Portland Industrial Vacancy Increases Slightly in Second Quarter

Overview

Industrial vacancy rose less than a percentage point to 15.24% during Second Quarter, with negative 354,330 sf absorbed. Southeast saw a significant increase in vacancy, to 14.35%, as United Stationers Supply Co. vacated 40,608 sf at Commerce Park – McLoughlin and relocated to 195,510 sf at Rivergate Corporate Center III in the North/Northeast submarket. Vancouver vacancy also increased about four percentage points to 15.44%, and Columbia Business Center had more than 450,000 sf available. Significant leases of the quarter included Consolidated Molding & Millworks leasing 48,000 sf and Stanton Furniture leasing 92,960 sf at 115th Commerce Park in Southwest I-5.

Flex vacancy increased slightly to 18.23%, with negative 23,633 sf absorbed, down considerably from First Quarter’s negative 166,559 sf of absorption. Vacancy in the North/Northeast submarket fell about 5% to 12.09%, and Columbia Gorge Corporate Center saw considerable activity, with Multnomah County leasing 18,150 sf and Pac/West leasing 11,950 sf.

Market Trends

Greenlight Greater Portland, a privately funded economic development group, released a report in June suggesting that manufacturing will be a major factor in Portland’s economic recovery. It predicted that the manufacturing sector could grow by 14% in the next five years.

Renewable energy companies, particularly solar power companies, continue to be active players in the Portland industrial market. Solexant Corp. is expected to receive a $25 million state loan to build a factory in the metro area to develop ultra-thin-film solar cells. The plant would initially employ 100, and could rise to the same capacity as SolarWorld in Hillsboro, which will employ 1,000 by this fall when its expansion is completed. ReVolt Technology, a battery maker, also won a $5 million U.S. government grant that will help it build a Portland plant to develop a battery for plug-in vehicles.

In other major transactions, Farwest Steel will acquire more than 20 acres from the Port of Vancouver for about $5 million. The company will build a $20 to $30 million steel processing and distribution facility that will create 125 new jobs and employ about 200 overall.

The full report is available here.

PDX Industrial Market Looking Up in First Quarter

Industrial vacancy decreased slightly to 14.56%, with 118,458 sf absorbed. Vacancy in North/Northeast remained stable at 17.58%. Some large leases were signed in this submarket, including Owens Corning leasing 123,120 sf at Bybee Lake Logistics Center – Phase II. Ferrotec USA and Archive Systems also signed leases at Birtcher Center @ Townsend Way totaling 81,850 sf. Vacancy in Vancouver decreased about 1.5 percentage points, as 82,800 sf was leased up at Hart Industrial Center, bringing that property to 100% occupancy, and 40,267 sf was leased at Westside Business Center.

Flex vacancy rose nearly two percentage points to 18.01%, with 166,559 sf of newly available space coming back on the market. Much of this space can be accounted for by Intel, which vacated more than 100,000 sf at the Amberglen Business Center in moving back to its headquarters, pushing Southwest Sunset’s vacancy up more than two percentage points to 19.71%. Some positive absorption did occur, though. BiAmp Systems leased 50,963 sf at Nimbus Corporate Center in the Southwest 217 submarket, whose vacancy stayed fairly flat at 17.76%.

Market Trends
The industrial market showed continued signs of a slow but steady recovery during First Quarter. Vacancy in the Portland metro area, though still high, appears to have stopped rising, and construction and new deliveries have been so limited of late that the market isn’t burdened by oversupply. National economic indicators were looking up. Factory orders rose 1.7% in January, the largest increase in four months, with heightened demand for commercial aircraft, and industrial production rose 0.1% in February.

Manufacturers continue to invest in the Portland metro area. LaCrosse Footwear is moving production of Danner boots to a new 59,000 sf factory about a mile from its Northeast Portland headquarters, a facility twice the size of its current plant, which it is replacing. Production is expected to begin there in Third Quarter 2010. Boeing is also investing up to $120 million in upgrading its operation in Gresham, which will add 152 jobs in the next three years. It will build a new 60,000 sf facility on its 87-acre campus where it will treat metals used in making commercial aircraft.

Vancouver Industrial Broker Garret Harper is Number One Top Producer of 2009

Garret Harper, the brokerage department’s Number One Top Producer of 2009 and an industrial specialist, makes his first appearance in the Top 5. He has been with NAI NBS since 2003, and participated in 28 deals totaling $18 million in 2009. A number of his deals were significant sales, including the $5.5 million sale of a 19-acre parcel at Birtcher Business Center to the US Army Corps of Engineers and the $4.23 million sale of a 64,000 sf Vancouver warehouse. He serves as Treasurer of the Evergreen School District Foundation Board.

NAI NBS Represents Buyer in $8.275M Purchase of Quad 205

NAI Norris, Beggs & Simpson Vice President Denis O’Neill and Vice President Steve Dodds represented Spears Real Estate, LLC in the $8.275 million purchase of Quad 205 Business Park, a 108,625 square foot landscaped business park in Vancouver, Wash. NAI NBS also took over building leasing and management in the trade.

The buyers are local private investors and were attracted to the property because of the mix of local and regional companies, according to Dodds. They feel the property has great long-term potential, which they can facilitate through personal attention and quick decision-making.

Built in 1983, Quad 205 comprises four buildings near the intersection of NE 112th and NE 39th Streets in the Orchards area, with easy access to I-205.

“Quad 205 is in a great location on the 112th Avenue corridor and offers high-quality light industrial space with nice office build-outs,” said NAI NBS Senior Salesperson Garret Harper, the leasing agent.

Spaces range from about 1,000 to 10,000 square feet, and some major tenants are Johnstone Supply, Thermal Supply and Automotive Electrical Distribution. Large industrial neighbors include companies like SEH America. Quad 205 has tilt concrete construction, dock and drive-in doors, and plentiful parking.

Portland Industrial Vacancy Rises in Second Quarter, NAI NBS Report Shows

Overview

Industrial vacancy increased nearly a percentage point during Second Quarter to 13.87%, with 515,518 sf coming back on the market. Vacancy in North/Northeast increased substantially to 17.51%. Although there was one major lease, Ernest Packaging took 62,150 sf at PDX Corporate Center South. Vacancy in Vancouver also increased substantially, to 12.30%. Several tenants left Columbia Business Center. Vacancy in Southeast decreased by a percentage point to 10.17%, largely due to Leverage 2 Productions leasing 62,765 sf in two buildings at Clackamas Commons Phase II.

Flex vacancy rose to 15.11%, with a loss of 159,633 sf, and much of the movement in small spaces. The Southwest 217 submarket saw vacancy increase nearly three percentage points to 17.49%, with more than 20,000 sf becoming available at both Creekside Corporate Park and Nimbus Corporate Center. However, Kleinfelder West leased 13,319 sf at Nimbus Oaks – Building C.

Market Trends

Metro, the area’s regional government, released a preliminary urban growth report this quarter suggesting that the Portland Metropolitan Area will require up to 82 million sf of industrial space by 2030, though it also expects manufacturing jobs to continue to decline.

Industrial projects under construction have decreased significantly in recent months, but work continues on one long-awaited project: the FedEx Ground facility in Troutdale. The three building, 415,000 sf facility is expected to be finished in July 2010 and should create 650 new jobs.

Jobs are also being created by adding lanes on nearby South Frontage Road and some additional road projects to prepare for the increase in truck traffic in that area. Transaction volume has slowed considerably, and many industrial sales today are in the $1 million to $5 million range. But Second Quarter had one large, standout transaction: SEH purchased the Vancouver Hewlett-Packard campus for $55 million. SEH, which makes silicon wafers, employs more than 800 people in Vancouver and will use the 4-building, 694,000 sf campus to expand. HP will lease back part of the complex for at least three years. In the works since late 2008, and area leaders hope the sale/expansion will create local jobs.

The full report is available on our Web site.