, developable land parcel.

“We love the neighborhood,” said Todd Gooding, president and principal at ScanlanKemperBard. “With Broadway being a big bike corridor, we see strong tenant demand for this area.”

SKB purchased the properties for $17.1 million, according to Multnomah County records. It last changed hands in 2007, when it sold for $2.84 million.

SKB represented itself in the transaction. The seller was Left Bank LLC.

The building at 240 N. Broadway has a number of office tenants, as well as the Stingray Café and Upright Brewing.

Tenants at the four-story building should be able remain in place, Gooding said. SKB plans to tackle deferred maintenance, but no major repositioning is planned for now, he said.

The property has been updated in recent years, and features an airy feel with tall ceilings and exposed wood ceilings and beams.

SKB is looking into development possibilities for the triangular vacant lot, Gooding said. Most likely, SKB will develop the property itself. “In all likelihood, we would,” he said.

The property is part of the area that the Albina Vision Trust seeks to redevelop. The concept from the nonprofit civic group would reconnect the street grid, add park space and river connections and provide affordable commercial space and housing.

Gooding said the off-market transaction was not made with Albina Vision in mind. “It did not, but we would be a happy participant” if Albina Vision did move forward, he said.

Based in Portland, SKB has a portfolio of 28.9 million square feet of office, industrial and retail space, and 2,154 residential units.

ReCap Real Estate Investment is a wholly-owned subsidiary of RGA Reinsurance Group of America, based in Missouri.

Editor’s Note: The purchase price has been updated to reflect multiple parcels that were included in the deal.

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A renovation of a former industrial building under way in Southeast Portland will provide 46,000 square feet of craft manufacturing, light industrial and creative office space in the Central Eastside Industrial District.

ScanlanKemperBard (SKB) is partnering with Denver-based Tryba Architects and Lorentz Bruun Construction on the Glass Lab, which will contain multiple speculative light industrial suites ranging in size from about 2,000 to 4,800 square feet. The building’s ground-floor suites will cater to industrial users, with concrete floors and interior roll-up doors providing access to a shared loading dock. The fully air-conditioned second-floor spaces are designed for creative office users.

“We’re big believers in a localized manufacturing economy,” said John Olivier, senior vice president of acquisitions & development for SKB. “For lack of a better term, I call it an urban industrial concept. This building is not just industrial; it’s also creative office or creative industrial.”

The project is a core-and-shell remodel of the 59-year-old building, which was constructed for a glass manufacturer. It later was used as an antique furniture showroom and most recently as the home of Eastside Distilling. SKB purchased the property last summer for $6.3 million, and is investing about $8.9 million in the renovation.

The two-story tilt-up concrete building features old-growth timber beams, tongue-and-groove wood floors and 20-foot ceiling heights. It will feature common amenities including break room and kitchen space, bicycle commuter facilities, a conference room, and a ground-floor gathering area. The second floor is being expanded by 4,000 square feet, and new interior mezzanines will be added to select ground-level suites.

As with the Iron Fireman building, an SKB-owned light industrial building in the Brooklyn neighborhood, the idea for the Glass Lab is to provide a home for craft manufacturers in an area where availability of affordable space is becoming increasingly rare.

“The smaller tenants are having trouble finding stuff in the Central Eastside,” Olivier said. “We really want to cater to the manufacturers, probably tech manufacturing, but we can still do any kind of light manufacturing.”

SKB has been working with Prosper Portland to capitalize on Enterprise Zone tax benefits, giving tenants the benefits of the capital improvements along with whatever money they invest into their individual spaces. According to Olivier, initial estimates equate to about a $1.40/square foot savings for the first five years of occupancy. Rental rates will be about $25-28 per square foot, triple-net.

“We think it’ll be some of the least expensive space in the Central Eastside, certainly of the newly-delivered stuff,” Olivier said.

The Glass Lab is being outfitted with new mechanical/electrical/plumbing systems, including an electrical upgrade from 208-volt service to 480-volt service, new water and sewer systems, rooftop mechanical units, and an upgraded fire suppression system. The building’s energy model is being brought up to code, and new insulated glass, window frames, storefront systems and roll-up doors are being installed.

The core and shell work is expected to last through the summer, at which point tenants will be able to begin building out their white box spaces. The building’s leasing is being handled by Colliers International.

SKB is also in predevelopment on a 140,000-square-foot creative office building on an adjacent parcel at 1919 S.E. Third Ave. The firm is working with Scott | Edwards Architecture to design the building. Olivier hopes construction will begin early next year.

“We see our ability to develop that area over time,” he said. “We think we’ve got the capability to bring all of these elements together and create a mini-campus, ultimately.”

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Downtown property owners and some of Portland’s wealthiest families are busily looking to form opportunity zone funds by taking advantage of a tax break in federal law.

Opportunity zones emanate from a federal tax bill that was enacted in December 2017. Seeking to encourage investment in blighted areas, the law allows for certain tax benefits for long-term real estate investors.

The opportunity zones are drawn from Census tracts. In Portland, that has yielded a curious situation that has made some very wealthy people very excited: Portland’s opportunity zone covers some of the city’s most expensive and desirable real estate, including downtown and portions of the Pearl District, South Waterfront District and Central Eastside Industrial District.

“Portland’s opportunity zone is a fabulous opportunity zone, and it’s getting a lot of attention nationally,” said Vanessa Sturgeon, a Portland developer who has formed a public opportunity fund.

Portland’s opportunity zone is home to recently constructed business hotels, multifamily developments and corporate office projects. Broadway Tower, soon to be home to Amazon, is in Portland’s opportunity zone. So is the new Woodlark Hotel on Alder Street. So is Portland’s largest building, the U.S. Bancorp Tower (better known as Big Pink), and its tallest building, the Wells Fargo Center.

Opportunity zones could also figure in major planned redevelopments. Both the Broadway Corridor and Oregon Museum of Science and Industry’s campus are within opportunity zones.

Sturgeon said she and two others who have formed Sturgeon Development Partners are considering a handful of sites for one or more major opportunity zone projects. Nick Fritel is chief financial officer and Robert Pile is vice president of construction. They’re seeking to raise about $328 million for the projects.

Sturgeon said she and her partners are considering sites on both sides of the Willamette River.

“We’re really working on four different tower sites,” she said. “So we’re in due diligence on several sites. We don’t know whether we’ll do one or two, but they’re sprinkled all over Portland.”

Sturgeon Development Partners is also using an opportunity zone fund to back a hotel project in Salem. The 126-room hotel would be built on the site of a condemned parking structure at 195 Commercial St. S.E.

“The Salem market, it’s really becoming part of the greater economic region of Portland, and it’s highly underserved right now,” Sturgeon said.

Sturgeon was approached by Chris Duffin, president of LMC Construction, about redeveloping the property.

“It’s a block that is blighting downtown Salem, and the city is supportive of seeing something there,” she said.

The offering period for Sturgeon Development Partners’ opportunity zone funds began on Nov. 30 and ends March 31, 2019.

The Goodman family is also considering forming an opportunity zone fund with other investors to develop the Eleven West tower, said Greg Goodman, co-president of Downtown Development Group.

An opportunity zone fund will be used to develop Eleven West, and another one will be used at Downtown Development Group’s property at Southwest Second Avenue and Pine Street, Goodman said. Eleven West received design review approval in December 2017 but ground has not been broken yet.

Downtown Development Group will own half the opportunity fund at Eleven West, Goodman said. The Goodmans have hired Newmark Knight Frank to find and evaluate potential joint-venture partners.

“11-W will get capitalized,” Goodman said. “It will get done.”

The advent of opportunity zones has sparked bidding wars for highly desirable properties.

“You really have to pick your spots because you’re already seeing a bid-up for spots in opportunity zones,” said Todd Gooding, president of ScanlanKemperBard.

SKB plans to use opportunity zone funds for at least two multifamily projects – one in Tigard and another in Vancouver, Washington. The new developments will have 180 to 200 multifamily units each.

“Having the longer-term capital is extremely attractive for the stability of our portfolio and to create real, long-term wealth,” Gooding said.

For developers, opportunity zone benefits could push across the finish line some projects that have been on hold because of inclusionary housing regulations and escalating construction costs.

“Some of these projects that wouldn’t pencil might pencil,” Sturgeon said.

Interest in opportunity zones has been high locally, said Owen Blank, a real-estate attorney and partner at Tonkon Torp.

Opportunity zones have the advantages of deferring, reducing and eventually forgiving capital gains tax, he said.

“It’s a far more flexible program than some of the other tax credit programs, (such as) like-kind exchange,” he said. “Any kind of capital gain could be invested in an opportunity zone fund. It doesn’t have to be from the sale of real estate, or even the sale of a business.”

Opportunity zone funds are beneficial for long-term investors. Merchant developers, or investors looking to quickly flip a property, will not realize many advantages from these tax treatments, Blank said.

Discounted tax rates kick in after five years and seven years. But the biggest benefit happens after 10 years.

“The benefit that has really caught people’s attention is if you hold the investment for 10 years, and then sell your stock in the fund; the appreciation in value escapes tax,” Blank said. “You can imagine why that’s caught some people’s attention.”

Opportunity funds are still new, and some questions remain to be resolved by future Internal Revenue Service guidance, Blank said. For example, how investors can exit, or what happens when an investor dies, remain unanswered.

“There are still some significant unanswered questions pertaining to the operational issues over those 10 years,” Blank said.

Other opportunity zones include areas around Portland International Airport, Gresham, Beaverton, Hillsboro, Forest Grove, Tigard, Tualatin, Wilsonville and Oregon City. Oregon has 86 opportunity zones, and there are about 9,000 scattered throughout the nation.

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A second phase of core-and-shell improvements is wrapping up as part of a project to convert a pair of Southeast Portland buildings into light industrial and maker space. The Iron Fireman Collective, as the project is now known, consists of two joined buildings on Southeast 17th Avenue in the Brooklyn neighborhood. The structures were originally built as furnace factories, and most recently used by airplane parts maker PECO Manufacturing; it put them on the market following the expansion of Southeast 17th Avenue for TriMet‘s orange line.

John Olivier, a senior vice president in acquisitions and development for project owner ScanlanKemperBard, says the firm saw potential in the buildings’ structure and location.

“We thought that it would be a great location for a lot of these craft manufacturers and makers that just can’t find space anymore in the central eastside – certainly not affordable space,” he said. “We’ve got good parking, which is tough to find in the Central Eastside, as well.”

ScanlanKemperBard purchased the buildings in early 2016 and set about renovating the first of the two structures, a 108,000-square-foot industrial building completed in the mid-1920s. General contractor Lorentz Bruun Construction carried out a Mackenzie-designed core-and-shell renovation of the building, which included restoration of historic elements such as exposed masonry and old-growth timber beams. It also included seismic upgrades, a partial roof replacement, and installation of new demising walls to create tenant spaces, a large main hallway, roll-up doors, and space for restrooms/showers.

That work was completed last year, and tenants including a brewery, an apparel designer, a robotics manufacturing and design group and a retail merchandiser have moved in. The second phase of work has involved the renovation of the north building, a 35,000-square-foot former warehouse that was connected to the south building via a garage roof. Second-phase work includes adjoining the two buildings with new ramps and stairs as well as construction of shell tenant spaces, and restoring historic industrial elements. Painted beams and columns were sandblasted to expose wood grain and large windows were restored.

Nine units are being built in the current phase, three of which will be turnkey spaces; the remaining six will be basic core-and-shell spaces. Additional work includes dividing a larger tenant space that was completed with the first phase into multiple “maker space” areas.

“We’re doing much smaller bays where folks can come in and rent space on a shorter-term basis that’s a little more affordable,” Olivier said.

SKB is also weighing whether to convert some of the space – likely second-floor areas that were formerly used as offices – into smaller art studios.

“We know there’s been a need because of conversion of some other buildings that used to have a lot of the artists,” Olivier said. “There’s not really a collective, synergistic place for them to go closer in.”

Lorentz Bruun Construction’s work on the core-and-shell portion of the project is slated to wrap this month. Then the firm will continue with some tenant improvement work.

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The rush of industrial office projects in the Central Eastside Industrial District shows no signs of abating.

Last week, ScanlanKemperBard, in partnership with Tryba Architects and Lorentz Bruun Construction principals, announced the group has closed on the purchase of 1805 S.E. Martin Luther King Jr. Blvd., with a 46,000-square-foot, two-story industrial building, for $6.3 million.

The project team plans to spend $8.9 million more on renovations to create an industrial office product they’re calling The Glass Lab.

The 1960s-era concrete building was originally the home of Morehouse Glass, a glass factory. The project is “designed to cater to creative craft manufacturing, advanced manufacturing and office users requiring 2,500-to-5,000-square-foot suites,” according to a news release.

Developers, prodded by zoning rules that limit residential and retail uses in the district, have flooded into the Central Eastside with projects designed to appeal to so-called “industrial office” users. Some have been adaptive reuse projects, such as the Towne Storage building and the Custom Blocks. Others have been new construction, including the proposed Platform and ODOT blocks projects.

The Glass Lab project is eligible for participation in Prosper Portland‘s Enterprise Zone program, which provides five-year property tax exemptions.

Also, the property is located within the Innovation Quadrant, where an effort is under way to link various developments in Southeast and Southwest Portland; they include the Oregon Museum of Science and Industry, Oregon Health and Science University and Zidell Yards.

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A project to modify and expand the lobby of the KOIN Tower in downtown Portland is nearing completion. Building owner ScanlanKemperBard held a celebration last week to celebrate the big reveal of the $6 million project, which is the first renovation the lobby has undergone since the building opened in 1984.

The project was designed by Mackenzie and built by contractor Lorentz Bruun Construction. In addition to new floors and finishes, the lobby’s size was expanded by about 30 percent via the removal of a two-story retail space. A portion of the building’s mezzanine was removed, opening up the space and allowing in more light.

A ground-floor café space will be occupied by Ristretto Roasters, which is due to open by the end of the year. A bicycle storage room is also being installed on the ground floor. The project also includes new building controls for energy efficiency, a new fire panel and fire suppression devices. In addition, new floors and finishes replicating those of the lobby have been installed on five upper multi-tenant floors and in the garage.

A 16-by-18-foot media wall behind the lobby’s main desk displays content related to the building’s brand identity. According to Traci Wall of ScalanKemperBard, the firm envisions the lobby being used as a rentable space for events ranging from corporate parties to wedding receptions. As such, a catering/food preparation room was built as part of the new café space. Work on the project began last February, and will continue through early next year with the upgrading of several more multi-tenant office floors.

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The onetime home of two significant Eastside industrial businesses has been sold to an owner committed to preserving the building’s historic character.

Portland-based ScanlanKemperBard (SKB) and William Harris Investors Inc. of Chicago have purchased the Iron Fireman building at 4784 S.E. 17th Ave. for $5.3 million, or $46 per square foot. They plan to convert the vacant industrial warehouse into “creative space for local light-industrial, light-manufacturing and maker businesses,” according to a news release.

The buyers declined to name the seller, but the city assessor’s website lists Steven Michaelis of Cleveland as owner.

The 115,000-square-foot building was constructed in 1924 as the factory of the Iron Fireman Co., a manufacturer of residential heating units. Later it housed Product Engineering Co. (PECO), whose name remains on the side of the building.

SKB and William Harris Investors plan to invest $10 million in building improvements over the next 12 to 18 months. The warehouse contains a number of old-time features owners wish to retain, including exposed brick, old-growth timber beams, handcrafted wood paneling and stained-glass windows.

The property is located along TriMet‘s new MAX orange line, near the stop at Southeast 17th Avenue and Holgate Boulevard.

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Owners of Portland’s buildings offering Class A offices are adding value to their properties by making improvements that tenants want and are willing to pay more for. Class A spaces become premium or “trophy” buildings when they are upgraded and can charge the top rents in the city, Jones Lang LaSalle‘s Portland office noted in a recent report.

A trophy building, according to the Dictionary of Real Estate Terms, is “a landmark property that is well-known by the public and highly sought by institution investors. Generally one-of-a-kind architectural designs, with the highest quality of materials, finish and expensive trim, these properties are more desirable than Class A buildings.”

In Portland, buildings that have gained such improvements are yielding considerably more in rent – up to 13.9 percent more, said Patricia Raicht of JLL. More details on trophy office rental rates in Portland are available at .

According to JLL, rents for Class A skyline office space average $31.81 per square foot, while so-called trophy buildings average as much as $36.25 per square foot.

A prime example is the U.S. Bancorp Tower, which has shifted from a largely single-tenant corporate headquarters to “a bona fide tech hub” following a $15 million investment in lobby improvements and other upgrades. Six other buildings in Portland’s skyline that would be considered trophy buildings include Brewery Block 2, Brewery Block 4, First and Main, Fox Tower, Moda Tower and soon-to-open Park Avenue West, according to Raicht.

“What we’re seeing is significant investments in lobbies to upgrade to more modern materials and finishes,” she said. “It also might mean creating some outdoor space, rooftop deck or some sort of deck area, and they typically have a list of amenities such as a fitness center, bike parking and showers and a good retail mix.”

New owners of the KOIN Center and One Main Place are in the process of repositioning their properties to bring them back to trophy status, and investors’ appetite for core central business district offices are at an all-time high, said Joe Vaughan, managing director of JLL.

Dave Squire, executive managing director at Newmark Grubb Knight Frank, agreed that the trend in Portland is to make improvements to get the highest rents possible.

“It’s a little bit of a perfect storm, and the reason is that (we have) an environment where there has been a tremendous amount of multifamily construction, but a very limited supply as relates to office space,” he said. “Take Park Avenue West, which was 80 percent leased before it (construction) was even started.”

Squire said that without a lot of new supply, landlords are finding that if they improve their buildings with “amenities and benefits and creature comforts,” the market is eager to pay premium rents for them. Those amenities could include bike storage and lockers, Wi-Fi in the lobby, big-screen TVs and casual seating areas.

A decade ago, Squire said, prime tenants for downtown Portland were typically accountants, lawyers and people in financial services, but that’s not where employment growth is at present.

“It’s more technology driven from the standpoint of industries that are hiring,” he said. “It’s folks writing code or in creative services, and that person might show up for work in jeans and a T-shirt with a nose ring who makes $90,000 a year. It’s not old guys in suits anymore.”

Many of the trophy properties are attracting institutional investors, and interest from foreign investors is on the rise, according to JLL. Of the $35.3 billion transacted over the past five quarters in the United States, 34.6 percent was driven by international buyers. That trend is coming to Portland, predicts a report by JLL, with investors from Chile and Canada competing for deals in the central business district.

One downtown property whose owner, ScanlanKemperBard, hopes to elevate to trophy class is the KOIN Center. The firm is making a significant investment in upgrades, SKB senior vice president Traci Wall said.

The KOIN Center opened in 1984, but according to Wall hasn’t received any update or renovation since. She compared it to “a kitchen that’s dated but functional.”

But the building will no longer be dated after completion of $4.5 million in renovations that will begin in September, Wall said.

“We will have a comprehensive renovation of the lobby with new flooring and new finishes on the walls and upgrades to the elevator cabs,” she said.

Also, the lobby will be enlarged by “recapturing space that is leased to tenants,” Wall said. A new stairwell will be built from the lobby to the mezzanine and a new bicycle hub with secured bike parking will be installed.

But the most exciting improvement, Wall said, will be a 20-foot-by-20-foot media wall on the lobby’s west side.

“It is made up of LCD screens and we can broadcast content over that, including social media or customized content,” she said. “If there’s a particularly big event, such as the Masters golf tournament, happening we will be able to broadcast it over our media wall.”

The wall is actually “a bunch of individual screens” that look like one giant screen, and will offer some interactive capabilities for tenants, Wall added.

Other improvements include making the lobby more of a lounge area rather than “a place you go through to get to the elevators,” she said.

“We will have soft seating, rugs and softer furnishings and a table where people can plug in their laptop or cellphone,” she said. “We want to make it more of a living space.”

Wall said the KOIN Center is the most iconic structure in Portland’s skyline, and that although it doesn’t have trophy status yet, it will soon.

“From any point, you can recognize the KOIN tower, but when you look at the handful of trophy spaces – the top Class A buildings – at this point we are not on that list,” she said. “But we are investing to create the type of environment that will bring more overall success to leasing of the property and elevate it to that list.”

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