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PORTLAND-Automatic Data Processing Inc. has renewed its lease for 115,000 square feet of Downtown office space that has been named after the company for more than two decades. The publicly traded company from Roseland, NJ, inked a deal that will keep it in the building through 2016.

Located just south of the core Downtown at 2525 SW First Avenue, ADP Plaza is a 180,000-square-foot (net rentable), 2.2-acre development consisting of two four-story class B office buildings connected by sky bridges and an underground parking garage. The building owner is KBS REIT, which paid $33.1 million for the building in late 2007.

ADP occupies the third and fourth floors of both ADP Plaza buildings as well as the second floor of the west wing. ADP utilizes the buildings for its R&D and computing support services for automotive, truck, marine and recreational vehicle dealerships. The company’s Dealer Management System is utilized by 27,000 dealerships nationwide. The new lease commences in January 2010 and runs for seven years.

Local brokers familiar with the deal tell GlobeSt.com the negotiated lease rate is between 10% and 15% below the current average market rate (fully serviced) for class B office space, which is $22.50 per square foot per year, according to a first quarter report by Grubb & Ellis. The deal also reportedly includes a modest “carpet and paint” tenant improvement allowance of less than $10 per square foot and a commitment by KBS to complete a capital improvement program that includes upgrades to lobbies, elevators and restrooms.

Tom Usher, Mark Carnese and Jeremy Neuer of Cushman & Wakefield represented ADP in lease negotiations, while Scott R. Madsen and Jeff Falconer of Capacity Commercial Group of Portland represented KBS. Usher did not return a phone call seeking comment; Madsen declined to comment on the deal terms but did say KBS is in the process of updating the building systems and lobbies.

“This is a key location for ADP with respect to its R&D function,” Madsen says. “It’s one of two R&D facilities in the country that services and supports their auto division.”

ADP has occupied the building since 1984, three years after it was completed. The building lat saw a major renovation in 1991. The other significant tenant in the building is Oregon Health and Science University, which occupies approximately 47,000 square feet on the first and second floors of the east wing. A 17,000-square-foot space on the ground floor was recently stripped for releasing.

Since its acquisition of the asset 16 month ago, KBS says it has completed “a full mechanical upgrade of the elevators as well as a complete renovation of one of two ground-floor lobbies.” The east wing lobby renovation is underway and on track for completion this summer.

While unable to confirm the deal terms, Mark Fraser, a broker, senior vice president and partner at GVA Kidder Mathews who has represented ADP in the past tells GlobeSt.com that ADP likely would have had to relocate to the western suburbs to find 115,000 square feet of contiguous space suitable to its needs. It would have saved on rent had it done so, he adds, but it might still have been costly.

“Those are knowledge workers they employ in that office and knowledge workers care where they are, and a lot want to be in the central city,” he says. “So although they may have saved on rent they would have had the cost and disruption of the move and may have found dissatisfaction among their highly skilled employees.”

KBS-affiliated companies also own two other Portland-area office properties. They own the 134,000-square-foot Triangle Corporate Park in Tigard and 172,200-square-foot Evergreen Park in Hillsboro.

ADP leases an additional 103,000 square feet of office and warehouse space in two other properties in the Portland area, 57,000 square feet on Columbia Boulevard in Portland and 46,000 square feet southeast of the city in Clackamas. Both leases were timed to be co-terminus with its current Downtown lease. An ADP spokesperson tells GlobeSt.com that those two leases also have been renewed.

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