The parties involved declined comment on the specifics of the lease agreement, but local brokers familiar with the transaction tell GlobeSt.com that Sewing Supply signed a 15-year lease valued at more than $6 million that includes an option to purchase. At $6 million, the average rental rate over the life of the lease would be about $0.39 per sf, but it is believed Sewing Supply plans to exercise its option upon the sale of an owned facility it will vacate to consolidate at Southshore.
Sewing Center Supply's operations now are housed in three facilities located near the Columbia River and Interstate 205. They include a 14,632-sf building the company owns at 9631 N.E. Colfax St., a small adjacent facility and a 27,600-sf leased facility located at 8727 N.E. Marx St. The Southshore space will allow the company to consolidate those operations and, when appropriate, to expand them as well.
Grubb & Ellis broker Tom Talbot represented San Francisco-based Catellus in the transaction. The lease brings to 100% leased the developed properties Catellus owns at Southshore Corporate Park.
Last month, United Parcel Service exercised an option to acquire 52 acres at the park for $4.05 per sf and Staples Inc. paid $14.9 million for 20 acres that includes a 200,000-sf distribution facility Catellus developed for the Framingham, MA-based office supply retailer.
The extra 10 acres in the Staples deal will allow for the building's eventual expansion to 455,000 sf. The UPS deal sets the stage for a possible land swap with the US Military that has been under negotiation for several months.
UPS has controlled the property since January 2000, when it signed a 40-year lease that included a limited option to buy. At the time, UPS was planning to relocate and expand its main sorting facility from Swan Island to Southshore Corporate Park, which is much closer to the airport. In late 2001 or early 2002, however, UPS apparently changed its mind and decided to try to expand at Swan Island by gaining control of the neighboring US Navy & Marine Corps Reserve Center.
GlobeSt.com reported in June that to accomplish that task, UPS proposed swapping 18 acres at Southshore Corporate Park for the 13.3 acres adjacent its Swan Island property where the Reserve Center is currently located. As part of the deal, according to local brokers, UPS has agreed to pay for development of the new Reserve Center and all moving costs.
UPS spokeswoman Donna Barrett told GlobeSt.com in October that it is still too early in negotiations to say whether the land swap will take place. If it does, she says the remainder of the land likely would be put up for sale. If the land swap does not take place, it's possible UPS would decide to revert to its original plan and relocate its main sorting facility there or simply seek a buyer for the entire property, which local brokers say is worth substantially more than when it locked in its option price nearly four years ago.
The Staples deal leaves about 45 acres of 230 acres still to be developed at Southshore--25 acres in Gresham and 20 acres in Portland. The available acreage could hold as much as 700,000 sf, which would bring the development at the park to right around 2 million sf.
Last fall, Bedford Property Investors acquired 5.2 acres at Southshore for $950,000 or about $4.20 per sf, but has yet to break ground. The Lafayette, CA-based REIT is planning two one-story tilt-ups that will have a high office build-out. One building will be 36,506 sf and the other 27,435 sf. Both buildings will be designed to accommodate the needs of smaller flex users, 1,800 to 6,500 sf, while still being a viable option for a single tenant.
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