Office Investors Continue to Target Downtown Portland
With an acquisition strategy that includes downtown Portland, PCCP recently paid $96.5 million for the nearly fully leased asset, Park Square, with a favorable mix of cash flow and credit tenancy.
PORTLAND, OR—Park Square, a two-building 296,000-square-foot office property located on the south end of the Central Business District, was substantially repositioned in 2016. This effort included the renovation of its 8,000-square-foot lobby/great room, which includes multiple seating areas, a fireplace and lounge area.
The two buildings are connected by the renovated lobby/great room. With an acquisition strategy that includes downtown Portland, PCCP recently paid $96.5 million for the nearly fully leased asset.
The first building is the single-tenant six-story 181,049-square-foot Woolworth Building located at 1621 SW 1st Ave. This property was originally a build-to-suit for the tenant that has occupied the space since the building was constructed in 1984.
The second property was built in 1964 and is located at 100 SW Market St. The seven-story asset totals 113,719 square feet and is leased to three investment-grade credit tenants.
“PCCP continues to target downtown Portland as an investment market and this building has a favorable mix of cash flow and credit tenancy in a high quality well-located asset,” said Matt Cochran, vice president with PCCP. “The recent repositioning of the common areas is a great amenity and creates an active and engaging meeting place for the employees.”
Park Square is adjacent to the SW Portland Pedestrian trail, a half-mile tree-lined walking trail that connects SW Market and SW Lincoln streets. Additionally, it is located three blocks from the Tom McCall Waterfront Park with scenic views of the Willamette River, and running and biking trails along the Willamette. Finally, the property benefits from proximity to Oregon’s largest university, Portland State, access to all of Portland’s major freeways and the central business district.
“We’re really excited to close on this acquisition and continue to increase our footprint in Portland, which continues to display strong market fundamentals across multiple asset classes,” Cochran tells GlobeSt.com.
PCCP has engaged the Portland office of Urban Renaissance Group/URG to manage the asset. URG has more than 8 million square feet owned or managed in Portland, Seattle and Denver.
New office construction and redevelopment, primarily within the center of the city, has affected the usual metrics such as vacancy rates and rents. But on a larger scale, it is building upon a renaissance underway in the four mixed-use transit-oriented submarkets of the CBD, according to a first quarter report by Cushman & Wakefield.
Overall office vacancy closed the quarter at 11.1%, up 60 basis points from a year ago, though down 70 bps from the previous quarter. Both the CBD and the suburban markets recorded a decline in vacancy during the quarter, the report indicates.