Five Centerpointe Coming to Market

LAKE OSWEGO, OR-One of the most visible buildings in the region’s premier office market is coming up for sale. The property is Five Centerpointe, a 114,000-sf class A office building completed in 1988 that sits on the north side of Kruse Way, right off Interstate 5. The seller, Teachers Insurance and Annuity Association acquired the six-story building in 1997. Cushman & Wakefield has the disposition assignment. Listing broker Steve Reaume tells GlobeSt.com the building is 89% leased, with much of the building under leases with more than four years remaining. The largest tenant is Vision Offices, which leases 20,000 sf. Prudential, Mortgage IT and Hart Crowser are the next largest tenants, each with about 10,000 sf. According to a TIAA report issued in March, the average annual base rent in the building is $16.62 per sf, not including triple-net expenses estimated at $7.75 per sf.The building is not expected to fetch the $248-per-sf Equity Office paid earlier this year for 5800 and 6000 Meadows, two newer class A properties on the south side Kruse Way. Most local investment brokers tell GlobeSt.com it should fetch between $210 and $220 per sf, which generally translates to between $24 million and $25 million. The most obvious buyer for the property is Equity Office. The Chicago-based REIT owns 18 buildings in the submarket, giving it about a 70% market share of the two million sf submarket, which had a vacancy rate of 8% at the end of March. Indeed, earlier this month Equity Office announced plans to break ground on a speculative five-story, 107,500-sf office building in the submarket in order to accommodate the expansion needs of its existing tenants. Equity Office expects to break ground in June and deliver the building in the fall of 2006. Currently, Equity Office does not own any office product on the north side of Kruse Way. Five Centerpointe would not only change that, but also would give it the building in the submarket that is most visible from I-5. Reaume declined comment on Equity Office’s potential interest in the property, but other local brokers say they will no doubt take a serious look at it.”I don’t know why they wouldn’t be interested in going across the street,” says David Hill, a senior investment broker with Grubb & Ellis. “If it does pursue the property, it will have a lot of competition, which should drive pricing; Kruse Way is undeniably the premier office submarket in the region and there are few opportunities to buy real estate there.” Offering information was sent to potential buyers this week. Responses are expected to come back over the next three weeks, after which Reaume will pick a horse with which to move forward. Assuming that horse closes the deal, the sale should conclude in June or July, according to local brokers.