NAI NBS' Clouser Earns CCIM Designation

NAI Norris, Beggs & Simpson Vice President Monique Clouser, a property manager, has obtained her Certified Commercial Investment Member (CCIM) designation.

To attain the CCIM designation, Clouser completed four core courses and three elective credits, prepared her management portfolio and passed a comprehensive exam.

A CCIM is an invaluable resource to the commercial real estate owner, investor, and user, and is among an elite group of more than 9,000 professionals across North America and in 30 countries abroad. Only 6% of the estimated 150,000 commercial real estate practitioners nationwide hold the CCIM designation, an indication of one of the most coveted and respected designations in the industry.

Clouser joined NAI NBS in 1996 and has managed more than two million square feet of office and retail space in her career to date. Management highlights include Lincoln Center, with seven Class A office buildings totaling 731,391 sf, 5800 and 6000 Meadows, which she managed from construction to operation, and One and Three Centerpointe, two office buildings totaling 190,335 sf in the Kruse Way submarket.

Clouser is a Certified Property Manager (CPM), a licensed broker in Oregon and Washington, and holds a business degree from Linfield College.

NAI NBS' Lindloff and Fuller Represent Landlord in Lease at Sunrise Professional Plaza

St. Elizabeth Ann Seaton Catholic High School has leased 13,938 sf at Sunrise Professional Plaza in Vancouver. NAI Norris, Beggs & Simpson Vice President Tamara Fuller and Associate Vice President Pam Lindloff represented the lessor, Sunrise Medical Plaza LLC.

The tenant is expected to move in on August 1.

On Earth Day, BOMA Gives Tips for Greening Buildings

BOMA (Building Owners and Managers Association) International has released a list that is very fitting for Earth Day: "100 Days, 100 Ways" gives tips for commercial real estate professionals to make buildings more environmentally friendly. You can find a link to the list here. The list includes tips like installing bicycle racks so workers can ride to work, starting an energy awareness program, instituting or increasing recycling programs, and cutting down on water use.

Slater Joins NAI NBS' Vancouver Office as Property Manager

NAI Norris, Beggs & Simpson has added Brandon Slater to its Vancouver office as a Property Manager.

Prior to joining NAI NBS, Brandon was a Senior Consultant with Spectrum Real Estate Advisors, a boutique commercial real estate consulting firm in Portland. There he advised on commercial real estate portfolios of varying sizes, created and audited operating budgets, reviewed leases and rent rolls and performed building inspections. Prior to Spectrum, Brandon spent five years with CB Richard Ellis in Las Vegas, where he advised clients on office, retail and industrial projects and brokered over $200 million in sales. He was a founding member of the CBRE National Land Group, a nationwide coalition of land acquisition and disposition specialists, and served as a board member for two years.

Brandon holds a bachelor’s degree in business management and finance from Brigham Young University – Idaho, is a licensed broker in the state of Oregon, and is fluent in Spanish.

Creativity, Flexibility Key to Selling Industrial Properties Today

Scott MacLean, Vice President, NAI NBS

Many brokers who specialize in investment sales have not put any sales in escrow recently, and most institutional buyers have headed for the hills. So, what does it take to sell property in these tough economic times? Sellers need to remember two words: creativity and flexibility.

Buyers are out there. But to consummate a transaction, brokers must use all of the tools in their arsenals. Brokers also need to look at industries that are more recession-resistant. Brokers have applied these techniques in the last six months to successfully sell buildings in the Portland area that had previously languished on the market with little or no activity.

Leasing with a fixed option purchase price allows buyers to “try before they buy.” Oftentimes, lessees/buyers are able to negotiate fixed purchase options with a specific timeline in which to purchase the building. This strategy allows a potential buyer to move into a building and get situated before having to spend the money to purchase the building. The buyer has flexibility to purchase the building on his or her timeline, which can allow a buyer to shop around bank terms without the pressure of a short due-diligence period looming. This strategy also creates immediate cash flow for the seller, and can allow a seller more time to work on a 1031 exchange.

A recent win-win was at 425 N.E. Ninth Ave. The property had been on the market for quite a while. The lessee/buyer got the flexibility of being in the building, and using capital for improvements rather than the purchase price. The company has also been able to lease some of the extra space in the building.

The contract sale, a tried-and-true method used successfully by brokers during the 1980s, allows buyers to purchase a building without the hurdle of bank financing. In some instances, sellers are able to realize a higher purchase price if they are flexible on the interest rates or down payment. This can allow buyers with less than stellar credit to purchase a building and can significantly reduce the due-diligence period, expediting the entire transaction. Contract sales aren’t an option for all commercial buildings, but in certain situations they can be very successful.

Another strategy for large buildings that do not have much functional ease is to divide them into two or more sections that appeal more to owners/users. Not every user of industrial space needs a 100,000-square-foot building, just as not every homeowner desires a six-bedroom, four-bathroom house. The “sweet spot” in the residential market is a three-bedroom, two-bathroom house. Commercially, industrial buildings that cater more to users of smaller spaces can be very desirable. Again, splitting a building is not always possible, but it is one strategy a broker can use.

One recent example of this “condominiumizing” is Yeon Business Center Building 9. The building had been on the market for a year when it was split last fall to make it more marketable, and two different owners/users purchased the halves. The buyers were happy to find smaller spaces in the desirable Northwest Portland neighborhood, which is dominated by larger buildings. The sellers were able to sell the building quickly after it was split, and got a higher price per square foot than is typical of small buildings.

A reverse on the aforementioned strategies is the sale-leaseback, in which a business owner is able to raise capital for his or her business by agreeing to a fixed lease rate on the building and then selling that property to an investor. The sale-leaseback scenario is oftentimes more attractive than trying to raise capital in the more traditional ways of financing with a bank, etc.

Buyers are having difficulty obtaining financing today, and some sources that aren’t utilized as much in better economic times are becoming good resources. Buyers are turning more and more to Small Business Administration (SBA) financing to help reduce their down payments. While the SBA loan can be paperwork intensive, it does allow a buyer to purchase a building with only 10 percent down, making the dream of building-ownership available to more businesses. More businesses are also utilizing grants available through the Portland Development Commission.

Now is the time for real estate brokers and sellers to work together and look at all possibilities available in the marketplace. The seller that is waiting for “the perfect buyer,” who will offer the asking price with a short closing period, is a thing of a past – at least for the foreseeable future. These days, brokers will be tested on their creativity and sellers will be tested on their flexibility.

NAI Global Ranked #4 Commercial Real Estate Brokerage Worldwide

NAI Global tied for the #4 spot in the Top 25 Brokerages 2009 in the April issue of National Real Estate Investor. The rankings were based on the total dollar value of leasing transactions and investment sales globally in 2008, and can be found here.

NAI Global closed $42 billion in leasing and sales last year, tying with Colliers International. NAI Global manages a network of 5,000 professionals and 325 offices in 55 countries throughout the world.

NAI NBS Offers Accelerated Marketing Program to Help Property Owners and Financial Institutions Dispose of Troubled Real Estate Assets

NAI Norris, Beggs & Simpson is participating in the Commercial Property PowerSale™, an Accelerated Marketing Program created by NAI Global to help property owners and financial institutions dispose of troubled real estate needs. More than 50 properties, valued in excess of $150 million and located in states, will be auctioned off during the first Commercial Property PowerSale™ on May 1.

The Commercial Property PowerSale™ employs a variety of accelerated marketing techniques that have proven effective in previous economic cycles when traditional sales channels are gridlocked. Property owners will have the option of offering their property for sale via a series of live online auctions, sealed bids or a unique combination of the two formats. Properties in the Commercial Property PowerSale™ benefit from an aggressive marketing campaign that includes focused print, broadcast and electronic advertising, and a direct-to-buyer outreach to more than 175,000 active buyers. Sellers are assured a shortened sales process and a date certain sale schedule. The three program options – Auction Marketing, Sealed-Bid and Sealed-Bid Plus™ – set up a competitive bidding environment that creates urgency, forcing buyers to act immediately.

The program is open to both private and institutional owners and will include the sale of both commercial real estate equity and loans. Sellers can submit an individual asset or an entire portfolio, and property types will include everything from office, industrial, retail, hospitality and multifamily properties, to residential subdivisions and land for development. Both performing and non-performing commercial real estate loans may also be offered for sale. The NAI team will evaluate each property and guide the seller through the program process, helping them to choose the sales vehicle that best suits their needs.

Find more information about the Commercial Property PowerSale™ here.

NAI NBS First Quarter Economic Report

National Highlights

President Barack Obama took immediate economic policy action after his inauguration in January. A $787 billion stimulus package, passed in mid-February, includes tax cuts for most Americans, increased unemployment benefits, and funds for infrastructure projects, education and health care. In addition, a $75 billion mortgage assistance program aims to help up to 9 million Americans refinance their homes or avoid foreclosure.

The government is also taking steps to mend the nation’s financial system. Treasury Secretary Timothy F. Geithner revealed some details of a financial system reform, which would provide the government with more power to intervene in non-bank financial institutions. The major stock markets gained 500 points with the news of this plan on March 23, whereas in late February and early March the markets had fallen to lows not seen since 1997.

National unemployment numbers continued to be discouraging. Unemployment rose to 8.1% in February, the highest it’s been since 1983. Major employers across many sectors, from Nissan to Caterpillar to Home Depot to Sprint Nextel, slashed thousands of jobs.

But after months of disheartening news, a few economic indicators showed positive signs this quarter. Sales of existing homes grew 5.1% in February, according to the National Association of Realtors, and 30-year mortgage rates have fallen to 4.85%, the lowest level since 1971. Orders for durable goods also increased 3.4% in February, according to the Commerce Department, which was better than expected. And consumer spending rose 1% in January and .2% in February after months of considerable declines.

Local Highlights

State unemployment rose to 10.8% in February, with 9.6% unemployment in the Portland Metropolitan Area. Two major Portland-area employers, Oregon Health & Science University and Intel, each laid off up to 1,000 people this quarter. However, Intel announced that it will invest $1.5 billion at Intel Oregon during 2009-2010. Oregon will also benefit from stimulus measures. Go Oregon!, a state stimulus package, will provide $175 million for infrastructure projects, and federal stimulus funds include $76 million for public transportation and $334 million for road and bridge repairs.

Portland’s bid for a Major League Soccer team was the talk of the town this quarter. The Timbers gained approval to move up to the majors in 2011 with the franchise fee paid by owner Merritt Paulson. If funding can be acquired, the Timbers will play at an upgraded PGE Park, and the minor league Beavers baseball team will move to a new stadium in the Rose Quarter. City leaders and stakeholders are also working on renewing the Rose Quarter and surrounding area as a year-round destination for entertainment and dining, not just sporting events.

Multifamily Market Still Healthy, But Product Sales Down

Overview

Multifamily vacancy crept up a bit to 4.96% in the First Quarter 2009. For comparison, the overall vacancy rate a year ago was 3.80%. The Clackamas/Oregon City/Milwaukie submarket had the highest vacancy at 6.00%, nearly two percentage points up from last quarter. Vancouver’s vacancy decreased more than a percentage point, however, to 4.81%. Southwest Portland had the lowest vacancy at 4.28%.

Average rental rates in all apartment types rose slightly, between $2 and $5, during First Quarter. The Downtown Portland and Wilsonville submarkets saw significant price increases in certain apartment types. The price of a 2 BR/2 BA unit downtown increased by $26 to $1,800, and a 3 BR/2 BA in Wilsonville rose by $18 to $868. The overall average to rent an apartment in Vancouver was $679, the lowest of all submarkets.

Market Trends

The current economic stress is evident in the multifamily market. Vacancy rates are increasing in suburban markets, including Vancouver and free rent incentives are now common, driving down effective rental rates. We expect to see this trend for the balance of 2009.

Many experts today view multifamily as the most stable product type and the one least affected by the uncertainties in this downturn, though the uncertainty has affected sales activity. Product sales were down dramatically in 2008, and we expect this to continue throughout 2009. It’s difficult to determine where values will settle, but going forward, they will be determined based more on tried and true methods like cash-oncash returns, driven by real numbers and interest rates, rather than specific pro forma models. Cap rates will be calculated more conservatively with much more scrutiny on underwriting, in-place income, historic performance, cost of capital and market stability.

The federal stimulus package got off to a bit of a bumpy start and its impact is still unknown, but it is encouraging to see economic stimulus action being taken, and investors may have some reason to be optimistic. Smaller, local banks will benefit from the stimulus, allowing them to clear the overhang of single family development inventory by extending lower interest rate loans. Low mortgage rates, along with the $8,000 tax credit for first-time home buyers, are stimulating the balance of the single family market and sales are picking up for homes under $350,000. On the multifamily side, Fannie Mae still has the lowest rates, but these rates come with more scrutiny on the borrower and property.

The full report is available on our Web site.

Vacancy Increases in Tough Retail Market, But Retailers Adapting

Overview

Vacancy in the Portland Metropolitan Area retail market increased during First Quarter to an overall 6.5%, with a negative absorption of 264,390 sf. Every submarket except two showed increases in vacancy of at least half a percentage point. Central City stayed relatively stable from last quarter at 8.2%, with a few thousand feet of negative absorption and considerable movement in small spaces.

The Eastside retail market was 5.6% vacant with a negative 40,226 absorption, largely due to Circuit City closing its 42,555 sf store at the Jantzen Beach Supercenter. Southwest Retail had the highest negative absorption at 82,341, with substantial space available at Canyon Place Shopping Center in Beaverton and Washington Green Shopping Center in Tigard near Washington Square. Vancouver vacancy increased more than a percentage point to 7.9%, with considerable negative absorption in spaces under 10,000 sf.

Noteworthy News

National retail sales last quarter were better than expected, with a 1.8% gain in January and only a 0.1% drop in February. Though these numbers were an improvement over months of declines, they don’t necessarily signal a turnaround, and many retailers are taking serious measures to cut costs. One trend is tenants, including large, national chains, renegotiating leases. Pier 1 has begun talks with landlords to reduce rents and says it will close up to 80 stores if it can’t cut enough costs, while retailers like Gap and Finish Line are attempting to cut down on store square footage.

Retailers around the country are using creative strategies to adapt to the new retailing environment. Promotions and special sales can reel in frugal consumers, and one restaurant in the area is going a step further than traditional sales or specials. The Blue Sage Café, with locations in Lake Oswego and West Linn, ran a special promotion for a few weeks (which may be extended) that allows restaurant-goers to choose how much they want to pay for an entrée.

Another tactic is to cut back hours or days of operations. Westfield Vancouver Shopping Center, for instance, is opening half an hour later and closing half an hour earlier on weekdays. Kitchen Kaboodle, locally owned with five locations in the metro area, is completely closing its stores three days a week.

Bankruptcy filings have become more common in this recession, and local retailers aren’t immune. Joe’s Sports & Outdoor, previously G.I. Joe’s and based in Wilsonville, filed for Chapter 11 bankruptcy in early March and explored its reorganization options, including seeking a buyer for the company.

The full report is available on our Web site.

PDX Industrial Vacancy Increases, But Some Positive Signs

Overview

Industrial market vacancy increased less than a percentage point to 12.95%, with a negative absorption of 159,471 sf. Vacancy in Southwest I-5 increased about 5 percentage points to 11.22%, partially because 278,920 sf at the new Commerce Park came online. Absorption in Southwest I-5 was a negative 195,907 sf, due in part to 49,900 sf vacant at Nelson Business Center, previously occupied by DHL, and 130,000 sf vacant space at Lakeview Business Center. North/Northeast vacancy decreased to 16.19%, with one tenant leasing 151,050 sf at Rivergate Corporate Center III and OIA Global Logistics expanding by 60,102 sf at Bybee Lake Logistics Center.

Flex market vacancy increased slightly to 13.63%, with a negative 47,392 sf absorbed. Vacancy in North/Northeast decreased nearly 6 percentage points to 9.76%, with CentiMark Corporation leasing 8,831 sf at Columbia Gorge Corporate Center, and other smaller spaces leased up. Vancouver flex vacancy increased to 12.93%, with nearly 16,000 sf newly vacant at Columbia Tech Center.

Market Trends

First quarter 2009 saw a multitude of strategies for dealing with the economic recession in the industrial market. The increased vacancy and negative absorption indicate that tenants are downsizing and right-sizing, putting considerable space back on the market. Other users of industrial space took a wait-and-see approach, holding steady while putting off making long-term decisions.

We are seeing some companies investing in facilities in the area, while others are even expanding and planning for growth. Just weeks after Intel said it will close its Fab 20 plant in Hillsboro later this fall, leaving about 1,000 people jobless, the company announced that it’s investing $1.5 billion into improving two other plants in Hillsboro. The Port of Vancouver bought 110 acres on NW Lower River Road to expand its current facilities. SolarWorld, which opened its nearly 500,000 sf solar manufacturing facility in Hillsboro last October, will build a new 210,000 sf building on the campus to be finished in November. Oregon provides tax incentives for solar companies, meaning more of them are putting down roots here and requiring industrial space.

The full report is available on our Web site.

First Quarter Portland Office Report Shows Rising Vacancy

Central City office vacancy rose to 10.46%, with negative absorption of 162,069 sf. The Central Business District had 10.61% vacancy, with a tight market for Class A space. Northwest’s vacancy rose to 12.85% overall, largely due to the 68,538 sf Machine Works building sitting entirely vacant. Although, this area also saw considerable leasing activity. Law firm, Ater Wynne leased 36,276 sf at The Lovejoy, which came online this quarter. Northwest Evaluation Association announced it will move from its current Lake Oswego offices to occupy the entire 104,000 sf Port of Portland Building in 2011.

Suburban vacancy increased to 17.32%. One consequence of the economic climate is sublease space is becoming more prevalent, and when taking that into account, the vacancy rate is 19.56%, with -122,161 sf absorbed. Vacancy in Lake Oswego/West Linn increased to 15.81%. Southern 217 also saw a significant rise in vacancy, partially because new buildings were added. All 96,870 sf at Triangle Pointe (formerly the Farmer’s Insurance Building), which got a new owner in late 2008, is currently vacant and the building is being remodeled. Kruse Way vacancy fell by about 1.5 percentage points, and EthicsPoint leased 22,654 sf at 6000 Meadows.

Vancouver vacancy fell more than a percentage point to 16.11%, with 62,242 sf absorbed. More than half of that absorption was in Class A space, with some sizeable leases. Seton Catholic High School took 13,938 sf at Sunrise Professional Plaza and Office Ally leased 10,993 sf at McGillivray Place. Vacancy in Class B space was 22.75%, but Vancouver Square saw significant absorption with the American Red Cross leasing 9,480 sf and the U.S. Veterans Affairs Department taking 8,280 sf, both in Building 3.

The full report is available on our Web site.

Borlaug Named to Portland Business Journal's "40 Under 40"

NAI NBS' Jeff Borlaug has been selected as a Portland Business Journal "40 Under 40" award recipient. A reception last night at the Armory honored Jeff and the other award recipients, and a special section featuring all of them appears in today's paper.

"40 Under 40" recognizes young professionals who are notable for career achievement and community involvement. Since joining the company in 2000, Jeff has built an impressive client list and become one of the top sales and leasing agents for office and flex space in the city. He was NAI NBS' Number One Top Producer in 2008, and was also promoted to Vice President/Director of Brokerage.

Find out more about Jeff in the PBJ profile.