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PORTLAND-One of Portland’s largest, most creditworthy office tenants has started testing the waters as the end of its current lease draws near, and given the current market there are probably a whole lot of incentives being offered up to try and attract them.

Automatic Data Processing, the 115,000-sf anchor of the 181,000-sf ADP Plaza office building in Downtown Portland, has CB Richard Ellis negotiating with the representatives of ADP Plaza and at least three other building owners in order to take advantage of the current depressed marketplace.

CBRE’ s Nathan Zoucha, a Portland-based broker working with Senior Director Robair Reichenstein out of the New York office, confirms for GlobeSt.com that ADP has a lease expiring Dec. 31, 2004 and is looking to seal a new deal in the near future with either its existing landlord–an Indonesian group represented by Gary Griff and Scott Madsen of Cushman & Wakefield–or with the owner of another building in the area. “We’re looking at buildings able to bridge that gap with free rent or existing tenants,” says Zoucha.

One top relocation option, says Zoucha, is Qwest Communications’ 292,000-sf building at 421 SW Oak St. in Downtown Portland, which is currently being marketed for sale by Grubb & Ellis along with the rest of Qwest’s local portfolio. Zoucha says ADP is pondering a deal with Qwest in which a downsizing Qwest would phase itself out of some of the space as ADP phased itself in–without ADP having to pay double rent.

Another top option is Columbia Tech Center, a 500,000-sf PacTrust-owned building in Vancouver, Wash. that is currently occupied by Consolidated Freightways, which is being liquidated. That could be attractive not only because of less expensive rent but also because ADP has about 60,000-sf in a PacTrust-owned building in Clackamas such that PacTrust could tear up and consolidate ADP at Columbia Tech Center. As well, Clark County’s economic development division may be able to offer other significant incentives, and parking would likely come free with the deal.

Real estate experts around town say a tenant with the size and credit worthiness of ADP could get some very attractive offers in the way of free rent, moving expenses and tenant improvement dollars. They also describe ADP’s window shopping as somewhat predictable. “A lot of larger Downtown tenants are in the market examining their options in an attempt to make sure they are getting the best deal they can possibly get when renegotiating their lease with their existing landlord,” one local expert tells GlobeSt.

The law firms Schwabe Williamson & Wyatt and Miller Nash are prime examples. Both flirted with owners of office buildings existing and planned earlier this year before signing new deals with their existing landlords at better rates than they had been paying. ADP’s current lessor no doubt knows what the law firms knew: it’s much easier to stay put because it’s expensive to move and otherwise a general pain in the butt, with unwanted downtime, unexpected costs and potentially the loss of skilled employees who quit because they don’t like the new location.

“The existing landlord will understand that,” one local expert tells GlobeSt. “So let’s say they have an offer on the table that’s 20% less than what’s be offered by their existing landlord. The existing landlord isn’t going to match it, because he knows the tenant has costs as well, so maybe the existing landlord counters with a 10% discount.”

Still, the owners of ADP Plaza have a lot to lose two years from now if they don’t keep ADP happy now by drafting a new lease at a lower rate. Just the tenant improvement cost to attract new tenants could run them well over $2 million, sources say, not to mention the cost of advertising and commissions and, worse yet, empty space.

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