Offering Memorandum - Ochin - 08 2020 Vers 1..indd

Offering Memorandum - Ochin - 08 2020 Vers 1..indd

OFFERING MEMORANDUM Owner/User Office Investment Opportunity Portland, OR For Sale or Lease

Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information which was gathered form sources deemed reliable including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information.

The Offering

Offering Summary

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Offering Highlights

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Property Details

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Property Description

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Market Overview

Portland Overview

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Portland Office Market

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Lease Comparables

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Financial Information

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MIKE HOLZGANG Executive Vice President 503 499 0055 [email protected]

BRAD CHRISTIANSEN Senior Vice President 503 499 0054 [email protected]

851 SW Sixth Avenue, Ste 1200 Portland, OR 97204 503.223.3123 Colliers.com/Portland

OFFERING SUMMARY Colliers International, as exclusive advisor to seller, is pleased to present the opportunity for an owner occupier to acquire 1881 SW Naito Parkway (the “property”), with an interior gross area of appoximately 40,200 square foot office building located in the Central Business District of Portland, Oregon

OFFERING HIGHLIGHTS

SOUTH WATERFRONT AUDITORIUM LOCATION

ON SITE PARKING with 41 Surface Spaces available. Ratio of 1.02/1,000SF

EASY FREEWAY ACCESS IN MULTIPLE DIRECTIONS

BUILDING IDENTITY IN HIGH TRAFFIC LOCATION (20,929 cars passing per day)

ADJACENT TO STREETCAR AND LIGHTRAIL WITHIN ___ BLOCKS

PROPERTY DETAILS

Address:

1881 SW Naito Parkway Portland, OR 97201

Building Description:

1881 SW Naito Parkway is a two story, +/- 40,224 square foot office building. The building offers the ability to brand your company and the building in a highly visable way with major street signage.

Signage:

Year Built:

1922/Renovated in 2000

Land Area:

.99 acres

Parking:

41 surface spaces available on site, Ratio of 1.02/1,000 sf

Zoning:

CX

FAR Range:

4:1 - 15:1

Maximum Height Limit:

75’+

APN:

1S1E03CB 00200

Price:

Call for Pricing

FLOORS

Concrete slab

FOUNDATION

Reinforced concrete

EXTERIOR WALLS

Concrete reinforced

ROOF STRUCTURE

Bow Truss

PEDESTRIAN DOOR/ACCESS

On Naito Parkway 2nd floor on grade

STAIRWELLS

Two primary stairwells on 1st Avenue

MECHANICAL DETAIL

HEATING/COOLING

Central Air System

ELEVATOR SERVICE

Two floor system.

FIRE PROTECTION

The building is fully equipped with fire sprinklers, strobes and alarm.

Water: Sewer:

UTILITIES

City of Portland

City of Portland Electricity: Portland General Electric Gas: NW Natural Gas

SITE IMPROVEMENT

ON-SITE PARKING

There are forty-one (41) striped surface parking spaces.

PAVING/EXTERIOR

Parking lot resurfaced and striped and building painted in 2020.

LANDSCAPING

The property is attractively landscaped and is well maintained on a regular basis.

ON-SITE PARKING

There are forty-one (41) striped surface parking spaces.

FIRST FLOOR

SECOND FLOOR

11

1 - Providence Park 2 - Portland Art Museum 3 - Oregon Historical Society 4 - Arlene Schnitzer Concert Hall 5 - Multnomah County Central Library 6 - Pioneer Courthouse Square 7 - Pioneer Place 8 - Tom McCall Waterfront Park 9 - Riverplace Marina 10 - South Waterfront Park 11 - Oregon Convention Center 12 - OMSI 13 - Chapman Square 14 - Portland State University 15 - Keller Auditorium

BURNSIDE BRIDGE

1

5

6

7

4

2 3

13

15

8

14

9

1881 SW Naito Pky

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OFFICE MARKET The CBD is Portland’s dominant office submarket and home to about one-quarter of metro inventory. The diverse office-us- ing employment base encompasses government, professional services, legal services, and an increasing number of tech firms. Upwardly trending vacancies, which increased by about 1% over the past four quarters, have been impacted by several large move-outs and the delivery of nearly half a million SF in speculative space. A large build-to-suit for NW Natural is midway through construction, along with Block 216’s 156,000 SF of speculative office space. Rent performance in the CBD has been influenced by the rising vacancy rate. While featuring the highest asking rents in Portland, the CBD’s year-over-year growth has declined in the past eight quarters; rent growth is now below the historical average. Office sales include Park Square for $96.6 million, 6Y for $47.5 million, and Heartline Building for $48.5 million. Portland’s three largest office sales of 2018 all traded in the CBD, and the submarket regularly sees the metro’s highest concentration of office investment. But despite these large deals, submarket office investment has slowed. LEASING Vacancies in the CBD have been on an upward trend for sev- eral years, rising by about 1% in the past four quarters. With few large move-ins on the horizon, little vacancy compression is anticipated in the near term, despite limited new construc- tion. Increasing vacancies were accelerated by the deliveries of Tanner Point and Broadway Tower in 18Q4, both speculative projects. Additionally, 18Q1 saw the completion of renovations at the Power + Light Building, along with several large move- outs, including The Galleria’s top two floors, formerly occupied by Le Cordon Bleu College of Culinary Arts. This all contribut- ed to the vacancy spike in 18Q1. About a dozen existing build- ings offer at least 50,000 SF of contiguous available space. Comparatively, about 40 properties offer at least 20,000 SF of contiguous space. This is a further reflection of the CBD’s high vacancy rate and even higher availability rate.

Google, Amazon, and NW Natural are all expanding their existing footprints in the CBD. In August 2019, Google leased 80,000 SF at the Meier and Frank Building, relocating from their prior offices in the CBD’s Wells Fargo Building. Committed to an 11-year term, the tenant takes occupancy in May 2020. In 19Q1, Amazon took occupancy of 84,000 SF at Broadway Tower. Broadway Tower is across the street from the office of AWS Elemental, a software compa- ny acquired by Amazon in 2015. Other large recent leases include NW Natural, which preleased the entire office portion at the 191,000 SF 250 Taylor prior to the building’s groundbreaking. RENT Annual rent growth has remained stable, following multiple years of strong gains. In 2019, annual growth held steady at approximately 2%. SALES The CBD typically leads Portland metro in office investment, and major institu- tional acquisitions make up a large portion of volume. But the pace of invest- ment has slowed in 2019. Additionally, the CBD saw lower investment in 2018 than in the three preceding years. Still, last year, the CBD boasted 42% of Portland’s total office investment.

The City of Portland The City of Portland is known for it’s in- dividual, unique style and a relaxed vibe that tends to go with the flow and stead- fastly support local businesses and artists. Portland sports the best of two worlds - a thriving urban headquarter and a gateway to the great outdoors, found in the city’s Northwest backyard. Portland is home to a vast number of omnipresent microbrew- eries, distilleries, coffee shops, food trucks and - of course - the beloved Voodoo Do- nuts. Near 1881 SW Naito Parkway you can wander TomMcCall Waterfront Park, take a short bus ride to the Interntional Rose Test Garden, or refuel on teh city’s countless trails that prove perfect for bikers, runners and casual strollers too. Wile away the afternoon in Powell’s City Books, shop till you drop in our sales tax-free haven, head to nearby ski slopes (in winter), partake in abundant water activities (in summer), and check out fun-fueled festivals (Rose Festival, Blues Festival, etc.) that enliven the city thorughout the calendar year. You can always visit Portland’s living room, Pi- oneer Courthouse Square and particiapte in various activities throughout the year.

Higher Education Less than a mile away, you’ll find the 49 acre campus of one of the nation’s most innovative universities, Portland State University (so ranked by U.S. News and World Report) which lives by the mot- to: “Let knowledge serve the city.” Portland Festivals Festivals abound year-round, many near 1881 SW Naito Parkway at Tom McCall Wa- terfront Park. You’ll find everything from flowers and feasts to brews and blues to flims and floats. Portland Food, Beer and Wine In recent years Portland has developed a standout food scene in recent years. The bounty of the Willamette Valley helps cre- ate an atmosphere of creativity. The food cart scene can be found in many location in Portland and they bring it! Add to the food scene, the amazing beers and wines this area is known for. The Willamette Valley is world renowned for producing amazing Pinot Noirs coming from wineries nestled in beautiful spaces. Beer lovers rejoice as well! Portland is home to countless micro- breweries. For food and drink, Portland certainly ranks among some of the best in the country.

The Portland office market has held steady quarter over quarter for the last year. This should encourage investors who are considering Port- land metro assets. Looking closer to downtown, the deluge of supply temporarily weakens market fundamentals. On the horizon is the deliv- ery of 787K SF of Class A office space in the central city wehre average annual asking rents have decreased $0.25 and vacancy has increased 0.2 percent over the quarter.

Portland Office Market Snapshot 19Q3

Q3 2019 YOY FORECAST

WATCH FOR Given the four tenant requirements look- ing for more than 50,000 square feet, there is a high probability that transactions signed in the next few months will create a pos- itive absorption for the middle of 2020 when tenants begin to occupy their space.

Vacancy Rate

10.0%

Absorption SF

77K

Construction SF

1.5M

CBD Class FSG Rent

$36.95

2

4

1

3

5

Lloyd Plaza 1425 NE Irving St. Portland, OR

Expensify Building 401 SW 5th Ave. Portland, OR

US Customs House 220 NW 8th Ave. Portland, OR

The Balfour 733 SW Oak St. Portland, OR

1355 NW Everett Portland, OR

Transaction Date

9/7/2017

8/27/2019

12/28/2017

11/28/2017

10/1/2019

Transaction Price $28,000,000

$11,000,000

$16,800,000

$30,000,000

$8,050,000

Property Type

Of fi ce

Of fi ce

Of fi ce

Of fi ce

Of fi ce

Zoning

CX

CX

EX

CX

CX

Gross Bldg Area 65,560 SF

28,445 SF

37,695 SF

68,451 SF

18,005 SF

1963 Renovated 1989

1916 Renovated 2016

1946 Renovated 2013

Year Built

1901

1913

Site Size 5.24 acres

.23 acres

.46 acres

.87 acres

.15 acres

$427.09

$386.71

$445.68

$438.27

$447.10

Transaction $/SF

1425 NE Irving St.

1

1355 NW Everett

3

4

220 NW 8th Ave.

5

2

220 NW 8th Ave.

401 SW 5th Ave.

Own Vs. Lease Comparison with SBA Loan

MIKE HOLZGANG Executive Vice President 503 499 0055 [email protected]

BRAD CHRISTIANSEN Senior Vice President 503 499 0054 [email protected]

851 SW Sixth Avenue, Ste 1200 Portland, OR 97204 503 223 3123 colliers.com/portland