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Investment Report: Office Sales Volume Will Moderate, But Not Much

PORTLAND, OR-With a record-breaking 2005 in the books, office investment sales volume in the greater Portland area is expected to moderate somewhat in 2006. However, a backlog of investment capital seeking product and sellers looking to capitalize on that should keep activity strong.

By Brian K. Miller | Updated on January 31, 2006

PORTLAND, OR-Coming off a record year for investment sales in 2005, Portland is ranked by the national brokerage firm Grubb & Ellis as one of the top 10 office investment markets through 2010. The Chicago-based firm’s “Opportunity Monitor” ranked Portland the ninth best investment market. Ahead of it were Orlando, Las Vegas, four California markets, the Greater DC area and Phoenix, which came out on top.

Local Grubb & Ellis investment broker David Hill tells GlobeSt.com that volume should moderate slightly in 2006 but continued investor interest and a backlog of investment capital seeking product should keep activity healthy. “I think we will have strong sales activity on the office side,” he says. “Given this past year was a record, people are thinking it’s a good time to cash in on the sellers market.”

Just under $700 million of office space changed hands in the Portland area in 2005, crushing last year’s total of about $400 million, says Hill. Concurrently, cap rates continued to fall and are now “a lot more like a 7% cap than the 8% cap it used to be, and there was enough activity that now it’s just the norm,” he says. “It used to be people look at the previous 12 months when deciding what to pay; now they are looking not only at the next 12 months but also the coming three to five years.”

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