City County Insurance Services has purchased the 13,593 sf office building at 11625-11675 SW 66th Ave. in Tigard for $2.25 million. NAI Norris, Beggs & Simpson's Chris Johnson, MaryKay West and Charlie Floberg represented the seller.
The building was constructed in 1963 and is close to I-5 and Pacific Highway. It sits on more than an acre of land.
Check out Costar's coverage of the sale here.Robert Black
, Associate Vice President, NAI NBS
Portlanders may be noticing more “For Rent” signs on apartment buildings around the city this summer, one of the more noticeable signs of how this recession has affected the apartment market. Apartment vacancy is rising across the metro area and multifamily investment sales are down, but the Portland market will recover from this economic downturn and be well-positioned for a comeback.
NAI Norris, Beggs & Simpson’s Second Quarter 2009 reports show a slight increase in apartment vacancy from the previous quarter to an overall 5.03 percent; this report only surveys select apartment complexes with more than 100 units, so vacancy across complexes of all sizes could likely be a bit higher.
The increase in vacancy doesn’t mean that people are moving out of the city. In fact, the Portland metro area’s population has been increasing in recent years. The U.S. Census Bureau estimates that Multnomah County’s population rose 2.2 percent in 2008, and that the greater Portland area’s population reached 2.2 million people last year. Portland’s relatively low cost of living, in addition to diversified job prospects and plentiful outdoor activities, continue to attract new residents.
So where are the renters living, if they’re not leaving Portland? Many of them are doubling up in apartments, moving in with family, or renting single-family homes. Though Portland unemployment decreased slightly to 11.6% in June, renters are still concerned about job security and layoffs, so they are taking any steps they can to save money.
Some tenants are also choosing to purchase homes. With median home sale prices down 13.8 percent from this time last year, an $8,000 first-time home buyer tax credit from the federal government and historically low interest rates, buying a home is becoming an option for more people.
Landlords are doing everything they can to attract the fewer active renters in the market. Concessions today in certain submarkets are sizeable, including up to two months free rent on a 13-month lease for some new properties in the downtown area. Renters looking for a new place to live are shopping around for the best deals they can get, and existing tenants are also tuned in and looking for bonuses to extend their leases on expiration.
The Portland-area submarket that everyone is keeping an eye on is downtown. Downtown has seen a building boom over the past five years, and with the condominium market softening at the end of 2007, developers looked for conversion options for projects proposed and under construction.
What resulted was one of the largest deliveries of new units the market has ever seen. Between February 2008 and today, the market added about 2,030 new units in the Central Business District (CBD), according to NAI NBS’ research, with another 450 units under construction delivering between fall 2009 and spring 2010.
This may seem like a large number, but there’s a reasonable explanation. From 2003 to 2007, more than 1,500 existing apartment units in the CBD were actually converted into condominiums. This loss of rental units helped drive the surge in the CBD apartment market, and when the new units began delivering in early 2008 the CBD had strong fundamentals, with the largest historic rental rate growth and vacancy below 3 percent.
If history is our guide in estimating demand for CBD apartments, it will take time to absorb the new product, but once the market stabilizes, in about 24 months, vacancy will tighten and rent growth will return, since there will essentially be no building in the remainder of 2009 and 2010.
Vacancy in the suburban markets is increasing, but because much construction of the past few years occurred nearer to the city’s core, they are well-positioned for when tenants become more active again. And when this happens, the suburbs will likely be underbuilt, driving demand and pushing rental rates back up to 2008 levels and beyond.
Multifamily investment sales have been seriously affected by the recession. The Portland metro area has seen approximately $137 million in apartment sales so far this year through the end of July, according to data gathered from CoStar, a commercial real estate information company. That figure for January to July of 2008 was around $656 million. This equates to a nearly 80 percent drop in sales.
2008 was a record year for apartment sales, and one critical component to the sales volume that year was the number of institutional sales, which we define as sales valued at $20 million and above. In 2008, $380 million worth of transactions was in individual sales over $20 million, while thus far 2009 has produced just one transaction above $20 million. When we omit the institutional transactions, the volume in 2009 compares more favorably, at about 43 percent of the volume in 2008.
Despite the impact of the recession on the apartment market, Portland is in a good position for the upswing. U.S. News & World Report recently named Portland and its commercial market one of the ten cities “primed for a real estate recovery,” due to its green economy and overall economic health. When the job market and overall economy starts to improve, Portland’s multifamily market will be in a strong position for a rebound.
NAI Norris, Beggs & Simpson has been named a CoStar Group Power Broker top leasing and sales firm in Portland, OR, for the fourth year in a row. Many individual NAI NBS brokers also received recognition:
-Top Office Leasing Brokers: Jeff Borlaug, Chris Johnson, MaryKay West
-Top Retail Leasing Brokers: Gina Barendrick
-Top Industrial Leasing Brokers: Randy Young, Scott MacLean
-Top Sales Brokers: Chris Johnson, MaryKay West
You can find all award recipients for the Portland metro area here.
CoStar Group is a leading information provider for the commercial real estate industry. CoStar tracks data on commercial properties and transactions throughout the U.S., UK and France. The Power Broker Awards are presented annually to the top brokerage firms and individual agents in major U.S. markets based on their leasing and sales transaction activities the prior year.
Tualatin Valley Fire & Rescue has purchased Dartmouth Square, a 38,000 sf office building in Tigard, for $8.2 million. NAI Norris, Beggs & Simpson Executive Vice President Chris Johnson, SIOR, and Vice Presidents MaryKay West, CCIM, John Medak and Jennifer Medak represented the seller, Dartmouth Square LLC.
Dartmouth Square, a three-story Class A building, is at 11945 SW 70th in the Tigard Triangle, close to I-5 and Highways 217 and 99. Tualatin Valley Fire & Rescue was attracted to the location and quality of the building, and will use it for administrative offices.
Dartmouth Square delivered in November 2008 and has been vacant until now.
“We were very fortunate to line up an owner/user such as Tualatin Valley Fire & Rescue in this very challenging, capital-starved real estate market,” Johnson said. “The fact that they were an all-cash buyer made this transaction doable.”
Read CoStar's write-up of the sale here.
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