Investors Stick with Tried-and-True Formula
Heartline’s office and retail unit sold to Intercontinental Real Estate Corporation on behalf of its managed fund, US Real Estate Investment Fund LLC; the seller was Security Properties Development Co.
PORTLAND, OR—Heartline Condominium is part of a master-planned mixed-use residential and commercial development spanning an entire city block. The newly constructed 72,130-square-foot boutique building is located at 1241 Northwest Johnson St. in the Pearl District, the destination live-work-play neighborhood.
Heartline takes its cues from recent adaptive reuse projects in Portland that offer the same allure. This brick-clad wood structure echoes the historic warehouses of the Pearl District, while featuring exposed wood beams inside, operable windows for natural ventilation and the innovations of an office building completed in 2018.
The property features outdoor seating along Northwest 13th Avenue. The historic loading areas have a dock along the length of the street that was designated a National Historic District in the 1980s.The development incorporates a landscaped mid-block connector featuring a full-sized bocce ball court.
Most recently, the office and retail unit of the property sold to Intercontinental Real Estate Corporation on behalf of its managed fund, US Real Estate Investment Fund LLC. The seller was Security Properties Development Company. The price was undisclosed.
The recently sold portion encompasses 61,659 square feet of office space and 10,471 square feet of retail space. The office portion of the five-story property is 100% net-leased to vacation home manager, Vacasa, on a long-term basis.
Heartline’s retail is integrated into the urban fabric of the Pearl District, attracting a high caliber of retail tenants. Ground-floor retail tenants include Kure Juice Bar, Little Bean and QuickFish Poke Bar.
Newmark Knight Frank vice chairman Nick Kucha and directors James Childress and Bill DeLacy represented the seller. Kucha said the sale of Heartline is a testament to the strength and desirability of Portland’s Pearl District, along with the quality of the asset.
“Portland’s commercial real estate market continues to benefit from a historically low unemployment rate, a highly educated population and a growing tech presence,” Kucha tells GlobeSt.com. “As one of the leading secondary markets on the West Coast, investors are attracted to the discount Portland offers compared to the coastal gateway cities in the US.”
Childress concurs, saying the “offering was well received due to the strong fundamentals of the submarket and the current investor demand for assets with long-term leases and a durable income stream.”
Portland’s inventory of office space totaled 60,354,139 square feet at the end of 2018, up 68,982 square feet from the third quarter and up 1.45 million square feet from a year ago, according to a fourth quarter 2018 report by Newmark Knight Frank. Adding sleek new office space to the inventory pushed the average asking rent up by $1.84 per square foot from the end of 2017.
Overall, Portland’s absorption totaled negative 209,365 square feet this quarter, although negative 188,365 square feet was attributable to move-outs for the renovations of Exchange Block (formerly the Wells Fargo Annex), 830 Oregon Square and Aircraft Factory. New office space under construction fell to 577,824 square feet in the fourth quarter, compared with 1.02 million square feet last quarter and 1.08 million square feet at the end of 2017.