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PORTLAND, OR-Schnitzer Northwest and Schnitzer Investment Corp. are declaring their latest Kruse Way class A office development complete, albeit not completely leased.

A just finished 80,000-sf office building called 5800 Meadows is the second and final building in the 198,000 sf Meadows development near the Interstate 5-Highway 217 interchange. The new building stands empty, but 6000 Meadows, completed last year, is 96% leased, putting the project’s overall vacancy at about 53%.

Gross asking lease rates for space in 5800 are $29 per sf. Its competition will come mainly from Kruse Oaks I, a nearby 92,000-sf class A office building acquired by Equity Office Properties Trust from Spieker Properties along with 13 other buildings in the corridor.

Kruse Oaks is reportedly about 40% occupied, but much of the first floor is being occupied by the building’s owner and amenities for tenants in all its nearby buildings, such as a health club and state-of-the-art conference rooms. Asking rates on that building were recently lowered from the low $30s to a flat $29 per sf.

With a new flyover at the Highway 217-I-5 interchange having eased traffic congestion in the area, Schnitzer Investment Manager Suzi Morris is calling 5800 alternative to the “congested, claustrophobic, downtown office space leasing mess.”

Norris Beggs & Simpson’s Bill Smith, a 19-year veteran of the local office market and leasing agent for 5800, says the Schnitzers are “highly motivated” to get their first tenant, and the bigger and more financially healthy they are, the better the deal they can likely negotiate.

Based on history, Smith says 5800′s tenants will likely come from an existing suburban space user, as most downtown tenants likely to make the move already have. Just in case, thought, no potential tenant is being ignored at the moment.

Meanwhile, 6000 Meadows, completed last year, is now 96% leased to the likes of Stockkamp Associates (22,450SF), Meritage Mortgage (44,900SF), Videotel (22,450SF), and recent addition Impac Services (1,950SF). Only two, 2,000 SF first-floor spaces remain.

Schnitzer Northwest purchased Meadows while 5800 was still under construction for $40 million from Langley Associates as part of a 1031 exchange from the sale of a three-building 336,400 SF property at its North Creek Office Campus (Bothell, Wash.) to AT&T in June 2000.

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