Hydroponics Industrial Lease is Largest in Portland Metro YTD

GRESHAM, OR—Hawthorne Hydroponics LLC is expanding operations within the Portland region, all while retaining a presence in Vancouver, WA. The firm recently signed a long-term lease for a 378,000-square-foot class-A industrial building at the newly developed Blue Lake Corporate Park in this Portland suburb.

The transaction is recognized as the largest industrial lease signed in the Portland metropolitan market year-to-date 2020. Hawthorne Hydroponics leased all of Building B and will serve as the project’s anchor tenant.

Blue Lake Corporate Park is owned by the partnership of Trammell Crow Company and a fund advised by Principal Real Estate Investors LLC. The project is Airport Way’s newest class-A industrial development and consists of two buildings totaling 463,500 square feet on a 41-acre site. The speculative project was substantially completed in May.

“We designed Blue Lake Corporate Park with top-of-market features that would appeal and suit a variety of warehouse users, while also selecting an ideal location in Portland’s highest velocity market,” says Steve Sieber, principal with Trammell Crow in Portland. “As the fourth-largest city in Oregon and the second largest in Portland’s metropolitan area, Gresham benefits from business-friendly demographics, strong transportation connections for commuters and freight, and a high quality of life. The city also boasts access to a skilled labor force.”

Blue Lake Corporate Park delivers ingress/egress to Interstates 84, 205 and 5. The park is minutes from the I-5 Corridor, the West Coast’s most prominent distribution channel.

Cushman & Wakefield Portland’s Brad Carnese, Aaron Watt and Keegan Clay represented the owner in the transaction. Stuart Skaug of CBRE Portland represented the tenant.

The property was leased within five months of completion amid the challenging environment brought on by the pandemic. In addition, the Cushman & Wakefield team is currently in talks with other potential prospects for both partial- and full-building users of the remaining space in Building A though no official leases have yet been secured.

The team emphasized that Portland’s industrial market fundamentals remain very healthy, with low vacancy and strong activity, particularly across e-commerce, food and beverage, and consumer goods.

“We’ve seen a tremendous amount of growth relating to the distribution of hydroponics-related goods,” Clay tells GlobeSt.com. “In addition to our own deal with Hawthorne Hydroponics LLC, there was another recent lease of 100,000 square feet nearby as well as a recent lease for 46,000 square feet with a fertilizer distribution company also in the area within the last six months. We are expecting continued growth within this sector along with larger leases that relate to e-commerce, food and beverage, life sciences, packaging and home improvement services/goods.”

Portland’s industrial development pipeline remained healthy through the close of the third quarter, according to Cushman & Wakefield’s latest industrial report. In fact, the third quarter has been the strongest of the year, registering 1.8 million square feet of new leasing activity during the period and bringing the year-to-date total to 4.2 million square feet.

Nearly 500,000 square feet spread across flex, manufacturing and warehouse distribution space delivered during the period, bringing the year-to-date construction completion figure to 1.2 million square feet. Across the market, an additional 1.9 million square feet is currently under construction, with almost all speculative warehouse product expected to deliver by the end of 2021.

The Airport Way and East Columbia submarkets will get the bulk of this new development, as those submarkets’ proximity to major transportation corridors remains highly desirable among e-commerce and third-party logistics occupiers.

At 3.9%, Portland’s overall vacancy rate is relatively flat year-over-year, a slight uptick from the 3.7% recorded in the third quarter of 2019. This fluctuation may partially be attributed to the recent speculative development that is now operational. Big-box warehouse and distribution requirements ranging from 100,000 square feet to 800,000 square feet indicate the level of demand, says the report.