The sale of Portland’s 2nd largest tower
Another frenzied year of Portland office sales pushed CBD sales volumes above $1 billion for the first time. But one sale towered above all others. Wells Fargo Center, Portland’s 2nd largest office tower and its adjacent DP building, sold to Starwood Capital for $188 million. Starwood will be investing a significant amount of capital in upgrading the buildings to compete with all of the new space being added to Portland’s urban inventory.
NW Natural is moving
In the most high profile relocation in recent years, NW Natural penned a deal to move across downtown from One Pacific Square to a new development by Onder Development and Arthur Mutal. Citing seismic requirements, NW Natural had their sights set on new development and their new location will be a sizeable upgrade from their current Old Town home. At 183,500 square feet, the new location dubbed Third & Taylor will house 600 of NW Natural’s 1,100 employees when they move in early 2020.
The transformation of the Eastside office market
The Close In Eastside is rapidly becoming the new “it” area with a gritty industrial past that has significant appeal to Portland’s creative class. The area has seen an increase in redevelopment over the last several years that cater specifically to the creative class. 4 new office developments brought over 230,000 square feet to this blossoming office market in 2017 and another 265,000 square feet will deliver in 2018.
Staples moves in and WPT Capital buys Interstate Crossroads
In the biggest non build-to-suit deal of 2017, Staples moved into 263,000 square feet at Interstate Crossroads Distribution Center. With minimal institutional grade industrial product for sale in Portland, the fully occupied building netted a tidy $56 million for Specht Development, who sold the property to WPT capital at a cap rate of 4.7 percent.
E-commerce drives leasing
Demand from e-commerce has reached fever pitch in Portland. Just 2 years ago, only 0.8% of industrial net absorption was attributed to e-commerce users and in 2018 over 1.7 million square feet of new warehouse and distribution space will be built for a large e-commerce retailer. These 2 built-to-suit projects will be 2 of the top 5 largest industrial buildings in the metro.
Opportunities materialize for larger tenants
For a number of years larger industrial users have been constrained by limited available options within the metro. Things are changing. 2017 delivered 9 new speculative buildings above 100,000 square feet to the market and together they had over 1.15 million square feet available for larger users. 2018 should follow suit with 4 new speculative buildings above 100,000 square feet currently under construction and at least 2 more set to begin construction in early 2018, all together delivering over 1 million square feet.
Starwood scoops up 737 units in large portfolio deal
Starwood was busy in Portland in 2017. Not only did they take the #1 spot for the largest office deal but they also acquired Holland Holdings portfolio of 11 multifamily properties, the largest metro multifamily deal of the year. Approximately $130.7 million of the $325 million total acquisition was allocated to 4 Portland metro properties, 3 in Vancouver WA and 1 in Hillsboro.
A year of IZ
While it may still be in its infancy, Portland’s new Inclusionary Zoning (IZ) laws are altering multifamily development in ways the city has never seen before. Before the policy went into effect on February 1, 2017, developers rushed to submit projects that could bring more than 19,000 new units to the market. Since the new law went into effect, only 682 units meeting IZ criteria have been submitted for permitting, prompting Portland’s mayor, Ted Wheeler, to announce plans to offer developers new incentives to convince them to build.
Portland’s hottest new hood
Situated in the old quasi-industrial area of Slabtown, the Conway District is transforming Northwest Portland. Formally owned and occupied by Con-way Freight (now XPO logistics), the superblock is now part of a master plan that will add 1,200 new apartments, 400,000 square feet of office space and 80,000 square feet of retail space. With new residents piling into brand new apartments and employees working at freshly renovated creative offices, the area now also boasts a New Seasons, Breakside Brewery and a new Besaws location.
Oregon's largest open-air retail center sells
The Jantzen Beach Center, a 758,000 square foot open-air mall on 67 acres of Hayden Island, has sold to Kimco Realty Corp for $131,751,000. The mall has managed to evade the struggles of many of America’s malls by taking advantage of its location on the state line where residents cross to take advantage of Oregon’s zero sales tax. However the sale was not without controversy as the disappearance of a 1921 carousal, one which Restore Oregon puts on its list of "Most Endangered Places," remains a mystery.
Lloyd Center redevelopment continues
The Lloyd Center facelift continues. The woes affecting large multinational retailers caused a number of high profile closures in the Portland metro over the past 3 years. Portland’s oldest mall, Lloyd Center, was hit particularly hard with the closure of Nordstrom and now Sears. But rather than withering away into obsolescence, the mall has reinvented itself blurring the line between retail and entertainment. The old Nordstrom space will soon house a new concert venue and Sears will be transformed into a 14-screen movie theatre.
Curated retail at the forefront of neighborhood development
E-commerce is forcing retailers to reimagine their space and how they interact with shoppers. One of the most successful reinventions has been the evolution of curated retail in neighborhoods. More than ever retailers are having to tailor their brands to the communities they serve and stock multiple product lines mixed in with entertainment and food options. As new multifamily developments sprout up, developers are carefully choosing their retail tenants that will cater to the community they’re in.