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May 12, 2017

High-rise Deals Shift Property Management Hierarchy

Portland Business Journal

Jon Bell

Over the past five years there's been a sizable shift in the hierarchy among Portland commercial property management firms as it relates to the amount of square footage under management.

Since 2013, CBRE - once the unquestioned leader among the region's commercial property managers - has dropped to No. 4 on the list, with the amount of square footage under management, declining more than 44 percent, from 16 million to just below nine million today. Meanwhile, Kidder Mathews has risen to No. 1 in Portland, increasing its property under management by 29 percent, from 7.5 million in 2013 to more than 9.7 million this year.

One of the biggest drivers of that change is the simple fact that so many office, industrial and commercial buildings have been trading hands in the past few years, said Sue Iggulden, director and city lead of asset services for Cushman & Wakefield in Portland,

"When something changes hands, it's an opportunity for the new owners to evaluate what the new going-forward program is going to be, and that creates new opportunities," Iggulden said.

Last year was a big one for office building transactions, with sales approaching $1 billion, according to Colliers International's fourth quarter report from 2016.

Cushman & Wakefield is just one of the firms locally to have benefited from those deals, jumping from 5.6 million square feet under management in 2013 to more then 9.6 million square feet this year. One of the most recent examples where Cushman & Wakefield was able to gain square footage was through the $90 million sale of the Umpqua Bank Tower earlier this year. The new owners, ZRG, hired Cushman & Wakefield to handle leasing and management of the building.

Iggulden said existing relationships between buyers and firms can help sway property management deals.

"A lot of times a multi-market client will come in and they have a relationship with a certain (property management) house in other markets, so they'll make that call first," she said. "They like to maintain consistency from market to market, so that creates a lot of opportunity, too."

Portland's real estate cycle continues to churn as the halfway mark of 2017 approaches, and all signs are that the getting will be good for a while. Still, Iggulden said the cycle will slow, as it always does. When that happens, property managers will step up and help find new ways to "create value inside each asset," she said. That could mean everything from leasing unused rooftop space to bringing in new services that didn't exist before.

"It's all open to being looked at," she said. "Property managers are always busy no matter what the market's doing."

For the full story, go to Portland Business Journal.

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