Portland Industrial Property Changes Hands for $49M
- Nov 12, 2018
A joint venture between Specht Development Inc. and Ares Management LP has acquired a 992,190-square-foot industrial property in Milwaukie, Ore., for $48.5 million.
The property is currently home to a SUPERVALU distribution center, which will continue occupying the facility.
“The story of industrial product in the Portland metro area is the story of a lack of land,” Greg Specht, Specht Development’s CEO, told Commercial Property Executive. “We’ve built millions of square feet over the years and we have very tight restricted land use regulations we have to adhere to, and there are very few large sites available for development.”
That’s why when this property came to Specht Development’s attention, the company quickly went to work to add it to its portfolio.
“We were able to negotiate a sale agreement and a lease back at a price point that was attractive and lease-back terms that were reasonable for us,” Specht said. “It allows us to go through the entitlement process to drag this facility, which has been built in phases over many decades, into the 21st century.”
The property comprises warehouse, distribution and manufacturing space, as well as freezer/cooler space and a separate 48,000-square-foot office.
Located inside the I-205 freeway at 6433 SE Lake Road in Milwaukie, Ore., a submarket of Portland, the location was a major point of appeal to Specht Development.
“It’s 62 acres and within two five-irons of the CBD, inside the beltway,” Specht said. “It’s got ample room for trailer storage and truck maneuvering and it’s around a million square feet, so we thought it was a deal we needed to do.”
A bright future
According to Specht, general industrial market vacancy rates, combined with historically low vacancy in the Clackamas/Milwaukie region, bode well for the industrial property’s future absorption.
At the end of the grocery wholesaler’s lease, the new owners plan to renovate and modernize the property. Changes ahead include replacement of the roofs and the asphalt, the addition of dock doors and painting throughout.
“We have plenty of time to go through the design entitlement phase, and once SUPERVALU vacates, we’ll begin the work,” Specht said. “It’s just a good play. The market is very active with vacancies in the low single-digits, and we believe we can be very competitive on the pricing.”
Don Ossey with Capacity Commercial Group served as the sole real estate broker on the transaction and brought the off-market opportunity to the joint venture.
Last December, Specht Development completed the largest speculative industrial development in the Portland region ever launched in a single phase with the 732,824-square-foot Vista Logistics Park, comprising three buildings, including the metro’s largest single vacant industrial space under one roof.
Image courtesy of Specht Development