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October 23, 2015

Jon Bell: Portland office market goes from hot to sizzling

Portland Business Journal

Jon Bell

With three quarters down and less than one to go before the end of the year, Portland’s office market shows no signs of easing up anytime soon. Rents are up, vacancy is down - we’re now the third-lowest in the nation behind only Salt Lake City and San Francisco - and construction is booming like it hasn’t in years. The big guns of the commercial real estate world all put out quarterly reports sizing up the market, and their third quarter reports were packed with the goods. Here are a few examples of just how hot the market was in the quarter:

  • A huge, historic deal- In August, we broke the news that a majority stake in the U.S. Bancorp Tower, downtown Portland’s Big Pink, had been sold to a subsidiary of UBS Global Real Estate. At the time, no price had been reported for the mega deal, but in its third quarter report, JLL noted that it sold for $372.5 million. That, according to JLL represents “the single largest asset office sale in the history of the Portland market.” At that price, UBS paid $338 per square foot. In its report, Colliers International cited another big office sale in the third quarter: Block 300, which went for $155 million, or $429 per square foot.

  • Creative crushes- In its Q3 report, Kidder Mathews noted that more than 2.2 million square feet of office space are currently under construction in the metro region. Though some of that is brand new construction - for example, 270,000 square feet in a project called Field Office on Northwest Front Avenue and 200,000 square feet downtown at Southwest Columbia and Clay - much of it is creative. The report notes that no fewer than four major developments were announced in the third quarter, including the 100,000-square-foot Towne Storage remodel and 75,000 square feet in the Pearl District at the former home of Premier Press.

  • Down in the 'burbs- NAI Norris, Beggs & Simpson noted a pickup in office leasing activity outside the central business district, with the suburban vacancy rate dropping to 12.6 percent. Some submarkets are even lower than that. Case in point, the Sunset Corridor submarket, which saw its vacancy rate drop to 8.7 percent, in large part due to the massive, 105,000-square-foot lease that Nike signed at the AmberGlen Business Center in Hillsboro, the largest lease of the quarter.

For the full story, go to Portland Business Journal.

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