First Quarter Reports Show Some Improvement for Portland CRE

NAI Norris, Beggs & Simpson has released its First Quarter 2011 quarterly reports for office, industrial, retail and multifamily commercial real estate, as well as its economic report.

Central City office vacancy rose slightly to 12.41 percent during First Quarter. The biggest office news downtown was the $129 million sale of Shorenstein’s First & Main to American Assets Trust. Suburban office vacancy also rose slightly, to 24.13 percent.

Industrial vacancy rose nearly a percentage point to 15.94 percent, with 529,020 sf newly available. Vacancy especially increased in North/Northeast, up to 18.94 percent, as a number of tenants vacated large spaces. But positive signs included Subaru’s build-to-suit lease at Rivergate Corporate Center III.

Retail vacancy remained fairly stable at 6.3 percent. Vancouver is seeing considerable retail activity, including a new Cinetopia under construction at Westfield Vancouver Mall and the recently-announced New Seasons in Fisher’s Landing, opening this October.

The multifamily market has seen recovery more quickly than other property types. Apartment vacancy was 2.74 percent during First Quarter, down from a peak of 5.43 percent during Fourth Quarter 2009. The multifamily investment market remains a bit sluggish, though the institutional market is more robust. The construction pipeline has also started to heat up.

Merino Takes Number Four Top Producer of 2010 Spot

Industrial broker Michael Merino, who has achieved the respected CCIM and SIOR designations, is NAI NBS' Number Four Top Producer of 2010. A frequent and consistent member of this list, he is actively involved in conducting business through the NAI Global Network. Some of his highlights of 2010 were representing Precision Elite Gymnastics in a 34,000 sf lease in Clackamas, and serving as a landlord rep in XO Communications’ 31,000 sf lease at Cascade Business Center.

Some Positive Signs for PDX Commercial Real Estate During Fourth Quarter

NAI Norris, Beggs & Simpson has released its Fourth Quarter 2010 quarterly reports for office, industrial, retail and multifamily commercial real estate, as well as its economic report.

Office vacancy in Central City decreased to 11.78%, with a few significant leases. Suburban office vacancy fell slightly to 23.88%, with 121,056 sf absorbed. One of the larger leases of the quarter was ACS taking 30,656 sf at Triangle Pointe for a new call center. Vancouver office vacancy rose slightly to 18.7%.

Industrial vacancy fell slightly to 15.01%, with 108,375 sf absorbed. As one recent study showed, the industrial sector is a bright spot in Oregon’s economy, and the Port of Vancouver has recently seen heightened activity with BHP Billiton’s 60-acre lease.

Retail vacancy was stable at 6.4%, with 81,081 sf absorbed. The area’s first H&M opened in November at Pioneer Place, and H&M also leased nearly 20,000 sf at Washington Square. Ross Dress for Less and Dick’s Sporting Goods also signed significant leases during Fourth Quarter.

The Fourth Quarter ended with a flurry of multifamily investment sales. The $79 million sale of Ladd Tower and $70 million sale of the Palladia Apartments were just two of the significant sales of the quarter. Apartment vacancy also fell to 3.09%.

Full reports can be accessed here.

Third Quarter Market Reports for PDX CRE: Signs of Improvement in Multifamily, Central City Office Markets

This week we released our Third Quarter 2010 quarterly reports for the Portland metro area. There's no doubt that we're still seeing the impact of the recession, but there was certainly some good news, too.

Office vacancy in Central City decreased to 12.13% with 282,442 sf absorbed, thanks to large leases at First & Main and the Meier & Frank Depot Building. Suburban vacancy remained stable at 24.06% with about 4,000 sf absorbed, the first positive absorption in the suburban office market since Third Quarter 2008.

Industrial vacancy was stable at 15.22%, with about 10,000 sf absorbed. A few large transactions occurred, including PFX Pet Supply leasing 70,000 sf at Columbia Corporate Park I in North/Northeast.

Retail vacancy decreased to 6.5%, and a few projects broke ground, including the 215,000 sf Progress Ridge Town Square between Tigard and Beaverton. Retail sales were up in August and September with the help of a strong back to school shopping season.

Multifamily was a bright spot during Third Quarter. Vacancy fell to 3.65%, the lowest it has been since Second Quarter 2008. The multifamily investment market also showed increased activity, especially for properties developed as condominiums and converted to apartments.

A PDF of all the reports can be found here.

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.

Three NAI NBS Brokers Earn CCIM Designation

NAI NBS' Neville Bassett (Portland), Doug Bartocci (Vancouver), and Garret Harper (Vancouver) have obtained the Certified Commercial Investment Member (CCIM) designation.

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 percent 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.

To attain the CCIM designation, each broker completed four core courses, an ethics course and three elective credits, prepared a portfolio and passed a comprehensive exam.

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.

NAI NBS Earns CoStar Power Broker Awards for Performance in 2009

NAI Norris, Beggs & Simpson made a strong showing in the 2009 CoStar Power Broker Awards.

For the fifth consecutive year, NAI NBS was named a top leasing and sales firm in the Portland metropolitan market.

CoStar said in an article about the awards:

"Given the extreme economic conditions in 2009, last year was one that many in the commercial real estate would just as soon like to forget. Every commercial real estate broker who managed to secure a lease or arrange a building sale during the year probably deserves an award.

The ones who excelled under those conditions and achieved the highest transaction volume in commercial property sales and leases last year in their respective markets are especially deserving of industry-wide recognition. Which is why CoStar is especially pleased to present the 2009 CoStar Power Broker Awards, singling out those who persevered and earned the right to be called one of the 'best of the best' in commercial real estate brokerage."

A number of NAI NBS brokers earned individual awards:

• Top Office Leasing Brokers: Jennifer Medak and John Medak
• Top Retail Leasing Brokers: Gina Barendrick and J.J. Unger
• Top Industrial Leasing Brokers: Michael Merino and Scott MacLean
• Top Sales Brokers: Chris Johnson, MaryKay West and Robert Black

Visit the Power Broker website for the entire list.

NAI NBS Takes Home Three CAR Awards

NAI Norris, Beggs & Simpson had a strong showing at the 2010 Commercial Association of Realtors (CAR) Awards Dinner last night at the Governor Hotel. The theme of the evening was “Building a Healthier Future,” and NAI NBS' Jeff Borlaug, the 2010 CAR President, emceed. NAI NBS' winners were:

-President Clayton Hering was named Co-Humanitarian of the Year. He is active in a number of charitable organizations, including the Oregon Symphony and Business for Culture and the Arts.
-Executive Vice President Chris Johnson was named Investment Broker of the Year.
-Associate Vice President Garret Harper (also NAI NBS' Top Producer of 2009) was named Industrial Broker of the Year.

We also had several runners up: Pam Lindloff for Retail Broker of the Year, Gina Barendrick for Rookie of the Year, and Jennifer Medak and John Medak for Office Broker of the Year. An insert in today's Portland Business Journal featured all of the winners and runners up.

CAR offers education, provides government advocacy and creates opportunities for commercial real estate professionals to connect and grow their business.

NAI Global's Global Market Report Details Challenging 2009

Commercial real estate markets around the world experienced the full impact of the global economic recession in 2009, according to the 24th annual Global Market Report released by NAI Global. Rising vacancy rates and declining rental rates were evident in virtually every market sector and geography, with weak demand and a growing supply of sublease space further eroding market fundamentals.

After a turbulent 18-24 months since the market peaked, 2009 marked a year where transaction volume nearly came to a standstill as corporate tenants waited for clear signs of recovery and investors remained on the sidelines waiting for signs the bottom has been reached. As the year progressed, government intervention in the form of stimulus packages in the U.S., Europe and parts of Asia took hold and by year’s end many markets had begun to stabilize. However, with U.S. unemployment topping 10%, consumer demand and spending power at their lowest levels in decades and international manufacturing and trade proceeding at a crawl, the global recovery will take some time to truly stimulate economic growth.

“The past year was extremely challenging for commercial real estate, and we don’t anticipate much new demand in 2010,” said Jeffrey M. Finn, President & CEO of NAI Global. “We’re working with our corporate clients to help them take advantage of the current tenants’ market to reduce their long-term occupancy costs. Many tenants are able to negotiate more favorable lease terms today in exchange for a longer commitment. This ‘extend and blend’ practice is a trend we see continuing well into the next 18-24 months.”

Investors who have been sidelined by economic uncertainty will see tremendous acquisition opportunities in the coming year as banks and financial institutions clean up their balance sheets and move more aggressively to dispose of commercial real estate loans and financially distressed real estate assets, said Finn.

“The recession has been over for six months and job growth is just months away, but the fact remains it will be impossible to predict what will happen next,” added Dr. Peter Linneman, NAI Global Chief Economist and Principal at Linneman Associates. “With significant tax, healthcare and regulatory proposals still in the offing, there is little clarity as to the ultimate outcomes or costs. We’re concerned with commercial mortgage delinquency rates as they have been on the rise and could keep the commercial real estate industry in neutral for several more months.”

NAI Global is one of the largest real estate services providers worldwide. Headquartered in Princeton, New Jersey, NAI Global manages a network of 5,000 professionals and 325 offices in 55 countries. Now in its 24th year, NAI’s Global Market Report offers insider insight and perspective on market conditions reported by NAI experts on the ground in over 200 property markets worldwide. To obtain a copy of the full report, contact psetaro@naiglobal.com.

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.

MacLean Takes Number Four Top Producer of 2009 Spot

Industrial broker Scott MacLean is NAI NBS' Number Four Top Producer of 2009. MacLean has appeared on this list multiple times during his 13 years as an industrial specialist with NAI NBS. In 2009 he was involved in 54 deals valued at $27 million. He helped 24/7 Inc. lease 50,000 sf in NE Portland, and represented the seller in the $2.85 million sale of an 80,000 sf warehouse on SE Belmont. MacLean is on the NAIOP Board of Directors.

Industrial Broker Dodds is Number Five Top Producer of 2009

Steve Dodds was NAI NBS' Number Five Top Producer of 2009. Dodds has been with NAI NBS for 25 years, and participated in 11 deals valued at more than $22 million during 2009. He represented the buyer in the $8.3 million purchase of Quad 205 Business Park in Vancouver, and helped Benson Industries lease 56,000 sf on NW Yeon.

Portland Industrial, Retail Vacancy Decreased During Fourth Quarter, NAI NBS Reports Show

NAI Norris, Beggs & Simpson has released its Fourth Quarter 2009 quarterly reports for office, industrial, retail and multifamily commercial real estate, as well as its economic report.

Office vacancy increased slightly to 11.81% in Central City and 20.95% in the suburban areas. The Northwest submarket saw some activity – the 87,976 sf redevelopment Soho 321 delivered, and a few leases were signed at Machine Works. Vancouver vacancy was flat at 18.56%, with positive absorption of 22,488 sf.

Industrial vacancy decreased to 14.85%, with 55,308 sf absorbed. This was the first positive absorption since Third Quarter of 2008. A number of sizeable leases were signed in North/Northeast, including MOR Furniture for Less leasing 156,000 sf at Kelley Point Distribution, and Rose City Printing & Packaging leasing 62,000 sf at Sandy Boulevard Business Park. Flex vacancy rose slightly to 16.16%.

The retail market saw some improvement this quarter as vacancy decreased more than half a percentage point to 7.4%, with 349,919 sf absorbed. The 140,000 sf Cascade Station Target delivered, and better than expected holiday retail sales results were encouraging.

Multifamily vacancy rose nearly a percentage point to 5.43%; a seasonal uptick in vacancy is to be expected, but this rise was more significant. Rents were largely flat. While multifamily permitting and construction is down, opportunities exist for developers to acquire buildable land at substantially lower prices. Yet barriers to development include lack of capital and uncertainty of future rental rates.

Click here for full reports.

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.

Neville Bassett Joins NAI NBS Industrial Team

NAI Norris, Beggs & Simpson has added Neville Bassett as a Real Estate Broker on the industrial team in Portland.

Most recently, Bassett was a Senior Account Executive in Business Property at GE Capital. In this position he sourced and closed commercial real estate loans, closing 43 transactions valued at $120 million between 2005 and 2009. His career at GE Capital spanned 15 years. He also has experience in commercial equipment finance and sales management.

Bassett holds a BS in business and economics from Eastern Oregon University, and is a licensed broker in Oregon. He is actively working toward achieving the Certified Commercial Investment Member (CCIM) designation.

Bassett's resume and contact info can be found here.

NAI NBS Releases Third Quarter Reports

NAI Norris, Beggs & Simpson has released its Third Quarter 2009 quarterly reports for office, industrial, retail and multifamily commercial real estate, as well as its economic report.

Office vacancy in Central City rose slightly from the previous quarter to 11.12%, with -272,692 sf absorbed. Two Class B buildings in Northwest were major contributors to this rise in vacancy and negative absorption. Vacancy in the suburban office markets rose about a percentage point to 20.59%, and Vancouver office vacancy rose to 18.42%.

Industrial vacancy increased to 14.94%, with -531,805 sf absorbed. One positive sign for the industrial market this quarter was Daimler Trucks North America’s decision to keep its Swan Island plant open. The plant had previously been scheduled to close in June 2010.

Vacancy in the retail market rose to 8.0%, with 365,818 sf newly available. The closure of all Joe’s Sports & Outdoors stores helped contribute to the increased vacancy, but Dick’s Sporting Goods leased a few previous Joe’s locations in the metro area.

Multifamily vacancy decreased slightly to 4.64%, which can partly be attributed to more tenants being active during the summer months; some landlords offered rent concessions and other incentives to attract tenants. Multifamily rental rates rose slightly.

A PDF of all of the reports can be found here.

NAI NBS Named a CoStar Power Broker for Leasing and Sales in 2008

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.

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.

VBJ Article Provides Commercial Real Estate Update for Clark County

The Vancouver Business Journal ran a story Friday exploring the present state of the commercial real estate market in Clark County. The article suggested that lease rates are decreasing and vacancy is going up, but that there are some positives. For instance, retail vacancy has increased, but it could have gone up quite a bit more. NAI NBS' Pam Lindloff, a retail specialist, and Garret Harper, who focuses on industrial leasing and sales, were interviewed for the article. You can find it here.

NAI NBS tracks vacancy and construction in Clark County for office, retail, industrial and multifamily properties. Our Second Quarter 2009 reports will be posted on this blog and on our Web site by mid-July.