Seattle Investor Pays Top Dollar for Retail Condo

PORTLAND- Seattle-based Lahka Investment Co. has acquired the 38,000-sf retail portion of the Edge Condominium building in the Pearl District here for $17.95 million, or slightly more than $472 per sf. The seller was Carroll Aspen, a local development company. The building is located at Northwest 14th Avenue and Johnson Street.

About 37,000 sf is leased for the next 14 years to Recreation Equipment Inc., the Seattle-based outdoor gear and clothing chain. The remainder is leased to Countrywide Home Loans. The deal includes 220-parking spaces.

Mark Fraser and Brandon O’Leary of GVA Kidder Mathews represented Carroll Aspen. Mike Horwitz of Capital Pacific represented Lahka.

“The most serious offers came from people in Seattle who understand REI,” Fraser tells GlobeSt.com. “They understand that because REI is a co-op, it virtually cannot be sold, lowering the risk of a corporate takeover by a weaker company.”

Indeed, Horwitz tells GlobeSt.com that Lahka previously owned a building that housed an REI store. Horwitz says Lahka considers the property a core asset in its portfolio.Local industry sources familiar with the offering tell GlobeSt.com that the purchase price translate to a sub 7% cap rate. “Even though cap rates are low, interest rates are still low enough that you can get positive leverage,” says Fraser.

REI is one of only a few retailers in the Pearl District leasing more than 10,000 sf of space. In addition to REI, OfficeMax leases 15,000 sf in Mark Madden’s Lovejoy Square retail development next door to REI and Safeway has preleased 40,000 sf in Unico Properties’ planned two-building mixed-use development between 12th and 14th avenues and Marhall and Lovejoy streets with landowners’ Bob Ames and Al Solheim.

REI is Lahka’s second Portland purchase this year. It acquired the Pearl Building at Northwest Glisan Street and 13th Avenue for $10 million in the spring.