McMorgan, which already owns eight developed properties in the Portland area, paid $6.7 million or $4.04 per sf for the site, which is located within a half mile of Southshore Corporate Park, a Catellus development that in February hit 100% occupancy for its built product.
McMorgan's VP of real estate John Maxim tells GlobeSt.com that the new project, Gateway Corporate Center, was originally planned as a two-phase project, but now will be a three-phase project that will begin with a speculative 152,000-sf tilt-up warehouse building divisible to 5,000 sf.
"We decided if we were going to be involved, we needed to take it slower, in part because of the softness of the market," says Maxim. "We have the land and the flexibility, so we will wait to see what the market does."
Construction on the first phase is scheduled to start this summer and deliver the product in February 2004. The proforma for the first phase figures it will take 12 months from completion to lease up the property, says Maxim, who was represented in the transaction by Chris Johnson of Portland-based Norris Beggs & Simpson.
Insignia's Steve Klein, who represented McMorgan in the transaction and will oversee development and leasing of the project, tells GlobeSt.com the site is one of the most visible in the Columbia Corridor, bounded on three sides by Interstate 84, Sandy Boulevard and 181st Street. As well, he says the Columbia Corridor is one of the better performing, having seen more than 350,000 sf of net absorption in the first quarter for a vacancy rate of 9.2%.
In January, Staples Inc. inked a build-to-suit agreement for a 200,000-sf distribution building on 20 acres of raw land at Southshore Corporate Park, and Bedford Property is now planning a two-building 64,000-sf flex office project on 5.2 acres it acquired at Southshore last fall for $950,000.
Nearby, Opus Northwest is near build-out on 30 acres it acquired in the fall of 2000 and renamed Columbia Gorge Corporate Center. The first phase of the project was a 180,000-sf build-to-suit for American Honda that was completed in 2001. After a bit of a lull, Opus signed build-to-suit deals with Boise, ID-based Winco Foods and Portland-based Teeny Foods, two bread products operations. Opus Northwest delivered Winco Foods' 55,000-sf central baking facility earlier this month and later this year will deliver Teeny Foods' 45,000-sf building. On the remaining land, Opus is nearing delivery of twin 35,500-sf speculative flex buildings.
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