Vista Logistics Park, a three-building industrial asset in Gresham, has sold for $93.25 million in a high-water mark for the Portland metro area’s industrial sector.

Black Creek Group, based in Denver, snapped up the east Portland metro industrial park for $127.18 per square foot.

The sale marks a lucrative exit for Specht Development, which built the industrial park on speculation in a single phase, and its venture capital partner, New York Life Real Estate Investors, a subsidiary of the insurance giant.

“This sale reflects the continued attractiveness of the Portland metropolitan market,” said Greg Specht, chief executive of the Portland-based development firm.

The 733,232-square-foot property was built on land that was purchased from the Port of Portland in 2016 for $9.28 million. Construction soon began, and Vista Logistics Park was completed in 2017.

Specht hired CBRE to market the property. After it didn’t attract the offers the owner wanted, the listing was pulled back. But the property continued to attract additional tenants, and this fall, Black Creek made an unsolicited offer, Specht said.

Limited supply in the industrial market helped push the price up. “The limiting factor of available land within the (urban growth boundary) puts upward pressure on pricing,” Specht said.

Vista, located at 32-198 S.E. 223rd Avenue in Gresham, was 86.5 percent leased by the time the sale closed. The property is leased to Medline Industries, Imperial Brown Inc., Samuel, Son and Co., and Fully, a furniture company. Capacity Commercial Group served as the leasing agent.

The sale comes as population and job growth provides strong market fundamentals, and logistics becomes ever more important.

“Most institutions are thinking they’re under-allocated to industrial in their portfolio, so they’re aggressively looking to add industrial,” said Paige Morgan, senior vice president at CBRE.

The tight industrial market has led to more growth south and north of Portland along the Interstate 5 corridor, and also has made infill redevelopment more attractive, such as Prologis‘ move to build on the Portland Meadows site, Morgan said.

“Given the UGB here, we’ve seen development moving further and further out. There’s not much more room to go moving east, so we’ve seen more growth moving north and south,” Morgan said.

“Redevelopment of infill sites has become more feasible, because tenants are willing to pay more to be closer in,” she added.

CBRE’s team on the deal included Morgan in Portland, Brett Hartzell in Seattle, Darla Longo, Eric Cox, Barbara Perrier and Val Achtemeier in Los Angeles; and Rebecca Perlmutter-Finkel in San Francisco.

The post Gresham industrial park sells for $93 Million appeared first on Daily Journal of Commerce.

Portland industrial developer Specht has gained a major tenant for its Vista Logistics Park in Gresham.

Medline Industries Inc. has agreed to take 297,501 square feet at the newly constructed, 37-acre industrial development. That will leave Vista with 435,731 square feet available, divisible down to approximately 37,000 square feet.

Medline is the nation’s largest privately held medical supplies manufacturer and distributor. The company’s move to Gresham gives Specht’s joint venture with New York Life Real Estate Investors, Madison-Specht Vista Logistics LLC, a key tenant.

The development was built on speculation as distributors have sought to snap up limited warehouse inventory.

Medline was represented in the transaction by Tyler Shiels of Jones Lang LaSalle and Michael Morgan of Colliers International. Madison-Specht Vista Logistics LLC was represented by Dave Ellis, Don Ossey and Tom Knecht of Capacity Commercial Group.

Demand for industrial space in Portland has been strong, with 2.2 million square feet leased during the second quarter, according to JLL. Leases of new construction have gone for 50 cents to 60 cents per square foot per month on a triple-net basis, with office surcharges of 90 cents to 95 cents per square foot, the research group reported.

The post Firm leases sizable Gresham industrial space appeared first on Daily Journal of Commerce.

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.”

The post Industrial development is big business appeared first on Daily Journal of Commerce.

Specht Development broke ground last week on a major speculative industrial project in Gresham.

The development near the intersection of Southeast 223rd Avenue and Stark Street will encompass three buildings totaling 732,824 square feet on the 37.42-acre site.

New York Life Real Estate Investors LLC is financially backing the $61 million project, named Vista Logistics Park.

The dominant building in the project will be 494,464 square feet, making it the largest vacant industrial space under one roof in the Portland area, according to a statement issued by Capacity Commercial Group principal Don Ossey.

Two smaller buildings will have 112,940 square feet and 124,420 square feet, respectively. Speculative industrial properties built recently have leased up quickly, said Gregory Specht, chief executive at Specht Development.

“There’s a proven demand for space like we are building, and that’s the business we’re in,” he said.

The developers purchased the site from the Port of Portland for $9.28 million in a transaction that closed Thursday. The project is scheduled for completion in fall 2017.

Shipping and logistics companies are continuing to seek large industrial spaces in the Portland-metro area, and they have few choices available to them, Specht said.

“Logistics users are demanding bigger buildings, so here’s an opportunity to give them what they want,” he said.

The largest building will have a clear height of 36 feet, while the smaller buildings with have clear heights of 30 feet.

Industrial construction has surged in Portland, with major facilities such as Capstone Partners‘ PDX Logistics Center and Trammell Crow Co.’s and Clarion Partners‘ Subaru shipping facility leading the way.

Specht said low vacancies, and strong wage and population growth help support the Vista Logistics Park project.

Specht credited the Port of Portland and city of Gresham for supporting the project.

“We were able to go from signing the (purchase and sale agreement) to closing in about 60 days, which evidences the willingness from the port and the city of Gresham to get this project under way now, because we’ve got an awful lot of dirt to move before it starts to rain,” he said.

Gresham has aggressively courted industrial construction, guaranteeing turn-around times for project review and approval, among other perks.

Specht has been a major player in the industrial market. The company is nearing completion of a 50,000-square-foot Comcast fulfillment center in Gresham. The Portland-based developer is also rehabilitating and renovating the Ballou Wright Building at 10th Avenue and Flanders Street in the Pearl District in a $25 million creative office project.

Mackenzie is the project architect and engineer for Vista Logistics Park, and Perlo Construction is serving as general contractor. Ossey and David Ellis with Capacity Commercial Group are the brokers representing the property.

The post Crews break ground on massive industrial project appeared first on Daily Journal of Commerce.