Untitled - Marketing Sites - JLL

JJLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. As of December 31, 2016, LaSalle Investment Management has $60.1 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com. JLL.com

Dear Valued Clients and Friends, As we reflect on 2016 we are pleased to have experienced another strong year across the Pacific Northwest. With the sustained strength of the economy we saw many commercial developer’s dreams and plans spring to life. As we witnessed the long anticipated pipeline of new projects begin to break ground we also watched those that were already underway climb further and further into the sky. Over the year, demand continued to outpace supply on the industrial front and we welcomed many new retailers into our storefronts and suburban malls. Housing demand has hit an all-time high, as we expect to deliver more than 10,000 new apartment units in 2017. Although our skylines have changed over the last year, our market fundamentals have not. New development, population growth, quality of life, a highly educated workforce, demand, absorption, pre-leasing activity and rising rents are all testaments to the overall attractiveness of the Pacific Northwest region from an investment standpoint. We were fortunate to complete several successful acquisitions in the past year and add several key members to our team, helping to further strengthen our position as a market leader in Seattle, Bellevue and Portland. In addition, we expanded our local Investor Services Platform with the addition of a highly regarded finance team. The launch of our new brand, Achieve Ambitions, was another evolutionary step for us and we are enjoying the very positive feedback we are receiving from across the globe. As we share our views of 2016 and turn the corner into 2017 please join us as we celebrate our 14th Annual State of the Market Event. We are honored to welcome so many familiar faces and look forward to forging strong relationships with those of you who may be joining us for the first time this year. Thank you for your continued partnerships and we look forward to a dynamic and prosperous 2017.

- Your JLL Pacific Northwest Investment Team

CAPITAL MARKETS TEAM

JLL Capital Markets team Seattle

Multifamily

Stuart Williams

David Young

Managing Director +1 206 971 7008 [email protected]


Lori Hill

Corey Marx



Dawn Brandenburg

Matt Kemper

Vice President +1 206 607 1785 [email protected]

Vice President +1 206 607 1752 [email protected]

Mark Thygesen

Don Flanigan

Retail Associate +1 206 607 1737 [email protected]

Vice President +1 206 607 971 7020 [email protected]

Bellevue Ann Chamberlin Managing Director +1 425 974 4022 [email protected]

Portland

PNW Finance

Northern California Finance

Buzz Ellis

Ray Allen

John Manning




Paige Morgan

Seth Heikkila

Alex Witt

Executive Vice President +1 503 972 8098 [email protected]

Senior Vice President +1 206 607 1732 [email protected]

Executive Vice President +1 415 395 4976 [email protected]

Adam Taylor

Zach Goodwin

Associate +1 503 972 8607 [email protected]

Senior Associate +1 206 607 1791 [email protected]

Drew Heitstuman Associate +1 206 971 7021 [email protected]

SEATTLE WAS RANKED THE TOP MARKET IN TERMS OF LOCAL INVESTOR DEMAND AND THE SECOND BEST MARKET FOR INVESTMENT POTENTIAL”

Seattle & Portland 2016 Investment Overview

7

JLL Capital Markets group

Leverage the expertise of a global leader Devised from comprehensive research, pervasive market knowledge, ethical practice and superior professionalism, the JLL Capital Markets team is focused on the unique requirements of our investor clients. Our in-depth local market and global investor knowledge delivers best-in-class solutions for clients—whether a sale, financing, repositioning, advisory or recapitalization execution. With a diverse, unified platform of shared expertise through a single point-of-entry, we help you achieve your priority capital objectives: Investment Sales

Benefit from sales advisory services grounded in solid market analysis, sophisticated portfolio structuring support, complex valuation, thorough underwriting capabilities, reliable investor intelligence and practical marketing expertise. Real Estate Investment Banking

Gain direct, strategic access to global money centers and real estate investment banking professionals who manage debt and equity financing across all asset types and scenarios. Finance

Access an unmatched combination of expertise in finance, lease accounting, tax and transaction structuring with global access to capital that helps real estate occupiers and net lease investors make the best financial decisions to optimize transaction economics and maximize asset value. Special Asset Services

Obtain transaction execution, valuation and advisory services for non-performing and sub-performing real estate assets concerning financial institutions and special servicers.

8

JLL Finance group

Navigate capital solutions As a trusted business advisor, our Finance team helps you navigate the capital markets to obtain the best capital solutions for your particular requirements. With billions of dollars in debt and equity transaction experience and deep insights into capital flows and trends around the world, we are well-qualified to advise on creative structures and innovative solutions. Clients seeking direct access to global capital also benefit from our on-the-ground access and contacts in every money center around the world. We provide access to the lowest cost of capital on the best terms via a competitive auction process and creative structuring. Through our broad array of relationships and a proprietary database that contains hundreds of lending and equity sources—both domestic and foreign— we provide a link between our clients and opportunity, finding appropriate, prequalified groups of capital providers and investors and creating a competitive market to get the best possible pricing and deal structure. Because we don’t align with any specific capital source, we deliver objective advice and focus exclusively on your needs. Your project receives senior-level attention—the top leaders of our group are always involved on a day-today basis. Our Finance professionals devise capitalization strategies and manage debt and equity placements across all asset types. •• Acquisition and permanent financing •• Bridge and mezzanine financing •• Construction financing •• Multifamily lending platform that includes Fannie Mae, Freddie Mac and HUD/GNMA •• Performing note sales •• Recapitalization strategies •• Asset advisory


9

SEATTLE

Seattle

Office Industrial Retail Multifamily

2016 Seattle office sales ($10M+) overview

Sales volume declines slightly in 2016, but market record for pricing is eclipsed once again More than $4.3 billion in office sales closed in 2016, nearly matching 2015’s total and far exceeding the 10-year historical average. In total, the market saw 55 transactions over $10 million, which makes 2016 the most active year for office investment sales since 2007. A new market record for pricing was achieved in the fourth quarter, when KOMO Plaza was purchased by GI Partners for $276.0 million, or $940 per square foot. This is a 72.5 percent price increase from when Hines purchased the building for $160 million just five years ago. Prior to 2016, the region had not seen an office building trade above $800 per square foot. Urban Union, a 12-story Trophy tower that delivered in Q3, went under contract in Q4 for $268.9 million, or $924 per square foot. The largest transaction of the year occurred in Q2, when GLL and Vestas Investment Management acquired Safeco Plaza for $387.0 million, or $488 per square foot. The 50-story Seattle CBD building, which was recently renovated and 68 percent occupied by the eponymous insurance company at the time of sale, previously traded for $163.5 million in mid-2005, so the current sale represents an increase in value of more than 136 percent. Overall, the most active submarkets for sales in 2016 were Lake Union, Seattle CBD and Bellevue CBD, with total volumes of $1.3 billion, $873.8 million and $595.0 million, respectively. Global interest in Seattle real estate has perhaps never been stronger. Seattle surpassed San Francisco and Washington D.C. in this year’s AFIRE Foreign Investment Survey. It is now the fourth most favored U.S. market amoung foreign commercial real estate

investors. 2016 saw three out of the five largest office transactions – Safeco Plaza, West 8th and Amazon Phase VIII – include foreign buyers. German company Deutsche Asset Management purchased West 8th for $370.0 million, or $716 per square foot. Mirae Asset Global Investments, a South Korean-based group, along with Metzler, acquired Amazon Phase VIII for $246.8 million, or $777 per square foot. According to ULI and PwC’s Emerging Trends in Real Estate 2017 report, Seattle was ranked the top market in terms of local investor demand and the second best market for investment potential. The fourth quarter was by far the most active quarter in 2016, with more than $1.7 billion in office assets trading, comprising 39.8 percent of the total sales volume. This was partially due to the largest local portfolio sale of the year. Blackstone acquired the Laguna Office Complex, Daytona Office Campus and the 5th & Bell Buildings for $300.0 million. The properties within that portfolio, along with Civica Office Commons and KOMO Plaza, traded for $766.0 million, positioning Hines as the most active seller in 2016. Though the total volume didn’t quite reach 2015’s total of $4.5 billion, the average price per square foot was up 18.7 percent yearover-year, and 48.5 percent greater than the 10-year average. Market conditions will continue to favor landlords in 2017, as they remain in position to hold properties and collect steadily increasing rents or capitalize on pricing that has hit an all-time high in the market.

2016 THE MOST ACTIVE YEAR FOR OFFICE INVESTMENT SALES SINCE 2007


15

Seattle office leasing

New inventory is disappearing quickly, as flight to quality trend intensifies among tech tenants Ten office buildings were delivered in the Seattle-Bellevue region in 2016, adding 2.3 million square feet of Class A inventory to the market. 97.8 percent of the space was leased at the time of completion. 5.9 million square feet of product is currently under construction, with 4.6 million square feet scheduled to deliver in 2017, 51.2 percent of which has been accounted for. This would make 2017 the most active year for deliveries since 2000. According to Rider Levett

THE TECH INDUSTRY ACCOUNTED FOR MORE THAN 60 PERCENT OF ALL OFFICE LEASING IN THE YEAR Bucknall’s North American Crane Index, Seattle’s skyline leads the nation for most construction cranes in the central business district. Nearly 50 percent of all cranes currently in use in North America are in Seattle, Chicago and Toronto. Average asking rents for new construction space in Puget Sound are being marketed at $48.40 per square foot, representing a 17.1 percent premium over existing Class A space. Six of the 10 largest leases signed in 2016 involved new construction buildings, all of which were executed by tech tenants, including Google at Lakefront Blocks, Facebook at Arbor Blocks and Valve at 400 Lincoln Square. The 10 largest leases signed were all executed by tech tenants. All told, the tech industry accounted for more than 60 percent of all office leasing in the year. For the last five years, the sector has been responsible for approximately 45 percent of leasing annually. Office space can be a key differentiator for companies competing fiercely for local talent, and tech tenants are willing to pay the premium for new, creative space. Average asking rates in the market increased 2.7 percent year-over-year to $34.90 per square foot, full service. While this is slightly above the national average, it is less than half the average cost of space being marketed in San Francisco. Class A asking rents stand at $41.33, a 6.0 percent increase year-over-year. At 5.3 percentage points below the national average, Seattle-Bellevue is the fourth

16

tightest market in the country, with a single-digit vacancy rate of 9.2 percent. Only Nashville, Salt Lake City and San Francisco currently have lower vacancy percentages. For the fourth consecutive year the market experienced more than 2.0 million square feet of positive net absorption, as nearly 2.5 million square feet of space was taken down in 2016. This impressive run should continue in 2017, as tenants take occupancy in several impending Class A deliveries. While the majority of recent leasing activity has taken place in the Lake Union and Seattle CBD submarkets, Pioneer Square/Waterfront and Bellevue CBD are also experiencing a lot of attention. Weyerhaeuser, an agricultural manufacturer that is the seventh-largest company in the state by revenue, relocated its headquarters to an 180,000 square foot build-to-suit development in Pioneer Square, becoming a new anchor tenant in the neighborhood. 450 Alaskan and Hawk Tower are other significant projects in the submarket set to deliver in the next 12-18 months, with 59.8 percent of their combined space preleased. The Bellevue CBD is gaining two Trophy towers; Centre 425 was completed in the fourth quarter of 2016 and is fully leased by a single-user tech tenant, and 400 Lincoln Square is 71.7 percent leased and expected to deliver in early 2017. The flight to quality trend in the market has intensified and buildings are expected to continue delivering with limited available space. Tech employment in the region has grown by 77.7 percent since 2001, the fourth highest growth rate in the country. Bloomberg’s 2016 U.S. Innovation Index ranked Washington as having the third most innovative economy for the second consecutive year, behind only Massachusetts and California. This was largely due to the state’s placement as number one in STEM concentration and number two in total science and engineering degree holders. Seattle-Bellevue, offering the second highest concentration of highly-educated millennials in the country and a relatively low cost of living, was also named a top-five city for business and careers. According to American City Business Journals, Seattle-Bellevue will become the 14th largest metro area by 2040 due to a population increase of 38 percent. Seattle remains one of the most desirable markets for millennials to live, and will continue to be a place that tech companies establish and expand their presence.

Seattle office sales & statistics

Office market statistics Submarket

Size (RSF)

Vacancy

Avg. Rental Rate

Net Absorption RSF

Downtown Seattle

51,796,834

7.6%

$38.01

1,858,364

Eastside

26,452,255

9.2%

$38.07

600,900

Northend

7,634,787

10.7%

$28.70

198,124

Southend

8,645,775

16.9%

$25.69

-181,328

2016 Total Market

94,529,651

9.2%

$34.90

2,476,060

2015 Total Market

91,830,292

10.2%

$33.98

2,461,440

Sales matrix (over $10 million) 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Number of Sales

119

19

6

15

25

38

39

40

48

54

Price/SF Highest

$531

$425

$397

$548

$557

$642

$745

$755

$792

$940

CAP Rate Average

5.2%

6.2%

9.5%

7.2%

6.8%

5.5%

6.1%

6.2%

6.0%

6.2%

Sales Volume

$9.6B

$0.4B

$0.4B

$1.2B

$1.7B

$4.9B

$2.8B

$1.8B

$4.5B

$4.4B

Office market statistics include Class A and B office buildings over 30,000 sf, excluding owner-occupied, medical, and government-owned buildings.


17

Seattle office sales ($10M+) Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Safeco Plaza

7/14/16

793,679

$387,000,000

5.10%

1001 4th Ave Seattle, WA

West 8th

$488 1969 / 2014-2015 2/24/16

2001 8th Ave Seattle, WA KOMO Plaza

12/20/16

7/8/16

325 9th Ave N Seattle, WA Amazon Phase VII

11/17/16

6/29/16

901 5th Ave Seattle, WA One Twelfth @ Twelfth

12/13/16

1100-1120 112th Ave NE Bellevue, WA

Civica Office Commons 205-225 108th Ave NE Bellevue, WA

18

•

98% leased at time of sale

•

68% occupied by Safeco

•


•

62% occupied by Amazon

•


•

100% leased to Amazon for 16 years

•

100% leased to Amazon for 16 years

Schnitzer West / Investcorp

•


Deutsche Asset Management

•

Major tenants: Cray, Milliman, PitchBook

Gemini Rosemont

•


Principal

•

Three property portfolio sale

•

Properties were previously acquired for $136.4M in July 2004

AEW / Unico

•


Hines

•

Two building portfolio sale

•

Previously acquired for $205.1M in February 2015

CalPERS / CommonWealth Partners

516,985

$370,000,000

2009

$716

4.20%


293,727

$276,000,000

2000

$940

317,804

$246,800,000

2015

$777

5.50%

GI Partners Hines

4.35%

Metzler / Mirae Asset Global Investments Vulcan

400 9th Ave N Seattle, WA 901 Fifth

GLL Real Estate Partners / Vestas Investment Management

Comments

AEW

100-140 4th Ave N Seattle, WA Amazon Phase VIII

Buyer Seller

11/14/16

317,189

$244,000,000

2015

$769

540,589

$223,300,000

1973 / 20142015

$413

480,389

$217,000,000

2001

$452

305,835

$193,000,000

2001

$631

4.60%

Tristar Capital / RFR Realty Vulcan

4.92%

5.90%

6.20%

Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

1st Hill Medical Pavilion

1/14/16

227,628

$192,341,000

5.28%

1976 / 2015

$845

1124 Columbia St Seattle, WA

Symetra Center

5/6/16

777 108th Ave NE Bellevue, WA Hill7

10/7/16

3/31/16

2/10/16

223 Yale Ave N Seattle, WA WestPark 8620-8672 154th Ave NE Redmond, WA

$411

6.60%

Heitman / NexCore Group

•

Medical office building

Trammell Crow / Washington Capital Management

•


•

Major tenants: Swedish Health Services, CellNetix, Theraclone

Sterling Realty Organization

•


285,680

$179,822,000

2015

$629

4.50%

•


•

Major tenants: Redfin, HBO

•

Complex includes a 222-room Hilton Garden Inn, which was not included in this transaction

M-M Properties

•


Beacon Capital Partners

•

Three building portfolio sale

MetLife

•


KBS Realty Advisors

•


Bentall Kennedy

•

21 property portfolio sale includes office, industrial and flex product

Hudson Pacific Properties / CPPIB Touchstone / Principal

3120-3180 139th Ave SE Bellevue, WA Alley 24

$185,000,000

Comments

Walton Street Capital

1099 Stewart St Seattle, WA

Sunset North

450,359 1986 / 2015

Buyer Seller

5/10/16

464,062

$155,193,000

1999-2000

$334

215,402

$129,400,000

2006

$601

778,472

$128,000,000

1975-1992

$164

6.60%

5.00%

Vulcan 6.10%


19


Closing Date

Total SF Year Built

Sale Price $ Per SF

11/11/16

465,000

$109,991,000

1998

$527

Cap Rate

Buyer Seller

Comments

Portfolio Sale Laguna Office Complex 15011 NE 36th St Redmond, WA

Daytona Office Campus

11/11/16

14850 NE 31st Cir Redmond, WA

5th & Bell Building

11/11/16


110 Atrium

11/16/16

110 110th Ave NE Bellevue, WA Lincoln Executive Center

15325-15395 SE 30th Pl Bellevue, WA

20

$94,000,000

2002

$444

197,136

$92,959,000

2002

$472

243,381

$81,500,000

981

$335

6.30%

•


Hines

•

Property includes 6 buildings

•

Part of a 20-property portfolio sale including Daytona Office Campus in Redmond and 5th & Bell Building in Seattle

•

Major tenants: Microsoft, Honeywell

Blackstone

•


Hines

•

Property includes 3 buildings

•

Part of a 20-property portfolio sale including Laguna Office Complex in Redmond and 5th & Bell Building in Seattle

•

Major tenant: Microsoft

Blackstone

•


HInes

•

Part of a 20-property portfolio sale including Daytona Office Campus and Laguna Office Complex in Redmond

•

Major tenant: Amazon

•


•


•

Five building portfolio sale

Kennedy Wilson

•

Four building portfolio sale


•

92% leased at time of sale - Building 1 was 95% leased - Building 2 was 100% leased - Building 3 was 94% leased - Building 4 was 86% leased

Lionstone Investments / Talon Walton Street Capital

10/6/16

3245-3380 146th Pl SE, 14432 SE Eastgate Way Bellevue, WA Eastgate Office Park

251,000

Blackstone

292,150

$80,500,000

1984-1986

$276

7.60%

Urban Renaissance Group / Miller Global Properties Beacon Capital Partners

4/13/16

295,413

$74,725,000

1985

$253

6.90%

Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Time Square

12/14/16

324,287

$54,500,000

9.60%

1984-1986 / 2004

$168

198,508

$42,050,000

1985

$216

500-800 SW 39th St Renton, WA Alderwood Business Center

12/31/16

3400-3500 188th St SW Lynnwood, WA 101 Elliott Building

2/10/16

3/31/16

11011 Meridian Ave N Seattle, WA Redmond Woods

6/21/16

5000-5020 148th Ave NE Redmond, WA The Offices at Riverpark

3/16/16

15809 Bear Creek Pky NE Redmond, WA Bay Vista Office Tower

7/21/16

2801-2815 2nd Ave Seattle, WA George F. Russell Jr. Hall

18300 Redmond Way Redmond, WA

•


•


•


•

Two property portfolio sale

•


•


Hayman Properties

•


Clarion Partners

•


Colony Realty Partners

•


•


Meriwether Partners

•


Unico

•

Property consists of 44,000 sf of office space, street-level retail and two floors of apartment units

Ascentis Real Estate Partners

•


•

34% occupied by Pushpay

•

Previously acquired for $15.9M in June 2012

LBA Realty 7.93%

Alaska Electrical Pension Fund

101,738

$40,400,000

1986 / 2008

$397

69,700

$38,300,000

2006

$550

145,221

$36,985,000

1982

$255

106,281

$36,900,000

2008

$347

119,701

$33,645,000

1982

$281

5.50%

Credit Suisse SteelWave

5.50%

Healthcare Realty Trust First Western Development

7.30%

7.80%

JMA Ventures 5.00%

Madison Marquette / Saradar Carlyle Group

9/29/16

1414 NE 42nd St Seattle, WA Redmond Technology Center

Greenbridge Investment Partners

Comments

Embarcadero Capital Partners

101 Elliott Ave W Seattle, WA Meridian Medical Center

Buyer Seller

5/24/16

62,500

$30,685,000

2009

$491

100,978

$30,250,000

2008

$300

6.00%

6.51%

Menlo Equities


21


Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

1411 Fourth

4/21/16

123,430

$29,725,000

4.50%

1929 / 2008

$241

89,850

$29,075,000

1985

$324

218,585

$26,500,000

1984

$121

1411 4th Ave Seattle, WA One Newport

1/22/16

3605 132nd Ave SE Bellevue, WA Creeksides at Centerpoint

1/13/16

20415-20435 72nd Ave S Kent, WA Quadrant Willows - Building C and E

3/3/16

1121-11241 Willows Rd NE Redmond, WA Broadacres Building

10/14/16

1601-1611 2nd Ave Seattle, WA Taylor Edwards Building

10/19/16

1518 1st Ave S Seattle, WA Springbrook Business Park

12/16/16

7611 -7825 S 180th St Kent, WA Weyerhaeuser Campus

2/9/16

33663 Weyerhaeuser Way S Federal Way, WA

Riverview Plaza 16000-16040 Christensen Rd Tukwila, WA

22

9/16/16

130,961

$25,650,000

1998-2000 / 2007

$197

123,108

$25,400,000

1907

$206

69,248

$25,000,000

1918 / 1998

$361

185,022

$23,500,000

1982-1985

$127

343,535

$22,762,000

1971

$66

171,260

$22,150,000

1981

$129

Buyer Seller Onni Group

Comments

•


AAA Washington

•


Ivanhoe Cambridge

•

Owner-user purchase

Menashe Properties

•


Unico

•


Equus Capital Partners

•


SteelWave

•

Building C was 76% leased at time of sale

•

Building E was 88% leased at time of sale

•


WSA Properties

•


Henbart

•

Sale included a vacant lot

Stockbridge

•


Metzler

•

Four building portfolio sale

Industrial Realty Group

•

Part of portfolio sale (Office + R&D Building)

Weyerhaeuser Company

•

IRG plans to redevelop and lease or sell parts of the property for office or industrial use

Talon

•


Broadreach Capital Partners

•


Mack Real Estate Group N/A

7.00%

7.25%

3.50%

LBA Realty Principal

N/A

6.39%

N/A

8.86%

Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Valley Medical Center

4/29/16

46,600

$21,600,000

5.90%

1983

$464

202,544

$21,100,000

1987

$104

3915 Talbot Rd S Renton, WA Sammamish Park Place Building A & B

5/2/16

N/A

22011 SE 51st St Issaquah, WA Delta Dental Building

11/16/16

9706 4th Ave NE Seattle, WA Watermark Tower

9/16/16

7/21/16

7/8/16

1813 Westlake Ave N Seattle, WA Gateway Two

1/11/16

5/18/16

550 4th Ave S Seattle, WA Delphi Building 3633 136th Pl SE Bellevue, WA

Healthcare Realty Trust

•


Valley Medical Center

•


Onward Investors

•


Midland RE Services / PNC Bank

•

Both buildings were 0% leased at time of sale

•

REO sale

•

97% occupied with Delta Dental vacating its space in mid-2017

•

Included a 6-story garage with 308 stalls

Martin Smith

•


Razore Enterprise

•

Sale included the commercial portion only (7 stories), the condominiums (15 stories) were not part of the offering

Nicola Crosby

•


Cypress Wealth Advisors

•

University of Washington occupies approximately 2/3 of the building

CBRE Global Investors (Allstate)

•

100% leased to Tribune Broadcasting Company

•


•


•


Salal Credit Union Washington Dental Service

71,150

$20,250,000

1983

$295

72,000

$19,900,000

1981 / 1995

$276

65,222

$19,500,000

1952

$299

7.15%

7.00%

6.30%

Tribune Media Company

915 118th Ave SE Bellevue, WA 1550 Building

5.80%

Comments

$225

1107 NE 45th St Seattle, WA Q-13 Building

$20,275,000

1987 / 2002

1109 1st Ave Seattle, WA University District Building

87,552

Buyer Seller

7/15/16

68,776

$18,280,000

1988

$266

51,550

$18,000,000

1974 / 2005

$349

69,980

$17,400,000

1981

$249

4.60%

Swift Real Estate Partners Walton Street Capital

6.35%

Spire General Partner US Bruce Raskin

7.28%

Swift Real Estate Partners Sun Life Assurance Company


23


Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Quadrant I-5 Corporate Park - Building A

6/30/16

74,974

$14,200,000

7.50%

1998

$253

62,677

$13,411,000

1980

$214

82,537

$12,800,000

1990

$155

35,200

$12,600,000

1999

$358

37,480

$12,089,000

2014

$323

24,497

$10,800,000

1991

$441

64,382

$10,700,000

1989-2001

$166

19,283

$10,400,000

1989

$539

66,376

$10,250,000

1983

$154

728 134th St SW Everett, WA 10700 Building (Bellevue Community College)

9/15/16

N/A

Buyer Seller

Comments

Shelby Company

•


Washington Capital Management

•

Off-market transaction

Robert Rothe

•


•


•


Ling Long / Chris Wang

•


Donovan Brothers Commercial Construction

•


Aegis Living

•


Macadam Forbes

•

1031 exchange

Matthew Eldridge

•


Michael Kinney

•


Puget Sound Center for Veterinary Medicine

•

Seller was the anchor tenant and a 14-year sale leaseback was completed

Onward Investors

•


AAA Washington

•

1031 exchange

Walton Street Capital

10700 Northup Way Bellevue, WA Fairway Center

6/16/16

14220 Interurban Ave S Tukwila, WA 15 Lake Bellevue

3/29/16

15 Lake Bellevue Dr Bellevue, WA Franciscan Medical Pavilion

5/12/16

7.00%

Schuster Group 6.40%

6/22/16

415 118th Ave SE Bellevue, WA Puyallup Executive Park

3/9/16

929-1011 E Main Ave Puyallup, WA Seattle Veterinary Specialists

3/4/16

5.88%

5.80%

6.75%

Steven Brown 6.33%

11814 115th Ave NE Kirkland, WA Koll Bellefield 1745 114th Ave SE Bellevue, WA

24

6/24/16

Costacos Family LP Taylor Development

205 10th St SE Auburn, WA David Evans & Associates

Shelby Company

N/A


25

Seattle


Seattle industrial sales ($10M+) overview

Sales volume increases, surpassing $1.2 billion in 2016 Industrial market fundamentals continue to adapt to rapidly improving economic conditions throughout the region. Reduced vacancy rates combined with high job and population growth are contributing to the current market situation, where developers are initiating projects at record levels. The Ports of Seattle and Tacoma have remained strong economic drivers, strengthening imports and exports in the region and helping to drive the local industrial market primarily in the Aerospace, Food/Beverage and Logistics industries. The Puget Sound area continues to be one of the top markets in the nation and industrial properties are attracting investors as well as retailers, e-commerce and food and beverage companies seeking to expand their real estate footprint. There continues to be a lack of available inventory and limited new product to satiate the demand in the market. A flurry of industrial sales closed in 2016 as institutional investors took notice of the region’s strengthening market fundamentals. 33 transactions over $10 million closed during the year, totaling nearly 9.0 million square feet and $1.2 billion, representing a 9.0 percent increase in volume compared to 2015. More than half of the transactions were portfolio sales of more than two properties, with cap rates ranging from 4.0 percent to 7.0 percent, and nearly 80 percent of the deals occurred in the Southend. Furthermore, average pricing on a per-square-foot basis increased 30 percent year-over-year to $144, and cap rates declined 20 basis points to an average of 5.5 percent. The cap rate compression in the market has been significant, as it’s currently 370 basis points below the high of 9.2 percent in 2009. There were three deals that exceeded $100 million in 2016. Two of which occurred in the fourth quarter. Prologis purchased Unified Grocers Site in Seattle from Sabey Corporation.

The eight property portfolio totaling 1.0 million square feet, traded for $136.0 million, or $133 per square foot. Clarion Partners purchased Cornerstone’s portfolio of approximately 980,000 square feet in Tukwila and Kent for $143 per square foot at an incredibly low 3.8 percent cap rate. Several other buyers including KBS Realty Advisors, LBA Realty, BKM Capital Partners, and Industrial Property Trust participated in transactions in the market that led to solid investment activity in 2016. Though quality product is becoming increasingly limited, transaction volume and activity in the SeattleBellevue region continues to be strong. Puget Sound remained a top-10 market nationally for institutional grade investments, according to PWC and ULI’s recently released Emerging Trends in Real Estate 2017 report. In the West Coast, Seattle was ranked second in terms of investment prospects for the industrial sector, behind only Portland. Institutional investors have clearly taken notice of the strong market fundamentals over the last three years and have been aggressive in acquiring both existing product, typically through unsolicited offers, as well as land in order to develop new product in the near-mid-term. Given strong demand from users along diminishing available space and increasing rental rates, some owners are looking at taking advantage of current market conditions and are evaluating selling their property at relatively high prices. With the local economy continuing to strengthen, the outlook for the Puget Sound industrial market is positive. Moving into 2017, we expect the industrial market to continue to perform well, both in terms of demand from tenants and interest from institutional investors.


29

Seattle industrial leasing

Year-end activity signaling continued growth in 2017 2016 marked another strong year for leasing activity in the Puget Sound industrial market. Vacancy in the region dropped 90 basis points year-over-year to its current rate of 2.7 percent, down 550 basis points since 2010. Every cluster in the region has seen vacancy drop in the last 12 months, with rates ranging from 4.3 percent in Pierce County down to 1.5 percent in the Seattle cluster. Though 2.8 million square feet of speculative development is underway,

THE DEMAND FOR INDUSTRIAL SPACE IS SIGNIFICANTLY OUTPACING THE INCREASE IN INVENTORY and more is planned to start, the demand for industrial space is significantly outpacing the increase in inventory, with about 16.0 million square feet of active tenant requirements in the market. The growth in tenant demand and the market’s limited inventory will continue to compress vacancies and availabilities in the region. The pace of absorption and leasing activity in the Puget Sound industrial market remained strong throughout 2016. More than 6.4 million square feet of space was absorbed, the highest total since 2007, and a 3.0 percent increase over 2015. This activity was focused predominantly in the Kent Valley and Pierce County clusters, which recorded 2.4 million square feet and 2.5 million square feet of total absorption, respectively. Tenant demand, from both small and large users, has contributed to robust net absorption totals. There are currently more than 50 companies in the market seeking space options larger than 100,000 square feet and nearly 100 tenants

30

seeking less than 100,000 square feet. With limited available product and continued strong absorption each quarter, landlords are comfortable posting high asking rates, leaving tenants with limited options such as early renewals, and accepting smaller free rent and tenant improvement allowance packages. More than 4.4 million square feet of new product was added to the market in 2016. With limited supply of available quality space in the region, newly-delivered product is being leased and absorbed at a strong pace. There were a total of 26 leases signed in 2016 that exceeded 100,000 square feet. All but three of these major leases took place in the Southend, where the demand and shortage of supply is notably high. The largest transaction of 2016 was Serta Simmons’ lease of 272,834 square feet at IAC Port 167 in Puyallup/Sumner submarket. Other notable transactions include Stryder Logistics’s 249,269 square foot lease at Prologis Park Kent, Amerisource’s 229,918 square foot lease at Des Moines Creek Business Park, and Regal Logistics’ 225,972 square foot lease at LogistiCenter at 167 in Fife. Given continued demand for space, coupled with the scarcity of quality available options, it is likely that absorption will remain positive and vacancy rates remain tight in the coming quarters. Even with limited land available in the region, developers are continuing to capitalize on the Seattle market. The largest current project is Prologis’ 770,195 square foot project in the Port of Tacoma/Fife submarket. Given the escalating land prices, rising construction costs, and shortage of big-box space, the majority of developments have been projects over 100,000 square foot. Construction activity is expected to ramp up as there are additional 7 million square feet of planned and proposed projects that sit in the pipeline slated for 2017-2018.

Seattle industrial sales & statistics

Industrial market statistics

Submarket

Size (RSF)

Vacancy

Avg. Rental Rate

Net Absorption RSF

Seattle

47,085,219

1.5%

$1.06

60,327

Kent Valley

110,980,828

1.9%

$0.69

2,457,690

Pierce County

62,923,038

4.3%

$0.58

2,530,579

Eastside

32,199,277

3.6%

$1.18

782,926

Northend

28,551,474

3.1%

$0.79

575,895

2016 Total Market

281,739,836

2.7%

$0.79

6,407,417

2015 Total Market

277,314,316

3.6%

$0.71

6,209,388

Industrial market statistics include industrial and flex inventory over 10,000 sf, single-tenant, multi-tenant and owner-occupied.


2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

14

35

19

9

11

14

20

25

24

26

33

Price/SF Highest (ind)

$140

$164

$151

$100

$115

$187

$125

$288

$198

$194

$312

CAP Rate Average

6.8%

5.9%

6.6%

9.2%

7.4%

7.2%

6.5%

6.3%

6.4%

5.7%

5.5%

Price/SF Highest (flex)

$206

$237

$199

$207

$156

$257

$180

$190

$122

$171

$229

$0.6B

$0.7B

$0.4B

$0.2B

$0.2B

$0.3B

$0.7B

$0.8B

$0.4B

$1.1B

$1.2B

Number of Sales

Sales Volume


31

Port of Seattle and Port of Tacoma historical total TEU’s

2016 TEU container volume

Seattle*

Tacoma*

* In 2014 Port of Seattle and Port of Tacoma began combining their statistics

4,500,000 4,000,000 3,500,000

Total TEU’s

3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0

2008

2009

2010

2012

2011

2013

2014*

2015

2016

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Seattle

1,973,504

1,704,492

1,584,596

2,153,685

2,049,733

1,885,680

1,592,753

*

*

*

Tacoma

1,924,929

1,861,358

1,545,853

1,412,869

1,443,550

1,678,778

1,863,408

*

*

*

-

-

-

-

-

-

-

3,393,522

3,529,441

3,615,752

Total TEU’s

32

2007

Seattle industrial sales ($10M+) Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Boeing Field Site

11/30/16

1,029,011

$136,000,000

5.10%

952

$132

930,433

$132,697,000

1987-1990

$143

778,472

$128,000,000

1975-1992

$170

371,163

$78,000,000

1986

$210

547,892

$68,000,000

2015

$124

3301 S Norfolk St Seattle, WA Southcenter S Industrial Park / Green River Corporate Park

12/21/16

3.80%

Buyer Seller

Comments

Prologis

•


Sabey Corporation

•

Eight property portfolio sale including two office & six industrial buildings

Clarion Partners

•


Cornerstone Real Estate Advisers

•

11 property portfolio sale

KBS Realty Advisors

•


Bentall Kennedy

•

21 property portfolio sale includes Office, Industrial and Flex product

BECU

•


RREEF America

•

Eight property portfolio sale

LaSalle Investment Management

•


•


LBA Realty

•


LaSalle Investment Management

•

Two property portfolio sale

Industrial Realty Group

•

Sale represents Industrial/Flex portion of two property portfolio sale

BKM Capital Partners

•


Global Logistic Properties

•


Blackstone

•


LBA Realty

•

Sales represent allocated sales price

•

Part of 49 property bulk sale

18201-18289 Olympic Ave S Kent, WA WestPark

5/10/16

8620-8672 154th Ave NE Redmond, WA Gateway Corporate Center

12/21/16

12671-12687 Gateway Dr Tukwila, WA Des Moines Creek Business Park Phase I

12/15/16

6.10%

4.57%

4.27%

2231 S 208th St Des Moines, WA Apollo / Titan Building

Panattoni 6/14/16

1801 132nd Ave E Sumner, WA Weyerhaeuser Campus

2/9/16

32901 32nd Ave S Federal Way, WA Tukwila Commerce Center

8/8/16

1001-1099 Industry Dr Tukwila, WA Springbrook 188 Distribution Center - Building 1 7811-7915 S 188th St Kent, WA

11/18/16

428,109

$48,050,000

2014

$112

461,673

$47,738,000

1981

$103

475,517

$45,200,000

1976

$95

365,040

$40,302,000

1965

$110

4.50%

N/A

Weyerhaeuser Company 5.70%

5.20%


33


Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

711 E 11th St

11/30/16

60,000

$32,376,000

N/A

1983

$540

184,260

$32,200,000

2008

$175

145,069

$32,000,000

1941

$221

711 E 11th St Tacoma, WA Westview 522

4/6/16

6525 240th St SE Woodinville, WA 1900-1938 Occidental Ave S

9/21/16

1900-1938 Occidental Ave S Seattle, WA Kent Industrial Portfolio

3/30/16

18405 72nd Ave S Kent, WA Ranch Associates Buildings

8/31/16

22828 68th Ave S Kent, WA Totem Lake Commerce Center

6/23/16

266,000

$31,602,000

1975-1987

$119

250,000

$30,000,000

1968

$115

171,841

$28,012,000

1996

$163

195,800

$27,000,000

1975

$138

102,714

$26,500,000

1978

$258

6.00%

N/A

4.90%

5.00%

Buyer Seller

Comments

Industrial Property Trust

•

Industrial building was unused by seller

Interfor

•

Sale includes 10K SF of office - 0% leased at time of sale

•

Sale was based on land value

Pine Forest Properties

•


Onward Investors

•

Portfolio sale include 4.96 acre pad site available for future development

WSA Properties

•


Apollonia Kwan

•

Two property porfolio sale

•

Buyer intends to build a basketball arena


•


Prologis

•


Puget Sound Energy

•


•


RREEF America

•


Int’l Airport Centers

•

Six property portfolio sale

Bellevue School District No. 405

•


•

Prior owner/occupant closed plant upon sale

•

Purchased for use as future elementary school

Bixby Land Company

•


MetLife / Panattoni

•

All cash deal

Hill Raaum Pietromonaco 5.85%

NWB Totem Lake LLC Benaroya Company

12521 128th Ln NE Kirkland, WA Sea King Industrial Park

9/22/16

9100 15th Pl S Seattle, WA Former Safeway Bakery Building

11/15/16

4.80%

N/A

2100 120th Ave NE Bellevue, WA The Steele Building 1565 Fryar Ave Sumner, WA

34

Safeway 6/30/16

206,463

$24,000,000

2015

$116

4.40%

Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

East Valley Distribution Center

9/22/16

228,300

$23,900,000

4.95%

1988

$105

185,092

$23,200,000

1985

$125

Buyer Seller

Comments

RREEF America

•


•


•

Four property portfolio sale


•


Beaverbrook Enterprises

•


CenterPoint Properties

•


Shelby Company

•

Sale included acquisition of a 1.4 AC parcel on Auburn Way N for $2.5M that will be paved and fenced for additional parking for the tenant FedEx

Wakefield Properties

•



•



•

83% occupied at time of sale

ScanlanKemperBard Companies

•


Blackstone

•


LBA Realty

•

Sales represents allocated sale price

•

Part of 102 property bulk sale

Int’l Airport Centers

20401-20421 84th Ave S Kent, WA Springbrook Business Park

12/16/16

7611-7691 S 180th St Kent, WA Opus Park 167

Stockbridge Capital Group Metzler

4/15/16

1604 15th St SW Auburn, WA Emerald Corporate Park Building E

6.88%

2/19/16

170,815

$22,000,000

2003-2005

$129

152,155

$21,900,000

2000

$144

126,545

$20,400,000

1985

$161

171,723

$19,800,000

1972

$115

217,700

$17,981,000

2008

$83

5.80%

7.00%

3700-3702 C St NE Auburn, WA Redmond Heights Tech Center

5/26/16

6.70%

4603-14833 NE 87th St Redmond, WA Andover Executive Park

10/25/16

698-722 Industry Dr Tukwila, WA Everett Commerce Center

11/18/16

6617 Associates Blvd Everett, WA Quadrant Parkside Office Park

11/18/16

77,629

$17,800,000

1988-1989

$229

6.40%

10.00%

8.25%

18939 120th Ave NE Bothell, WA Span Alaska Transporation 3815 W Valley Hwy N Auburn, WA

3/21/16

51,250

$16,000,000

2007

$312

5.75%

Hill Family III LLC

•


Embarcadero Capital Partners

•


•

Buyer simultaneously sold a fourth building in the complex to a church

Realterm Global

•


Span-Alaska Transportation


35


Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Riverfront Business Park

2/12/16

137,916

$15,450,000

7.30%

1990

$94

16110-16140 Woodinville Redmond Rd NE Woodinville, WA Kirkland 118

3/10/16

10/7/16

11323 30th Ave W Everett, WA Kent 212 Building

10/19/16

21235-21255 76th Ave S Kent, WA Red Dot Building

5/27/16

745 Andover Park E Tukwila, WA Sumner West

10/18/16

2719 W Valley Hwy E Sumner, WA Kirkland Business Center

5/23/16

11803 NE 116th St Kirkland, WA Owl Transfer Building

6/14/16

3623 6th Ave S Seattle, WA Tri-Land Industrial Park Dania Building 1251 Andover Park W Tukwila, WA

36

Harsch Investment Properties

Comments

•


•

Four property portfolio sale

Par 5 Park 118 LLC

•


Expert Drywall

•


Vaupell Industrial Plastics

•


Puget Sound Properties

•

Owner/user sale

Bule Origins

•


John & Cynthia Baumann

•

Owner/user sale; buyer to occupy

•

Buyer intends to occupy the building

•


John Larsen

•


Columbia Pacific

•

Owner/user sale; buyer to occupy

Razone Enterprise

•


•


•


•

Owner/user sale; buyer was the tenant

Western America Equities

11730 118th Ave NE Kirkland, WA Airport Business Center

Buyer Seller

2/26/16

77,072

$13,916,000

1998

$181

150,046

$12,550,000

1986

$84

126,656

$12,412,000

1974

$98

113,980

$12,300,000

1974

$108

117,870

$12,120,000

2016

$103

109,180

$11,150,000

1962

$102

73,335

$10,600,000

1961

$145

100,036

$10,000,000

1977

$100

6.05%

6.70%

N/A

5.20%

LBA Realty Red Dot Corporation

N/A

6.00%

TA Realty 5.36%

John & Diane Ching American Life

N/A

Interline International / Scandinavian Design Tri-Land Corporation


37

Seattle


2016 Seattle retail sales ($10M+) overview

Sales volume continues to decline, but a new record for pricing is achieved 2016 was another highly active year for retail investment sales throughout the Seattle region with 22 transactions over $10 million. Much like 2015, the flurry of activity didn’t translate to higher sales volume, with only $548.9 million in assets trading hands, a drop of 15.0 percent year-over-year and the lowest level since 2011. Investors are transferring their focus to periphery markets, as approximately 75 percent of all transactions and 64 percent of total sales volume for 2016 came from outside of the Seattle-Bellevue core. We are starting to see the focus shift from the core to lower cost, longterm investments in secondary and tertiary markets. Tacoma was a particularly active segment of the market, with three of the 10 largest transactions of the year and total sales volume of $97.5 million, second only to Seattle. Tacoma also lays claim to the largest transaction of the year south of Seattle, with the purchase of the Tacoma South Shopping Center by Retail Properties of America from Sterling Realty. The 230,657 square foot neighborhood center is anchored by Bass Pro Shop and LA Fitness and was 97 percent leased at the time of the $39.4 million sale.

The largest transaction of the year occurred in the first quarter, when Vulcan Real Estate sold 2200 Westlake to Weingarten Realty Investors for $66.2 million, or $897 per square foot. The 100 percent leased, Whole Foods-anchored retail portion of 2201 Westlake in Seattle traded at a cap rate of 5.8 percent, the second lowest of the year. Seattle also saw a new market record for pricing occur when the Liberty Building, home to Hard Rock Café, sold for $1,297 per square foot. With the highest average price per square foot of $833, and the highest volume of any submarket at $131.6 million, Seattle is still the most desirable location for investment throughout the Puget Sound region. Seattle was ranked as the 3rd most desirable market in the U.S. for investment in the retail sector, up 17 spots from last year, according to PWV and ULI’s Emerging Trends in Real Estate 2017 report. 43 percent of respondents to the Emerging Trends in Real Estate survey placed a “buy” rating on retail property in Seattle. Look for further exploration of peripheral markets in 2017 as a variety of traditional anchor tenants are closing stores in shopping centers throughout the region.

SEATTLE WAS RANKED AS THE 3RD MOST DESIRABLE MARKET IN THE U.S. FOR INVESTMENT IN THE RETAIL SECTOR

40

Seattle retail leasing Market tightens further, putting landlords in the driver’s seat 2016 was a banner year for the Puget Sound retail market. Vacancy continued its rapid decline, ending the year at 3.6 percent, a drop of 50 basis points year-over-year and the lowest level in more than a decade. Subsequently, rental rates continued on the upward trajectory, finishing at $18.80 per square foot, an increase of 7.0 percent year-over-year and the highest rate since 2008. As the

RENTAL RATES CONTINUED ON THE UPWARD TRAJECTORY market tightens even further and population density continues to increase, we have seen a number of national retailers moving to the market, including la Marzocco, Whole Foods 365, New Seasons, Filson, and Warby Parker. Net absorption for all submarkets – Downtown Seattle, Eastside, Northend, Southend, and Tacoma – was overwhelming positive, with 1.1 million square feet of space taken down in the year. The Downtown Seattle submarket remained the tightest, as vacancy dropped 50 basis points to 1.7 percent. Rental rates increased 8.1 percent year-over-year to an average of $26.93. Tacoma posted another impressive year, accounting for 62 percent of total market absorption, with rental rates increasing to a respectable $15.98, and vacancy down a staggering 36 percent to 4.7 percent overall. Development activity was minimal in 2016, with just 391,629 square feet of inventory added to the market. 588,018 square feet of space remains under construction heading into 2017. As in 2015, technology advancement was emphasized across the retail spectrum in 2016. With delivery concepts continuing to expand their offerings in Seattle, traditional brick and mortar retailers are

using a number of approaches to drive traffic or take advantage of the emerging delivery market. Amazon Prime Now made a big splash in the Seattle market last year with guaranteed 2-hour delivery on select items sold directly from Amazon. A number of local grocers, including Uwajimaya and PCC Natural Markets, have tapped into the established delivery network this year to offer their in-store offerings in 2 hours or less. Orders are filled by personal shoppers and delivered using the existing Prime Now delivery network. Fresh off of their Amazon Books store opening in 2015, Amazon expanded their brick and mortar offerings to include Amazon Go in South Lake Union. The store incorporates a number of sensors, so unlike traditional retailers, no check stands are present and customers simply grab food from the shelves and walk out. While many traditional grocers and restaurants become congested at checkout during the lunch and after work rush, Amazon Go stores identify your Amazon account information upon entry and track each item you grab from the shelf so your account can be charged when you leave. With the tourism sector expanding in Seattle, SeaTac International Airport announced a plan for expansion to accommodate the growing number of domestic and international visitors. The $636 million renovation will transform the existing retail and dining hub into a more modern facility that will include eight new gates, improved Wi-Fi connectivity, and 46,000 square feet of retail and dining options; more than double the existing retail space. The project aims to improve the overall traveling experience, enhance the quality of retail offerings, and fix a number of operational inefficiencies. The project is expected to break ground in early 2017, with a targeted completion sometime in 2021.


41

Seattle retail sales & statistics

Retail market statistics

Submarket

Size (RSF)

Avg. Rental Rate (NNN)

Vacancy

Net Absorption RSF

Downtown Seattle

26,365,522

1.7%

$26.93

50,889

Eastside

28,036,807

2.8%

$24.48

78,349

Northend

47,084,524

3.9%

$18.25

101,132

Southend

31,230,541

4.0%

$16.98

181,396

Tacoma

41,416,800

4.7%

$15.98

666,071

2016 Total Market

174,134,194

3.6%

$18.80

1,077,837

2015 Total Market

173,174,496

4.1%

$17.56

1,445,654


2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Number of Sales

28

19

4

8

7

15

16

18

22

27

22

Price/SF Highest

$518

$467

$380

$404

$305

$387

$512

$509

$849

$701

$1,297

CAP Rate Average

6.4%

5.9%

7.2%

8.8%

N/A

7.0%

6.4%

6.4%

6.0%

6.3%

6.4%

Sales Volume

$0.5B

$0.4B

$0.1B

$0.1B

$0.1B

$0.4B

$0.9B

$1.1B

$0.8B

$0.6B

$0.5B

42

Seattle retail sales ($10M+) Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

2200 Westlake - Whole Foods Market

2/29/16

73,800

$66,210,000

5.76%

2006

$897

2200-2210 Westlake Ave Seattle, WA Bellevue Plaza

5/3/16

5/11/16

18420-18600 33rd Ave W Lynnwood, WA Tacoma South Shopping Center

5/5/16

60,844

$45,350,000

1962

$745

178,734

$40,747,000

1980 / 2003

$228

230,657

$39,400,000

1984-2015

$171

N/A

5.95%

6.80%

7601-7941 S Hosmer St Tacoma, WA Klahanie Shopping Center

Comments

•


•

Retail portion of 2201 Westlake

•

412 parking stalls included in the sale

Vulcan

•


UDR

•

Planned redevelopment

Merlone Geier Partners

•


Barclay’s Realty

•

Major tenants: Rite Aid, Big 5 Sporting Goods, Ross, HomeGoods, Buffalo Wild Wings

Retail Properties of America

•


•

Major tenants: Bass Pro Shop, LA Fitness

Regency Centers

•


Gerrity Group

•

The shopping center’s anchor, QFC, was not part of the sale

•

Previously acquired for $22.0M in November 2011

ROIC

•


Urban Renaissance Group

•

Major tenants: Bartell Drugs, Red Apple Market, Ace Hardware

Vestar Development

•


InvenTrust Properties

•

Major tenants: Fred Meyer, Rite Aid, and FedEx Office

Vulcan

•


Weingarten Realty

•

Partial redevelopment project that could have approximately 570 apartments, with construction starting in mid-to-late-2017

Sterling Realty 7/15/16

4506-4598 Klahanie Dr SE Issaquah, WA

Bridle Trails Shopping Center

Weingarten Realty Investors / Bouwinvest Vulcan

117-144 106th Ave NE Bellevue, WA Alderwood Plaza

Buyer Seller

10/17/16

66,895

$35,988,000

1998 / 2000

$538

106,000

$32,800,000

1981

$309

128,264

$31,400,000

1978-2000

$245

96,660

$30,900,000

1997

$320

5.18%

4.50%

6501-6625 132nd Ave NE Kirkland, WA James Center

1/13/16

6901 S 19th St Tacoma, WA Promenade 23 2301 S Jackson St Seattle, WA

2/17/16

6.00%

N/A


43

Seattle retail sales ($10M+) Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Lincoln Plaza Shopping Center

4/29/16

80,922

$26,718,000

6.90%

1988 / 2007

$330

70,575

$21,000,000

2001

$298

16,000

$20,750,000

1924 / 2009

$1,297

Buyer Seller

Comments

MK Property Services

•


PASSCO Companies

•

Major tenants: Big 5 Sporting Goods, Mens Wearhouse, Summit Salon Academy

Intracorp Real Estate

•

Vacant at time of sale

Merlone Geier Partners

•

Mixed-use redevelopment project

KLM Equities

•

100% leased to Hard Rock Café through early-2029

•

Previously acquired for $3.3M in September 2006

Da Li Properties

•


Tourmaline Capital

•

Major tenants: Market at Plaza, Goodwill, and Sprint

Gerrity Group

•


Cimco Enterprises

•

Major tenants: Ace Hardware, Rite Aid, Dollar Tree

Raskin Family

•


Prium Companies

•

Planned redevelopment

2501-2505 S 38th St Tacoma, WA Top Foods Grocery Store

1/15/16

15751 NE 15th St Bellevue, WA The Liberty Building (Hard Rock Café)

5/17/16

N/A

4.80%

Urban Visions

114 Pike St Seattle, WA La Plaza Midway

5/10/16

23201-23325 Pacific Hwy S Kent, WA Lake Stevens Marketplace

6/16/16

303 91st Ave NE Lake Stevens, WA Meeker Square

6/27/16

1301-1313 W Meeker St Kent, WA Renton Highlands Safeway Plaza

4/14/16

75,830

$19,200,000

1993

$253

96,341

$17,500,000

1993

$182

137,138

$17,000,000

1966 / 2004

$124

54,264

$16,900,000

1985-1998

$311

135,041

$14,116,000

2006

$105

7.00%

7.15%

7.30%

6.30%

•

Transaction resolved a troubled situation

Washington Investment

•


Henry Buys / Bart Kooyman

•

Major tenants: Safeway, 24Hour Fitness, Petco

Guardian Capital Management

•

100% leased at time of sale to Lowe’s Home Improvement

Fana Northlake LLC

•


Ivar’s

•

20-year single tenant net leased to Ivar’s

4110-4260 NE 4th St Renton, WA Midway Lowe’s

11/8/16

Shopping Center 24050 Pacific Hwy S Kent, WA Ivar’s 401 NE Northlake Way Seattle, WA

44

5.00%

Robertson Properties Group 12/15/16

16,767

$13,725,000

1970

$819

4.90%

Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

901 Building

4/28/16

21,968

$13,400,000

N/A

1946 / 1999

$610

34,672

$13,000,000

1965

$375

59,850

$11,970,000

2003

$200

52,573

$10,600,000

1993-1995

$202

33,496

$10,200,000

1986 / 2007

$305

905 Bellevue Way NE Bellevue, WA Brien Motors

12/6/16

5200 Evergreen Way Everett, WA Woodinville Athletic Center

2/12/16

N/A

7.37%

Buyer Seller

Comments

Lakha Investments

•


Greenbaum Family

•

Mixed-use property that includes approximately 12,000 sf of office space

•

1031 exchange

Swickard Corp.

•


P & S Properties

•

Buyer intends to occupy the building

Maverick Investments

•


Goodman Real Estate

•

Major tenants: Gold’s Gym, Home Court

Da Li Development

•


Hung Nguyen

•

Major tenants: Albertsons, Bartell Drugs

Frank Au

•


Gold Investment

•

1031 exchange

18512-18600 Woodinville Snohomish Rd NE Woodinville, WA White River Junction Center

1/14/16

7.71%

3734-4018 A St SE Auburn, WA Twin Lakes Shopping Center

6/30/16

7.40%

2120-2324 SW 336th St Federal Way, WA


45

Seattle


2016 Seattle multifamily sales ($10M+) overview

More than $5 billion in sales closed in 2016, setting a new market record Seattle’s strength as a multifamily market derives from unprecedented job growth, overwhelming in-migration and consistent demand in spite of record high supply. In 2016, the Seattle metro area set a new peak for sales volume, with $5.1 billion in transactions closing, significantly more than the average of $3.5 billion between 2012 and 2016, and $1.2 billion between 2007 and 2011. Investors continue to capitalize on the robust Seattle market because of its proven longevity and remarkable growth opportunities. Seattle is home to many Fortune 500 companies that have a long term commitment to Puget Sound. For this reason, it continues to lead the country in year-over-year job growth with 3.8 percent, compared to the national average of 2.1 percent. For the past seven years, an average of 61,000 jobs have been added to the Seattle market annually. In addition to the large companies that call Seattle home, like Amazon, Microsoft and Boeing, many Bay Area tech giants have grown substantially in the area, such as Facebook, Google, and Salesforce.

RENT GROWTH IN 2016 OUTPACED THE NATIONAL AVERAGE AT 7.5 PERCENT YEAR-OVER-YEAR Rent growth in 2016 outpaced the national average at 7.5 percent year-over-year. The Northend saw an increase of 9.3 percent, and the Southend was even more impressive, at 10.7 percent. In 2016, Seattle was the only city ranked in the top ten for both rent growth and rental price. While rents have grown rapidly in each of the last five years, the Seattle area is still a significant discount to San Francisco. Only the San Francisco Bay Area has a tighter housing market than Seattle. It is more costly than ever to own a home in Seattle,

as prices have climbed 60 percent in the last five years. In 2016, a record-low number of homes went on the market, with only 1,600 homes for sale in King County compared to 7,400 homes at the same period in 2015. Supply is dwindling at a time when demand has never been higher. Seattle’s inventory dropped 13.4 percent last year, which is the third largest decrease among the top 20 markets. Washington saw substantial net migration in 2016, as 87,100 people moved to the state, representing 71 percent of the total population growth. This is the third consecutive year that net migration exceeded 45,000, which is the average for the previous decade. In 2017, there will be significant multifamily unit deliveries, with 13,496 currently under construction. In 2016, a remarkable 10,387 units were delivered. This is a large increase in supply when compared to an average of 8,308 units delivered per year between 2012 and 2016, and an average of 3,436 units delivered per year between 2007 and 2011. This considerable supply is accompanied by substantial demand, as 11,639 units were absorbed in the last 12 months. The LIV Bel-Red apartments on the Eastside achieved the largest sales price of 2016, selling for $172.0 million. The largest suburban trade was Bridges at Northcreek in Bothell, which sold for $145.0 million. Tivalli was the largest new construction suburban sale, trading for $94.3 million. Cap rates remained relatively flat throughout the year, averaging 4.4 percent for new construction core assets. The overall Puget Sound average for sales larger than $10 million was approximately 5.0 percent. With underlying fundamentals remaining strong, the outlook for 2017 and beyond remains optimistic. As home to many noteworthy companies’ headquarters and satellite locations, Seattle’s economic drivers continue to fuel a healthy market, with robust employment growth, exponential population gain, and limited supply.


49

Seattle multifamily sales & statistics

Sales matrix ($10M+)

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

121

93

57

15

36

45

17

49

84

91

108

$285,965

$407,083

$417,391

$211,957

$321,078

$350,000

$509,800

$690,583

$606,383

$636,192

$554,745

CAP Rate Average

5.4%

5.1%

5.8%

6.4%

6.4%

5.8%

5.5%

5.1%

5.2%

4.9%

5.0%

Sales Volume

$2.0B

$2.9B

$1.6B

$0.4B

$0.9B

$1.5B

$2.7B

$2.0B

$2.8B

$3.9B

$5.1B

Number of Sales

Highest Price/Unit

INVESTORS CONTINUE TO CAPITALIZE ON THE ROBUST SEATTLE MARKET BECAUSE OF ITS PROVEN LONGEVITY AND REMARKABLE GROWTH OPPORTUNITIES.

50

Seattle multifamily sales ($10M+) Property

LIV Bel-Red

Closing Date

Sale Price $ Per Unit $ Per SF

Units Year Built

Cap Rate

9/13/16

$172,000,000

451

4.40%

$381,375

2015

2170 Bel-Red Rd Bellevue, WA Juxt

10/18/16

12/16/16

15631 Ash Way Lynnwood, WA

Holland Partner Group

$145,000,000

524

$276,718

1999

4.90%

Griffis Residential Grosvenor

$132,000,000

506

$260,870

2001

4.80%

Greystar AvalonBay Communities

$122,000,000

400

$305,000

1992

4.50%

Security Properties Heitman

$98,000,000

360

$272,222

1989

4.40%

Acacia Capital Grosvenor

$98,000,000

400

$245,000

1988

5.20%

Sequoia Equities TruAmerica Multifamily

$224 4/22/16

2630 77th Ave SE Mercer Island, WA Tivalli

2016

Blackstone

$331

15030 SE 179th St Renton, WA 77 Central

$415,175

4.60%

$312 9/30/16

13305 NE 171st St Woodinville, WA Carriages at Fairwood Downs

361

$241 5/26/16

5305 Lakemont Blvd SE Bellevue, WA Campbell Run

$151,400,000

$331

3333 164th St SW Lynnwood, WA Overlook at Lakemont

Goodman Real Estate

$604 10/12/16

20225 Bothell Everett Hwy Bothell, WA Avalon Brandemoor

Kennedy Wilson

$477 9/30/16

810 Dexter Ave N Seattle, WA Bridges at Northcreek

Buyer Seller

$96,831,000

171

$519,936

2010

4.10%

TIAA Seco Development

$542 3/9/16

$94,250,000

383

$246,084

2014

4.95%

Kennedy Wilson Goodman Real Estate

$283


51


Berkshires on Elliott

Closing Date


Units Year Built

Cap Rate

1/20/16

$90,750,000

233

4.00%

$386,516

1990

2400 Elliott Ave Seattle, WA Equinox

10/13/16

7/12/16

8/8/16

2/22/16

11400 NE 132nd St Kirkland, WA

52

JP Morgan Chase

$85,000,000

464

$183,190

1990

5.70%

Prime Group Fairfield Residential

$80,500,000

430

$187,209

2007

5.10%

Kennedy Wilson ColRich

$78,750,000

227

$346,916

1994

4.10%

Security Properties OHSTRS

$76,000,000

137

$554,745

2015

4.00%

Clarion Partners The Schuster Group

$75,000,000

380

$197,368

1991

4.60%

Starwood Capital Group Equity Residential

$242 6/22/16

1401 Merrill Creek Pkwy Everett, WA Woodlake

2009

Kennedy Wilson / LeFrak

$766

9009 W Mall Dr Everett, WA Millington at Merrill Creek

$433,946

4.70%

$306

75 Vine St Seattle, WA Huntington Park

204

$196 12/8/16

17771 NE 90th St Redmond, WA Walton Lofts

$90,250,000

$167

6170 Terrace View Ln Auburn, WA The Heights at Bear Creek

Berkshire Property Advisors

$536

952 SW Campus Dr Federal Way, WA Belara at Lakeland

Griffis Residential

$509 10/11/16

1520 Eastlake Ave E Seattle, WA Glen Park

Buyer Seller

$74,500,000

344

$216,570

2006

5.00%

Prime Residential Security Properties

$221 1/26/16

$74,211,000

288

$257,675

1984

$318

4.60%


Property

The Lodge at Peasley Canyon

Closing Date


Units Year Built

Cap Rate

9/21/16

$70,172,000

339

5.00%

$206,997

2004

32200 Military Rd S Federal Way, WA Bella Terra

11/9/16

11/18/16

12/19/16

11/1/16

9501 59th Ave SW Lakewood, WA

Equity Residential

$69,300,000

177

$385,806

2016

4.40%

UDR Legacy Partners

$68,500,000

309

$221,683

1990

4.95%

Priderock Capital Partners TruAmerica Multifamily

$65,250,000

294

$221,939

1990

5.40%

Intercontinental Real Estate Security Properties

$65,200,000

238

$267,347

2002

4.70%

Sares Regis Group Simpson Housing

$64,700,000

352

$183,807

1989

5.80%

Standard Property Lowe Enterprises

$191 9/27/16

125 SW Campus Dr Federal Way, WA Village at Seeley Lake

2002

Starwood Capital Group

$354

10115 Holly Dr Everett, WA The Reserve

$297,872

5.00%

$239

12716 Lake City Way NE Seattle, WA Olin Fields

235

$181 6/9/16

12303 Harbour Pointe Blvd Mukilteo, WA Solara

$70,000,000

$469

1300 SW Campus Drive Federal Way, WA On the Green at Harbour Pointe

UBS Realty Advisors

$283

8300 160th Ave NE Redmond, WA Arcadia Townhomes

Avanath Affordable Housing

$212 2/22/16

12101 Greenhaven Mukilteo, WA MileHouse

Buyer Seller

$63,800,000

401

$159,102

1989

5.30%

ConAm Kennedy Wilson

$179 10/5/16

$62,600,000

522

$119,923

1989

5.80%

Blackstone Bridge Investment Group Partners

$134


53


Grammercy

Closing Date


Units Year Built

Cap Rate

6/30/16

$61,250,000

382

5.00%

$160,340

1985

17425 120th Ln SE Renton, WA Reunion at Redmond Ridge

11/30/16

10/5/16

1/26/16

10/5/16

13608 12th Ave SW Burien, WA

54

Equity Residential

$56,600,000

304

$186,184

1987

5.00%

Jackson Square Properties Security Properties

$55,300,000

338

$163,609

1986

5.70%


$55,000,000

131

$419,847

2014

4.20%

Capital Valley Holland Partner Group

$53,182,000

202

$263,277

1990

5.00%


$52,550,000

293

$179,352

1989

5.50%


$187 8/9/16

10811 SE 239th St Kent, WA Alturas @ Burien

2008

Starwood Capital Group

$280

1020 Central Ave N Kent, WA Mosaic Hills

$188,460

5.10%

$640

11105 NE 123rd Ln Kirkland, WA Chandler’s Bay

321

$177 7/27/16

1201 Mercer St Seattle, WA Heronfield Apartments

$60,496,000

$212

2800 Queens Way Milton, WA Rivet

Fowler Property Acquisitions

$195

6305 S 238th Pl Kent, WA Surprise Lake Village

Fairfield Residential

$185 1/26/16

11315 Trilogy Pkwy NE Redmond, WA Waters Edge

Buyer Seller

$51,575,000

366

$140,915

1980

5.60%

MG Properties PASSCO Real Estate

$169 1/29/16

$51,450,000

543

$94,751

1948

$131

7.50%

Fowler Property Acquisitions Laramar Group

Property

Ballard Public Lofts

Closing Date


Units Year Built

Cap Rate

12/21/16

$47,500,000

99

4.80%

$445,773

2015

6450 24th Ave NW Seattle, WA East Howe Steps

10/19/16

2/29/16

8/1/16

10/12/16

1901 SW 320th St Federal Way, WA

Daly Partners

$47,200,000

402

$117,413

1985

6.50%

Goodman Real Estate Hamilton Zanze

$46,500,000

230

$202,174

1998

5.10%

Kennedy Wilson American Realty Advisors

$46,000,000

388

$118,557

1976

5.60%

Fowler Property Acquisitions Bridge Investment Group Partners

$45,553,000

111

$385,630

2015

4.40%

PrivatePortfolio Group Pryde Johnson

$43,200,000

200

$216,000

1989

4.90%

Investment Property Group Carmel Partners

$247 7/21/16

11401 3rd Ave SE Everett, WA Retreat at Maple Hill

2016

Bender Development

$564

2020 Lake Heights Dr Everett, WA North Creek

$476,455

3.30%

$153

5711 24th Ave NW Seattle, WA Waterford

96

$271 1/27/16

31004 19th Pl SW Federal Way, WA Soren

$47,500,000

$159

4500 Harbour Pointe Blvd Mukilteo, WA Landing at Dash Point

William Parks

$793

5601 N 37th St Tacoma, WA Alara at Harbour Pointe

TA Associates

$519 11/21/16

1923 Eastlake Ave E Seattle, WA Northpoint at Creekside

Buyer Seller

$42,000,000

264

$159,091

1986

5.30%

Priderock Capital Partners Lowe Enterprises

$185 10/26/16

$42,000,000

300

$140,000

1981

5.10%

Fairfield Residential Hamilton Zanze

$160


55


Venue

Closing Date


Units Year Built

Cap Rate

6/7/16

$41,500,000

284

5.75%

$146,127

1973

4455 NE 12th St Renton, WA Artesia by the Lake

8/3/16

8/12/16

11/17/16

9/8/16

2101 SW Sunset Blvd Renton, WA

56

Fairfield Residential

$40,200,000

73

$497,863

2016

4.20%

Calfox Real Estate Investment Continental Properties

$39,633,000

90

$394,513

2015

4.25%

TIAA Denny Onslow

$36,250,000

177

$204,802

2013

5.50%

Green Leaf Partners Rush Companies

$36,100,000

180

$200,556

1995

4.90%

Investment Property Group Ray & Deanna Dally

$35,300,000

200

$176,500

2003

5.25%

Actus Capital Partners AllianceBernstein

$166 9/6/16

103 12th Ave Seattle, WA Sunset View

1990

Rise Properties

$202

13507 E 99th Ave Puyallup, WA Anthem on 12th

$210,938

4.70%

$231

13118 Meridian Ave E Puyallup, WA Alderra

192

$654 1/29/16

4275 S Pine St Tacoma, WA Canterbury

$40,500,000

$59

1525 Harvard Ave Seattle, WA Pacifica


$230

324 Central Way Kirkland, WA Cue

New Standard Equities

$205 12/15/16

11225 19th Ave SE Everett, WA Capri

Buyer Seller

$34,700,000

120

$274,740

2015

5.00%

CWS Capital Partners Spectrum Development Solution

$439 11/30/16

$33,600,000

240

$140,000

1970

$128

6.20%

Legacy Group Captial Investors Management Group

Property

Hamptons

Closing Date


Units Year Built

Cap Rate

10/5/16

$33,300,000

230

5.60%

$144,783

1990

2541 Meridian St Puyallup, WA Clock Tower Village

2/10/16

8/5/16

10/5/16

12/6/16

2368 Yakima Ave Tacoma, WA

Carino and Associates

$33,000,000

160

$206,250

2013

5.20%

Daryl Connell Walt Miles & Eric Cederstrand

$33,000,000

146

$226,027

1967

4.90%

Wallace Properties MG Properties Group

$32,950,000

231

$142,641

1990

5.30%

Green Leaf Partners Thayer Manca

$31,000,000

155

$200,000

2000

5.60%


$30,300,000

116

$261,207

2015

4.90%

FSC Realty Christopher Koruga

$278 3/16/16

306 Blanchard St Seattle, WA Vue 25

2001

Security Properties

$176

1620 Benson Rd S Renton, WA Cornelius

$175,532

5.40%

$157

2323 7th St SE Puyallup, WA Altitude

188

$271 8/31/16

5406 82nd SW Tacoma, WA Bradley Park

$33,000,000

$204

10735 Roosevelt Way NE Seattle, WA Green Leaf at Lakewood

Bridge Investment Group Partners

$168

1600 Sequalitchew Dr Dupont, WA The Park at Northgate

Blackstone

$168 2/19/16

1584 McNeil St DuPont, WA Creekside Village

Buyer Seller

$29,650,000

137

$216,423

1926

5.00%

Pillar Communities MG Properties Group

$476 2/5/16

$28,650,000

163

$175,767

2012

4.90%

ColRich CenterSquare Investment Management

$248


57


Cambridge

Closing Date


Units Year Built

Cap Rate

1/22/16

$27,000,000

168

5.00%

$160,714

1969

4727 200th St SW Lynnwood, WA The Q

2/29/16

6/6/16

10/5/16

8/1/16


58

Acacia Capital

$25,866,000

61

$321,344

2010

5.00%

Equity Residential Ederer Investment Company

$24,050,000

49

$340,197

2000

5.00%

Triad Investments Co Inc. Lani, Robert and Michael Cochran

$22,000,000

123

$178,862

2002

5.00%


$21,800,000

157

$138,854

1991

5.60%


$21,800,000

90

$242,222

2015

4.80%

Pacific Development Partners Goodman Real Estate

$296 1/26/16

13850 NE 8th St Bellevue, WA Union 18

1950

Acme Realty

$153

4902 148th St SW Edmonds, WA Martine

$305,172

5.10%

$211

209 21st Ave SW Puyallup, WA Trillium

87

$278 2/22/16

1730 112th St SW Everett, WA Chesnut Hills

$26,550,000

$365

2108 N Pacific St Seattle, WA Sage

PASSCO Real Estate

$433

1520 12th Ave Seattle, WA Pacific Pointe

Grosvenor

$172 12/30/16

1321 Queen Anne Ave N Seattle, WA Packard Building

Buyer Seller

$21,247,000

67

$317,126

1984

4.70%


$342 9/14/16

$20,800,000

57

$364,912

1969

$454

5.30%

Pacific Development Partners Goodman Real Estate

Property

Gilman Terrace

Closing Date


Units Year Built

Cap Rate

5/31/16

$20,155,000

65

5.00%

$280,609

1989

2572 Gilman Dr W Seattle, WA 80 Main

7/29/16

2/22/16

11/7/16

7/22/16

733 Summit Ave E Seattle, WA

Goodman Real Estate

$20,000,000

128

$156,250

2007

5.80%

The University of Washington Lorig Associates

$20,000,000

104

$192,308

1989

4.90%


$19,400,000

76

$255,263

1975

3.90%

King County Housing Authority Intracorp

$18,800,000

136

$138,235

1989

5.40%

FSC Realty Daniel Lim

$18,230,000

54

$337,593

1927

4.20%

Peter Goldman Cadence Capital LLC

$452 7/21/16

14014 Admiralty Way Lynnwood, WA The Summit

2016

Borracchini Family

$142

1619 E John St Seattle, WA Serene Village

$446,667

4.10%

$257

31224 20th Ave S Federal Way, WA Whitworth

45

$232 8/31/16

14510 NE 7th St Bellevue, WA Brightwater

$20,100,000

$223

3805 164th St SW Lynnwood, WA Highland Village

Gilman Terrace Holdings LLC

$696

1717 Market St Tacoma, WA Orchard Ridge

Tim McHugh

$324 11/22/16

80 S Main St Seattle, WA Court 17

Buyer Seller

$17,925,000

121

$148,140

1987

5.50%

Pacific Coast Capital Partners / Fowler Property Acquisitions

$185 12/30/16

$17,000,000

52

$326,923

194

Williams Investments

4.60%

Acme Realty Acacia Capital

$538


59


Rainier Meadows

Closing Date


Units Year Built

Cap Rate

4/20/16

$16,921,000

134

5.70%

$126,276

1988

29225 Military Rd S Federal Way, WA Crystal Pointe

12/20/16

9/7/16

6/30/16

2/9/16

1406 E Republican St Seattle, WA

60

Pacific Coast Capital Partners

$15,400,000

119

$129,412

1968

7.00%

Williams Investments Tae-Kae Kai

$15,350,000

107

$143,458

1969

6.60%

Hsiao Lin & Yu Lo Sun Apex Properties Group

$14,475,000

40

$361,875

1990

4.60%

Ron Danz / Morris Groberman / Andrew Person Munehiro Tanaka

$14,450,000

75

$192,667

2015

4.75%

Eric Anderson Triad Development

$14,300,000

118

$121,186

1968

5.60%

DH&G Williams Investments

$138 12/5/16

12115 Meridian Ave S Everett, WA Yardhouse

1991

CIM Group

$636

19800 50th Ave W Lynnwood, WA Meridian Glen

$151,429

5.20%

$434

4029 7th Ave NE Seattle, WA Wilshire Cove

105

$170 11/30/16

2501 E Madison St Seattle, WA Studio 7

$15,900,000

$164

20407 68th Ave W Lynnwood, WA Madison Gate

Residential Investco

$153

701 75th St SE Everett, WA Heather Ridge

Thayer Manca

$159 10/6/16

35434 25th Ave SW Federal Way, WA Shoreside Village

Buyer Seller

$14,100,000

86

$163,953

1990

4.90%

Priderock Capital Partners Randolph Street Realty Capital

$192 2/1/16

$13,897,500

35

$397,071

2014

$762

4.00%

Jerry Costacos Revolve Development

Property

Crystal Bay

Closing Date


Units Year Built

Cap Rate

1/29/16

$13,730,000

112

5.70%

$122,589

1976

1605 S 235th Pl Des Moines, WA Arterra

1/13/16

1/29/16

4/29/16

4/29/16

4828 123rd St Sw Lakewood, WA

Holland Partners

$13,350,000

98

$136,224

1980

5.60%

Weidner Investment Services RedHill Realty Investments

$12,975,000

38

$341,447

1977

4.50%

Suhrco Residential Properties Coast Equity Partner

$12,450,000

32

$355,889

2009

4.00%

Peter Goldman Gerry Pigotti

$11,592,000

126

$92,000

1986

6.25%

Goodman Real Estate Pacific Living Properties

$11,312,000

64

$176,750

1986

4.80%

Armand Tiberio Thomas Propst

$209 7/26/16

3031 NE 137th St Seattle, WA Clover Lake Park

1981

Jackson Square Properties

$120

18414 108th Ave SE Renton, WA Chameleon

$111,250

5.50%

$507

9210 S Hosmer St Tacoma, WA Springfield

120

$416 4/15/16

3815 Woodland Park Ave N Seattle, WA Springhaven Village

$13,350,000

$180

2251 NW 59th St Seattle, WA Portofino

Pacific Living Properties

$143

9612 SE 252nd St Kent, WA Aros & Voss

Auctus Capital Partner

$176 1/11/16

711 W Casino Rd Everett, WA Parkside Village

Buyer Seller

$11,250,000

68

$165,441

1965

5.30%

Bob Cryan SR Investment Group

$213 11/10/16

$11,000,000

144

$76,389

1975

5.80%

Fowler Property Acquisitions Charles Diesing

$104


61


Emerald Park

Closing Date


Units Year Built

Cap Rate

11/10/16

$11,000,000

125

5.30%

$88,000

1981

5700 23rd St E Fife, WA The Park

4/29/16

12/15/16

7/22/16

10/27/16

25124 97th Pl S Kent, WA

62

Acacia Capital

$10,672,000

116

$92,000

1982

5.90%

Goodman Real Estate Pacific Living Properties

$10,500,000

61

$172,131

1968

5.10%

Madison Residential Williams Investments

$10,500,000

56

$187,500

1978

4.80%

Paul & Krista Lin Jennifer Murphy

$10,500,000

33

$318,182

2015

3.80%

Ken Williams Isola Homes

$10,350,000

107

$96,729

1949

5.30%

Meter at 4632 Fowler LLC Johnson Investment Company (Receiver)

$117 4/8/16

15530 Bothell Way NE Seattle, WA Stonecreek

1948

Colin Hagstrom / Curran Hagstrom / Giovanni Napoli / Ryan Dinius

$589

4632 Fowler Ct Everett, WA Sheridan Beach Terrace

$314,706

4.50%

$298

521 2nd Ave W Seattle, WA Forest Park Estates

34

$217 9/29/16

818 NE 106th St Seattle, WA Queen Anne Flats

$10,700,000

$124

5825 200th St SW Lynnwood, WA Northgate Manor

Charles Diesing

$449

9314 S Ash St Tacoma, WA Lynnview


$121 12/30/16

1205 Queen Anne Ave N Seattle, WA Waverly Farms

Buyer Seller

$10,270,000

51

$201,373

1965

5.40%

Dr. Anastasia Deliganis

$211 1/12/16

$10,000,000

70

$142,857

1988

$168

Steven Lazoff / Jeremy Gustavel / Kurt Fisher

5.60%

RedHill Realty Investment Weidner Investment Services

PORTLAND

Portland


Title right

66

2016 Portland office sales ($10M+) overview

Strong sales volume in the CBD pushes total to new cycle high The number of sales in the metro climbed to 27 transactions above $10 million in 2016, totaling over $1.15 billion with an average price per square foot of $255, a 6.8 percent increase over the $1.1 billion recorded in 2015. Of the $1.15 billion, $822 million or 71 percent were assets located in the CBD (Institutional ownership has increased over 50 percent since 2005, with many investors viewing Portland as the leading transitional market that bridges the gap between traditional primary markets and secondary markets.)

Much of the new ownership has pledged significant investment in renovations and upgrades in an effort to modernize their newly acquired assets and fetch higher rents. Buildings such as KOIN Tower and Sixth at Yamhill underwent significant renovations in 2016 and recent acquisitions such as Pacwest, CDK Plaza, Power & Light Building and Macy’s will all be undergoing significant renovations to their lobbies and common areas in an effort to attract creative tenants.

The end of year sale of Pacwest center from GEPT/Ashforth to LPC Realty Advisors for $170 million was the largest sale of the year and traded at a price per square foot of $312. The 29-year-old building was only 76 percent leased at the time of sale and new owners have pledged significant investment to upgrade the building’s lobby and common areas. The sale marks one of two Portland trophy assets that traded hands in 2016, the other being the sale of Pioneer Tower from General Growth Properties to LaSalle for $121.75 million. Pioneer Tower set the year’s highwater mark at $411 per square foot and registered the lowest ever cap rate for a core CBD Class A building at 4.8 percent, signaling that investors are placing more value on Portland’s core assets and expecting more rent growth. The nod to Portland as a credible alternative to primary markets has been characterized by sharply declining cap rates in recent years, with 2016 reaching a new low; averaging 5.2 percent for core assets in the CBD.

The sale of the Evergreen Corporate Center was the most significant suburban sale of the year, trading for $45.5 million in the second quarter. The sale consisted of four buildings totaling 266,000 square feet. Following closely was the sale of South Center and the Tanasbourne Commerce Center for $44.25 million and $31.1 million respectively. These high profile suburban trades show that suburban assets are proving attractive to large institutional investors. Office sales should remain brisk through 2017, with a number of high profile properties on the market spilling over from 2016 and institutional owners continuing to look for value and quality in less volatile markets such as Portland. Buildings set to undergo renovations in the market are evaluating their options. These investments will continue to drive rent growth in the CBD.

INSTITUTIONAL OWNERSHIP HAS INCREASED...WITH MANY INVESTORS VIEWING PORTLAND AS THE LEADING TRANSITIONAL MARKET...


67

Portland office leasing

Record development pushes market vacancy and rents up Demand for office space remains strong, with 634,140 square feet being absorbed in 2016. Class A absorption in the CBD experienced its best yearly performance since 2000, with 321,062 square feet absorbed in 2016. A large part of the positive absorption was due to leases commencing in newly delivered buildings, indicating that tenants are increasingly taking advantage of all the quality space being brought to the market. The rest of the close-in urban submarkets also experienced strong absorption in 2016, with the Lloyd District and Close-In Eastside Class A buildings experiencing 172,652 square feet of positive absorption between the two submarkets. For the first time in six years, supply has outpaced demand; with 1,176,643 square feet delivered in 2016 and a further 1,434,651 square feet currently under construction. After a five year construction hiatus due to the 2008 recession, the eventual delivery of Park Avenue West was the largest addition to Portland’s skyline in six years at 220,889 square feet. Together with Pearl West and 1320 Broadway, the three largest speculative developments above 100,000 square feet all delivered around 90 percent leased. Other notable deliveries included the new headquarters of Banfield Pet Hospital in Vancouver, Ankrom Moison in Block 8L and Simple in Clay Creative, which added 206,000, 91,000 and 72,000 square feet respectively. The trend of the urban core spreading out of the CBD accelerated in 2016 with new projects such as Field Office, Leland James Center and other mid-sized developments on the East Side breaking ground. Of the 1.4 million square feet currently under construction, 98.8 percent are located within the urban core. Massive developments such as Zidell Yards and further expansion into the North Waterfront and Slabtown micromarkets are also planned in the near future and will further contribute to the densification of close-in urban submarkets.

68

Portland has had a sub 10 percent office vacancy for the past three years, and continues to be one of the top five tightest markets in the nation, evidenced by over 85.9 percent of new deliveries in 2016 being leased at delivery. New construction rates are shattering previous records, with rents routinely being quoted above $40.00 per square foot and some as high as $46.00. This newer, higher quality product is pushing rents up significantly in the metro area, which are up 13.0 percent year-on-year, to $27.56 full service, predominantly led by CBD Class A buildings, now averaging $33.48. While the information and technology sector continues to be the largest group of tenants looking for space in the metro area, the dominance in leasing activity is waning and being replaced by more traditional tenants looking for space in creative buildings. Demand for creative space is increasing among these non-creative companies, producing an environment where Class B and C office rents are escalating rapidly. A landscape has been formed where creative Class B office space, in specific buildings, can bring in higher rents than traditional office space in Class A buildings. Driven by the high price of new construction, expect rental rates to continue their ascent as properties deliver to the market. Vacancy will likely bump up slightly when deliveries hit the market, but is not expected to rise beyond 10 percent for the metro area, with the CBD likely seeing vacancy modestly higher. Institutional investment in the market will continue to drive the trend of re-positioning buildings; particularly for Class A buildings with vacant space, as new owners try to capture creative demand. This will further push rental rate growth in the market.

Portland office sales & statistics

Office market statistics

Submarket

Size (RSF)

Vacancy

Avg. Rental Rate

Net Absorption RSF

Central City

26,050,183

8.6%

$31.23

250,951

Eastside

6,495,729

9.8%

$24.79

31,929

Westside

20,741,646

10.6%

$26.29

26,284

Vancouver Suburbs

6,537,183

8.3%

$20.85

324,976

2016 Total Market

59,824,741

9.4%

$27.56

634,140

2015 Total Market

58,699,534

8.9%

$24.59

783,626


2008

2009

2010

2011

2012

2013

2014

2015

2016

Number of Sales

28

9

5

5

5

9

14

18

21

27

Price/SF Highest

$442

$271

$159

$197

$356

$443

$399

$460

$496

$497

CAP Rate Average

6.7%

7.1%

7.6%

8.4%

7.4%

8.3%

7.3%

7.2%

5.6%

5.8%

Sales Volume

$1.8B

$518M

$180M

$200M

$282M

$247M

$437M

$638M

$1.1B

$1.15B


69

Portland office sales ($10M+) Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Pacwest Center

12/21/16

545,000

$170,000,000

N/A

1988

$312

1211 SW 5th Ave Portland, OR

Pioneer Tower

6/30/16

Portland, OR 888 SW 5th Ave

Park Square Campus

11/8/16

100 SW Market St Portland, OR

Public Service Building

9/15/16

920 SW 6th Ave Portland, OR

USPS 715 NW Hoyt Street Portland, OR

70

8/2/16

296,239

$121,750,000

1990

$411

295,767

$94,350,000

1969 / 2014

$319

233,607

Master Lease

1927 / 1999

N/A

402,936

$88,000,000

1962

$218

4.80%

5.30%

N/A

N/A

Buyer Seller

Comments

LPC Realty Advisors

•


GEPT/Ashforth Company

•

413 parking stalls

•

Bought for repositioning. Lobby and common areas to be renovated

•

Major tenants: Schwabe, Williamson & Wyatt, Merrill Lynch and Key Bank

LaSalle

•


GGP

•

188 Parking stalls

•

Major tenants: Tonkin Torp, Geffen Mesher, Bullivant Houser Bailey

CBRE Global Investors

•

2 property portfolio

CalSTRS

•


•

212 parking stalls

•

Major tenants: Regence, Oregon DoJ, Ecova


•

Off market transaction

Downtown Development Group

•

Beacon took ownership of master lease

•


•

Parking ratio: 2/1,000

•

Major tenant vacating in 2017

Portland Development Commission

•

Site will be redeveloped as part of Broadway Corridor Master Plan

USPS

•

Purchased for land value

•

USPS (single tenant – will relocate to new development in NE Columbia Corridor)

Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Commonwealth Building

6/16/16

218,499

$69,000,000

5.50%

1948 / 2015

$316

195,470

$54,150,000

1908

$277

266,000

$45,500,000

1997

$171

421 SW 6th Ave Portland, OR Macy’s Building

11/22/16

621 SW 5th Ave Portland, OR Evergreen Corporate Center

6/16/16

4/14/16

7565-7995 SW Mohawk St Portland, OR RiverEast Center

3/16/16

1515 SE Water Ave Portland, OR

CDK Plaza

1750 NW Naito Pkwy Portland, OR

$44,250,000

1991

$129

99,860

$33,500,000

1952/2006

$335

•


N/A

KBS Realty Advisors

•

Redevelopment from retail to creative office

Macy’s Department Stores

•

Macy’s will exit the building in Q1 2017

6.20%

Griffin Capital

•


Washington Real Estate Holdings

•

Rent will increase dramatically in 1.5 years

•

Major tenants: Nike

7.20%

Westport Capital

•


UBS Realty Investors

•

10 buildings

•

Proforma cap rate: 7.7%

4.50%

•


•

In place rents estimated 50% below market

•

176 parking stalls

•

Major tenants: Mackenzie, Viewpoint Construction Software

Bixby Land Co.

•

2 building campus and plaza

KBS REIT

•


•

Major lobby and plaza renovations to take place totaling $7.5m

•

Major tenant: CDK Global (will vacate 20,000 SF in Q1 2017)

Lincoln

•


TA Realty

•

385 parking stalls

•

Major tenants: Harris Group, Legacy Health

ASB Real Estate Investments RiversEast LLC

12/8/16

2525 SW 1st Ave Portland, OR

Fremont Place I & II

342,316

KBS Realty Advisors

7/29/16

185,729

$33,400,000

1981 / 1991

$180

121,506

$31,500,000

1987

$259

Comments

Unico Properties

20500-20540 NW Evergreen Pky Portland, OR South Center I-IV

Buyer Seller

N/A

5.70%


71


Tanasbourne Commerce Center

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

3/1/16

183,907

$31,100,000

7.10%

1986 / 2001

$169

3188 NW Aloclek Hillsboro, OR

Hanna Andersson Building

3/16/16

2/25/16

4145 SW Watson Beaverton, OR

Rock Creek Corporate Center

Westport Capital Partners

1/15/16

119,948

$31,000,000

1930 / 2015

$259

146,028

$29,325,000

2003

$201

142,661

$23,000,000

1999

$161

6.10%

7.30%

N/A

4 buildings

•


•

804 parking stalls

•

Major tenants: Nike, Kaiser Permanente, Norm Thompson, Grass Valley

Mapleton Investments

•


ScanlanKemperBard

•

195 parking stalls

•

Renovated in 2015

•

Major tenant: Hanna Andersson

SKB/Independencia

•

2 buildings and parking garage

SKB

•


•

Parking stalls: 665 stalls

•

Major tenants: 24 Hour Fitness, Exterro

•

Part of 17 building portfolio sale – price is allocation

•


•

4/1000 Parking

•

Major tenants: Fiserv, GE Healthcare

•

Part of 17 building portfolio sale – price is allocation

•


•

160 parking stalls (4/1000 Parking)

•

Major tenant: Volkswagen

Kensington Management

•


New Urban Properties

•

No parking

•

WALT less than 1 year, most tenants on month-to-month

Lone Star Funds Blackstone

3400 NW John Olsen Pl Hillsboro, OR

Sunset Corporate Park

1/15/16

22867 NW Bennett St Hillsboro, OR

Board of Trade 306-310 SW 4th Ave Portland, OR

72

9/30/16

133,221

$22,000,000

1998

$165

88,797

$18,000,000

1908

$203

Comments

•

Meriwether Partners

541 NE 20th Ave Portland, OR

The Round

Buyer Seller

N/A

Lone Star Funds Blackstone

N/A

72

Property

NW Center For Orthopedics & Rehabilitation

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

8/5/16

33,290

$16,530,573

6.10%

2005

$497

1515 NW 18th Ave Portland, OR

ODS Plaza

5/16/16

10505 SE 17th Ave Milwaukie, OR

1500 Plaza

12/2/16

1500 NE Irving St Portland, OR Ballou & Wright Building

1/8/16

1010 NW Flanders St Portland, OR 811 @ Waterfront

5750 NW Pacific Rim Camas, WA

$15,231,835

2001

$300

72,572

$14,575,000

1964 / 2013

$201

55,500

$14,000,000

1992 / 1997

$252

7.30%

7.30%

N/A

Comments

Olympus Ventures

•


Acorn NW Real Estate Fund

•

Office/medical use building

•

Major tenants: Pettygrove Physical Therapy & Sports Rehabilitation, Northwest ASC, The Orthopedic and Sports Medicine Center of Oregon

Columbia Investments

•


Oregon Dental Service

•

Possible lease-back

•

150 Parking stalls

•

Major tenant: ODS

Second City

•


Swift

•

158 stalls (2.3/1,000)

ASB Real Estate Investments/Specht

•


•

Will be redeveloped into creative office

Roscoe Nelson

•


Swift Realty Partners

•


•

45 parking stalls

•

Major tenants: Ensequence, Marquam Group, CompanionLink Software

Camas School District

•


Sharp Electronics Corp

•

Owner-user purchase

•

Includes 30 acres of land for future development

Evan Denhart 2/4/16

811 SW Naito Pkwy Portland, OR

Sharp Electronic Building

50,800

Buyer Seller

6/29/16

49,222

$12,600,000

1982

$256

55,000

$12,500,000

1990

$227

5.00%

N/A


73


Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Swift Portfolio

12/29/15

90,810

$12,188,000

5.30%

1875 / 1994

$134.21

Merchant Hotel Building Captain Couch’s Square Norton House Bldg

$6,110,267

Portland, OR

Buyer Seller Swift Real Estate Partners

Comments

•

3 historic buildings

•


Fountain Village Development Co

•

Will be redeveloped to creative

•

Renovated in 1990, 1998, 1998

Onder Development

•

3 building sale consisting of office and retail buildings

•

Property will be redeveloped into Hotel tower and office building - land value

Killian Pacific

•


Ifits Equity

•

Office/medical use building

•

1031 exchange

•

Major tenant: Retina Northwest

$3,290,448 $2,787,284

Onder Portfolio

3/10/16

915 SW 2nd Ave Portland, OR

Lovejoy Medical Building 2525 NW Lovejoy St Portland, OR

74

6/30/16

56,815

$12,125,000

1892

$213

40,000

$10,000,000

1965

$250

N/A

House Of Gold

3.00%


75

Portland


2016 Portland industrial sales ($10M+) overview

Sales velocity accelerates as institutional investors take advantage of strong tenant demand The absence of large multimarket portfolio sales that included multiple Portland properties left 2016 industrial sales down 24 percent from 2015’s alltime high of $615 million, to $467 million. However, this is the second highest total on record and interest in Portland assets remains high with the number of deals above $10 million increasing to 16, double 2015’s velocity. Sales continue to be focused in the NE Columbia Corridor with 40 percent of sales concentrated in that submarket. Deliveries of new product remain strong and delivered 83 percent leased in 2016, 20 percent higher than 2015 and higher than any year on record.

2016 WAS ANOTHER RECORD YEAR FOR INDUSTRIAL SALES IN PORTLAND Increased demand and competition for Portland industrial assets continues to compress cap rates with the average cap rate dropping from 2015 to 6.1 percent. With record low vacancy and surging rents, investors who own quality assets are reluctant to sell and the lack of Class A sales was noticeable, with only four Class A buildings sold in 2016 at an average cap rate of 5.3 percent. One of those sales was Rivergate Logistics Center from Principal Real Estate Investors to Dermody Properties at a cap rate of 4.7 percent, the lowest in 2016. The building was also the largest individual building sold at 527,934 square feet. Developers are also taking advantage of Portland’s hot industrial market. The newly built PDX Logistics Center, Buildings 1, 2 and 3, sold to Clarion Partners for a total of $82.8 million or $98 per square foot, with a cap rate of 5.7 percent for Buildings 1 and 2 and 5.4 percent for Building 3. The project was fully leased before delivery and had weighted average lease terms of 8.9 and 6.4 years respectively.

78

The crowding out of local investors and owner/users by institutional investors continued in 2016 with only one transaction above $10 million going to an owner/user and just two transactions by regional investors. By far the largest sale of the year occurred late in fourth quarter when the Commerce Parks Portfolio sold to Lincoln Property Company for $112.3 million at a cap rate of 6.0 percent. The portfolio consisted of five commerce parks totaling 1.4 million square feet and almost 70 acres of land. Flex sales activity in 2016 was subdued at $124 million and was largely dominated by sales of Nike-occupied buildings. Of the six flex transactions in 2016, three of them were Nike-occupied totaling 522,680 square feet. The largest sale of the year was the nine property portfolio of Beaverton Creek Business Park that sold to Artemis/Cruzan for $41.55 million at a cap rate of 4.8 percent. In addition to the nine properties that Specht sold to Artemis/ Cruzan, two other buildings in the business park were sold by Specht to KM Paige Associates in a separate transaction for $9.5 million, bringing the total sales price of the Beaverton Creek Business Park to $51.05 million Taking both industrial and flex sales into account, total sales for 2016 amounted to over $591 million. The number of sales above $10 million was the most ever seen and if multimarket portfolio sales are excluded, 2016 was another record year for industrial sales in Portland. A burgeoning population and economy are the catalysts for this growth and the metro is attracting larger and higher profile tenants that are snapping up any and all larger developments in the metro. As these users continue to move to Portland, sustained pressure on vacancy rates and increasing rents will continue and attract further interest from institutional investment.

Portland industrial leasing

E-commerce propels strong 2016 and is expected to continue through 2017 As Portland’s population continues to balloon, large e-commerce and distribution companies have expanded into new locations to service their growing customer base. 2016 saw 19 leases above 100,000 square feet, among the most notable were Amazon and DB Schenker signing 303,360 and 137,920-square-foot leases in the Sunset Corridor’s latest development, the Majestic Brookwood Business Park, indicating that the population in Portland’s western suburbs has reached a critical mass as companies move to service their customers in the traditionally underserved west. On the Eastside, UPS and Cummins both signed and moved into 234,960 and 119,993 square feet respectively at PDX Logistic Center’s Building 3, with UPS signing for another 60,000 square feet at Rivergate Logistics Center as 2016 drew to a close. The delivery of Subaru’s new 600,000-square-foot distribution center and Amazon’s 303,360-square-foot sortation center took the absorption total to 2,971,267 square feet for 2016. While absorption is down 31.5 percent from 2015, large expansions in the fourth quarter by Bunzl, USA Warehousing and Logistics and Aosom meant Portland saw a third year in a row where absorption was above the 10-year average of 2.2 million square feet. This sustained demand in the market drove vacancy down 40 basis points year-over-year to a record low of 3.4 percent and Portland experienced its largest 12-month rent increase on record during 2016, growing 18 percent to $0.59 per square foot. Asking rents for new construction are now firmly being quoted at $0.55 with office surcharges quoted up to $0.90 per square foot, on a triple-net basis.

Deliveries in 2016 were sizeable, with over 2.4 million square feet added to the Portland metro. While completed construction was down 520,000 square feet year-over-year, industrial development remains elevated with 2.5 million square feet under construction, of which 70 percent is speculative, a sign that developers remain bullish on Portland’s industrial future. Leasing at delivery for 2016 was 83 percent, over 20 percent higher than 2015. The metro’s largest developments such as PDX Logistics Center, Vista Logistics Park – Subaru Distribution Center, Majestic Brookwood Business Park and Clackamas Distribution Center were all 100 percent leased before they were completed. In addition to larger developments, Portland is experiencing a boom in small to medium size developments of infill sites closer to the urban core. These developments are targeted as regional distribution centers with high volumes, and these buildings are pushing rents up faster than any other period in Portland’s history. Vacancy remains at a 25-year low, fueled by strong population and job growth in the metro area. Demand has exceeded supply for the last six years, further strengthening Portland’s industrial market fundamentals. Less desirable product on the market is benefitting from the new construction, pushing rents to new highs. While there is a decent amount of new supply expected to deliver in 2017, demand remains high and vacancy is expected to remain at record lows with rents continuing to push upwards.

PORTLAND IS EXPERIENCING A BOOM IN SMALL TO MEDIUM SIZE DEVELOPMENTS OF INFILL SITES CLOSER TO THE URBAN CORE


79

Portland industrial sales & statistics

Industrial market statistics

Submarket

Size (RSF)

Vacancy

Avg. Rental Rate

Net Absorption (RSF)

Eastside

92,306,001

2.9%

$0.65

2,117,090

Westside

62,545,056

4.0%

$0.55

674,832

Clark County

16,385,710

3.4%

$0.48

179,345

2016 Total Market

171,236,767

3.4%

$0.59

2,971,267

2015 Total Market

167,491,279

3.8%

$0.50

4,339,260


2008

2009

2010

2011

2012

2013

2014

2015

2016

Number of Sales

17

5

1

1

2

5

5

15

11

22

Price/SF Highest

$156

$112

$52

$59

$44

$63

$95

$133

$153

$231

CAP Rate Average

6.9%

7.0%

9.5%

9.2%

N/A

7.4%

7.4%

7.1%

6.2%

6.1%

$377M

$84M

$40M

$28M

$32M

$173M

$103M

$320M

$732M

$591M

Sales Volume

80

Portland industrial sales ($10M+) Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Commerce Park & Park I-84 Portfolio

12/9/16

1,392,407

$112,315,000

6.00%

1959-1993

$81

530,068

$51,400,000

1988-1992

$97

Buyer Seller

Comments

Lincoln Property Group

•

Five property portfolio

Washington Real Estate Holdings

•

69.7 Acres

LBA Realty

•

Nine building portfolio

BIT/PNC

•


•

21% office

•

Major tenants: Owens & Minor, Laminations

•


•

Major Tenant: KeHE

Lexington Realty Trust

•


CBRE Global Investors

•

Major tenant: Pacific Foods (single user)

Artemis / Cruzan

•

Nine property portfolio

Specht/ASB

•


2901-3203 SW 153rd Ter 3005 SW 154th Ter

•

Major tenant: Nike

15345-15385 SW Beaverton Creek Ct

•

Flex property

•

Under market rents

KM Paige Associates

•

Two property portfolio

Specht/ASB

•


•

Major tenant: Nike

•

Flex property

•

Under-market rents

12475 SE Johnson Rd Portland, OR Wilsonville Business Center

7/1/16

5.80%

27350-27695 SW 95th Ave 9025 SW Hillman Ct 9720-9750 SW Hillman Ct Wilsonville, OR PDX Logistics Center (2 buildings)

3/18/16

491,200

$46,600,000

2014

$95

5.70%

9255-9555 NE Alderwood Rd Portland, OR Wilsonville Logistics Center

Clarion Partners and LIT-Acquisitions Capstone Partners/PCCP

10/4/16

508,277

$43,100,000

1986 / 1989

$85

311,000

$41,550,000

1989-1997

$133

5.90%

27255 SW 95th Ave Wilsonville, OR Beaverton Creek Business Park

9/15/16

4.80%

15450 SW Milikan Way Beaverton, OR Beaverton Creek Business Park 15550-15560 SW Millikan Way Beaverton, OR

8/29/16

68,713

$9,500,000

1997

$138

4.80%


81


Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

PDX Logistics Center - Phase II – Bldg 3

10/31/16

355,200

$36,200,000

5.40%

2016

$102

527,934

$36,000,000

1999

$68

Buyer Seller

Comments

Clarion Partners

•

100% leased

Capstone Partners/PCCP

•

Major tenants: UPS, Cummins

Dermody Properties

•


Principal Real Estate Investors

•

Property has significant lease roll in near term

•

Major tenants: Ford, Terminal Transfer, Aaron Rents

Winkler

•

Two property portfolio

LBA Realty

•


•

Year 1 cap rate: 7.45%

•

Major tenant: Nike

9601 NE Alderwood Rd Portland, OR Rivergate Logistics Center

5/4/16

8929 N Ramsey Blvd Portland, OR SunTech Corporate Park & Tanasbourne Corporate Park I

10/7/16

142,967

$23,275,000

2001

$163

4.70%

7.50%

3445 NW 211th Ter 20010 NW Tanasbourne Dr Hillsboro, OR Halsey Business Center

3/17/16

18285-18557 NE Halsey St Portland, OR Crosswhite Industrial Park

9/30/16

6461 SE Crosswhite Way Portland, OR

Ronler Corporate Center

5/4/16

23235-23255 NW Evergreen Pky Portland, OR Navistar Building 22638 NE Townsend Way Fairview, OR

82

9/22/16

423,300

$22,300,000

1960 / 1983

$53

267,000

$20,000,000

1980

$75

159,701

$17,325,000

2000-2001

$108

210,000

$17,200,000

2007

$82

7.10%

7.50%

N/A

N/A

•

Flex property

DRA Advisors

•


STAG Industrial

•

Major Tenant: Unisource Worldwide

Watumull Properties

•

Off-market transaction

Crosswhite Enterprises

•


•

1031 exchange for buyer

•


•

Major Tenant: Precision Castparts

SWIFT

•


Broadreach Capital Partners

•

Pro-forma Cap Rate listed at 8.5% (after stabilization)

•

Flex property

•

Part of 19 property/35 building multimarket portfolio

•


•

Major tenant: CTDI (single user)

RREEF Management International Airport Centers

Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Twin Oaks Business Park

9/29/16

162,543

$17,150,000

7.00%

1984-1988

$103

1800-1815 NW 169th Pl Beaverton, OR Dawson Creek Corporate Park

9/23/16

126,180

$15,350,000

1996

$122

6.90%

Buyer Seller PNW Properties

•

10 Property portfolio

Graham Salisbury

•

Approximately 92% leased at time of sale

•

Bought for renovation

Thomas Garnier

•

2 Property portfolio

Leavitt / Wolff Co.

•


•

Major tenants: Radisys Corp, Genentech

Lincoln Property Co.

•


Trammell Crow

•

Major Tenant: Wineshipping.com

DW Fritz

•

Owner-user

Killian Pacific

•


BLT Enterprises & Majestic Asset Management

•

25% mezzanine office build out

•

1031 Exchange

•

Development piece in site

•

Major tenants: Labrix, Cornell Pump Company

Prologis

•


Allegro Corporation

•


•

1031 Exchange

•

Sale-Leaseback

Sixteen Segment

•



•


5435-5445 NE Dawson Creek Dr Hillsboro, OR Southwest Industrial Park Bldg D – Lot 4

1/31/16

145,136

$14,520,000

2015

$100

157,038

$12,000,000

978/1989

$76

160,707

$11,660,000

1981

$73

5.90%

Comments

12085 SW Myslony St Tualatin, OR IMP Building

9/28/16

9600 SW Boeckman Rd Wilsonville, OR Sunrise Business Center

6/9/16

16277 SE 130th Ave Clackamas, OR

Rockwood Corporate Center

2/12/16

131,037

$11,250,000

2008

$86

N/A

Inland Pacific Properties 7.70%

N/A

19786 NE San Rafael St Portland, OR Hayden Island Business Park

10/31/16

98,860

$11,125,000

1981

$113

6.40%

2400-2723 N Hayden Island Dr Portland, OR


83


Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Cummins NW Building

6/30/16

47,883

$11,067,000

5.90%

1985

$231

4711 N Basin Ave Portland, OR E.J. Bartells Building 18977-19039 NE Portal Way Portland, OR

84

7/28/16

110,000

$10,473,909

1999

$95

5.50%

Buyer Seller

Comments

Alta Home Properties

•


Swan Island Capital

•

Possible 1031

•

Major tenant: Cummins NW


•

Two Property multimarket portfolio

Billings Development

•

Portfolio cap rate 5.5%

•


•

Major tenantt: EJ Bartels (single user)


85

Portland

Office Industrial Retail Multifamily Seattle & Portland 2016 Investment Overview

87

2016 Portland retail sales ($10M+) overview

Investment sales decline as super-mall sales dry up After 2015’s stellar retail sales performance, the lack of super regional mall sales weighed down sales in 2016, which fell 58 percent to $438 million. Investors are still finding value in small neighborhood centers as cap rates compressed further in 2016, averaging 5.8 percent. The largest deal of 2016 was the sale of Progress Ridge Town Square by Gramor Development to Donahue Schriber for $95.2 million at a price per square foot of $445. Gramor is focusing its efforts on their Vancouver waterfront development. The new development, which broke ground in 2016 on its first phase, reconnects 35 acres along the Columbia River to the city’s historic core and will include up to 3,300 housing units, 10 park acres, 1.25 million square feet of office space and 250,000 square feet of retail and hospitality space. While Progress Ridge Town Square’s sale was the largest of the year, the most notable sale came from Macy’s 68 store closures. Macy’s owned the first 5 floors of the old Meier & Frank Building which total 195,470 square feet, the other 9 floors are occupied by The Nines Hotel owned by Pebblebrook Hotel Trust. Macy’s sold their portion of the building to KBS Realty Advisors for $54.15 million at $277 per square foot, and KBS plans to redevelop the building into creative office once Macy’s vacates in the spring of 2017. This shift in retail footprints is a national trend, not specific to Portland. Traditional department stores, midprice specialty and apparel retailers are undergoing a radical shift in consumer demand. Shoppers are either flocking to discount department stores like Target and Walmart or luxury retailers. This is been especially hard on traditional department stores, which are also perceived as old-fashioned by millennial and generation Z shoppers. Some will be redeveloped with new tenants focused on experiences, like food and entertainment. Others will be redeveloped with more of a focus on discount shopping, attracting retailers that might have traditionally been in a Power Center, like discount department stores and grocers.

INVESTORS ARE STILL FINDING VALUE IN SMALL NEIGHBORHOOD CENTERS AS CAP RATES COMPRESSED FURTHER IN 2016, AVERAGING 5.8 PERCENT. 88

Portland retail leasing

Portland retail fundamentals are strong Portland’s economy remains a top performer nationally, spurring confidence in the metro’s retail sector. The metro maintains solid economic drivers; above-average population growth, job gains and household formation. These factors have resulted in strong demand and thus declining vacancy, but rent growth is still average. Moderate net operating income growth should not support outsized returns but Portland’s strong demographics make it one of the better opportunities in the region, and retail cap rates are the highest among the West Coast metros. However, the hardships afflicting large national department chains have not evaded Portland. Macy’s announced that it will close its downtown location in spring 2017 as part of a nationwide 68-store closure following a slowdown in sales. In 2015, Nordstrom vacated both its Lloyd Center and Vancouver Mall locations. Management attributed underperforming sales to the Lloyd Center’s lack of appeal to the typical Nordstrom shopper. Demand in 2016 was strong with 773,961 square feet being absorbed, pushing Portland’s retail vacancy down to 3.9 percent, 40 basis points lower than in 2015 and significantly below the national average. 2017 won’t provide much relief, with just 431,573 square feet of retail space currently under construction and already 82.9 percent preleased. Over half of the current construction is general freestanding retail buildings with an average building size of 23,946

square feet, meaning minimal new options for larger stores. The largest project currently under construction is the 129,000 square foot expansion of Cedar Hills Crossing II in Beaverton. The addition is expected to deliver in the fourth quarter of 2017 with the bowling alley, Sunset Lanes, already signing a 44,446 square foot lease. Other large leases in the metro area include supermarket chain Fred Meyer moving into 143,000 square feet as the anchor tenant in the newly opened Happy Valley Crossroads shopping center in Clackamas/ Milwaukie. Walmart also signed 48,000 square feet at Sequoia Village in the Sunset Corridor. Big spending from a growing population contributes to strong demand. Population, employment growth and home price appreciation are well above the national average, meaning more residents with stable paychecks are purchasing goods and services in the metro area. Portland offers robust job prospects, and its reputation for high-quality yet relatively affordable living appeals to young families ready to settle down. Retail sales have been strong, but online sales could hurt demand for brick-and-mortar locations, especially in a metro that is increasingly tech-centric.

PORTLAND’S RETAIL VACANCY IS DOWN TO 3.9 PERCENT, 40 BASIS POINTS LOWER THAN IN 2015 AND SIGNIFICANTLY BELOW THE NATIONAL AVERAGE


89

Portland retail sales & statistics Retail market statistics

Submarket

Size (RSF)

Vacancy

Avg. Rental Rate

Net Absorption RSF

CBD

4,820,506

4.0%

$19.14

26,404

Clark County

18,766,299

4.8%

$18.42

306,058

I-5 Corridor

10,935,736

5.3%

$21.50

(47,628)

Lloyd District

5,564,753

4.3%

$21.92

11,903

Northeast

20,401,706

3.3%

$17.12

126,192

Northwest

1,826,150

3.2%

$22.40

(2,736)

Southeast

22,822,822

3.4%

$16.76

263,300

Southwest

13,701,921

3.7%

$18.60

(4,687)

Westside

9,637,155

3.2%

$18.37

95,155

2016 Total Market

108,477,048

3.9%

$18.23

773,961

2015 Total Market

107,318,284

4.60%

$17.42

705,712


2008

2009

2010

2011

2012

2013

2014

2015

2016

Number of Sales

14

6

4

9

4

5

9

13

20

14

Price/SF Highest

$633

$636

$173

$328

$209

$533

$405

$564

$643

$1,180

CAP Rate Average

6.5%

6.6%

8.5%

7.9%

9.7%

6.4%

7.4%

7.3%

6.6%

5.1%

$383M

$93M

$89M

$311M

$70M

$151M

$677M

$668M

$1.0B

$437M

Total sales volume ($ in millions)

90

Portland retail sales ($10M+) Property

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

Multi-Property Sale

8/19/16

213,849

$95,197,000

5.20%

2011

$445

Progress Ridge TownSquare

Donahue Schriber Commercial Real Estate

9/27/16

341,186

$86,300,000

2000

$253

184,610

$43,000,000

1998-2000

$233

N/A

Comments

•


•


•

Major tenants: New Seasons, Ace Hardware, Cinetopia, Umpqua

DDR

•


Westlake Realty Group

•

Major tenants: Bed Bath & Beyond, Best Buy, Old Navy

Giustina Resources

•

Eight property portfolio

Killian Pacific

•


•

Cap rate for Andresen Marketplace was 5.6%

•

Major tenants: Safeway, Rite-Aid

•


•

WALT: 14.1 years

•

Major tenants: Market of Choice, H&R Block, Pharmaca

Nhi-reit of Oregon LLC

•


Peg LLC

•

Single tenant: Toyota

Time Equities

•


Simon Property Group

•

Major tenants: Gap, Adidas, Bass, Carters, Guess

Killian Pacific

•


Metro Holdings North

•

1031 Exchange

•

Major tenants: Office Max, Harley Davidson Outlet, On Deck Sports Bar

Gramor Development

12345 SW Horizon Blvd Beaverton, OR Gresham Station Shopping Center

Buyer Seller

1135 NW Civic Dr Gresham, OR Evergreen & Andresen Marketplace Portfolio

4/22/16

6.70%

6711-6715 NE 63rd St 3307 NE 32nd St 3307 Evergreen Way Vancouver & Washougal, WA Multi-Property Sale

10/4/16

Timberland Shopping Center

91,660

$42,600,000

2015

$465

5.20%

LaSalle Investment Management Gramor Development

12043 NW Barnes Rd Portland, OR Toyota

8/22/16

30,924

3142 NE Doran Dr McMinnville, OR Columbia Gorge Premium Outlets

$36,500,000

N/A

$1,180 1/7/16

164,235

$28,425,000

1991/1998

$173

46,412

$19,750,000

1978

$426

N/A

450 NW 257th Way Troutdale, OR Lovejoy Square Portfolio 930 NW 14th Ave 1325 NW Kearney St Portland, OR

7/8/16

5.10%


91

Portland retail sales ($10M+) Property

Kitchen Kaboodle

Closing Date

Total SF Year Built

Sale Price $ Per SF

Cap Rate

2/2/16

30,567

$13,000,000

5.00%

1987

$425

404 NW 23rd St Portland, OR Arney Retail Center

3/1/16

9/14/16

6901 NE Sandy Blvd 7037 NE Sandy Blvd Portland, OR Town & Country Chrysler/ Mitsubishi

Urban Development Partners

Comments

•


•

Major tenant: Kitchen Kaboodle

•

Major tenants: TJ Maxx, Panera, Red Robin

•


•

Major tenants: Safeway, Raymond James Financial Services, Starbucks

Bett Investments

•


Moorenouri li

•

Major tenants: Dodge, Hyundai, Chrysler, Jeep

Heslin Holdings

•

Former Alerbertson’s

•


•

Single tenant: Sears

•


•

Single tenant: New Seasons

Alta Home Properties, LLC

3000-3060 Sprague Ln Woodburn, OR Rose City Center

Buyer Seller

38,390

$12,870,979

2015

$331

59,685

$12,750,000

1993

$214

5.90%

Giustina Resources Deacon Development Group

N/A

Retail Opportunity Investments, Corp. Estate of Earl M. Chiles

4/12/16

38,039

$12,650,000

1986

$332

48,330

$11,775,000

2000

$244

111,645

$11,500,000

1959

$103

M/A

16800 SE Mcloughlin Blvd Milwaukie, OR Tigard Towne Square

4/1/16

16200 SW Pacific Hwy Portland, OR Sears

8/17/16

1260 Lloyd Ctr Portland, OR New Seasons Market 6300 N Lombard St Portland, OR

92

N/A

Spirit Realty Capital N/A

Capref Lloyd Center East LLC Sears Roebuck & Co

3/1/16

25,050

$10,620,000

2016

$424

5.10%

Ram Property Development Deacon Development Group


93

Title right

94

Portland


2016 Portland multifamily sales ($10M+) overview

Portland’s robust multifamily demand is driven by the recent influx of millennials and new employers Portland’s multifamily strength stems from the continual increase in population and the notably high levels of employment. Portland currently has an inventory of 173,735 units, with an overall 2016 vacancy rate hovering around 4.9 percent. The average Portland rent sits at $1,297, which is a 10.2 percent rent increase from last year. Oregon is one of the top moving destinations according to migration studies. The average income in Portland is $81,160 and the total population is 2,372,802. The Portland City Council predicts that around 260,000 more people will be living in Portland by 2035. An impressive 40.9 percent of the total population earns over $75,000. Currently, unemployment levels in Portland are 5.0 percent and the city ranks ninth in the nation for total employment increase at 5.0 percent in the last 12 months. According to apartment search website, Abodo, Portland was voted as the fourtht most desirable city for millennials. Portland is on the cutting edge of the evolution of the local food and drink scene, which includes 895 local food trucks and 69 craft breweries. Portland has the highest concentration of athletic and outdoor companies in the nation. Millennial growth in Portland is anticipated to be 5.2 percent over the next five years, predominately in the downtown area. Investors continue to capitalize on the robust demand in the Portland market. 2016 multifamily sales dwarfed all previous years with 66 deals exceeding $10 million, totaling 13,757 units for $2.8 billion, $1.0 billion more than last year. The largest sale of the year occurred in the fourth quarter when Invesco Real Estate and Holland Partner Group purchased the 566-unit LaSalle

Apartments in Beaverton for $140 million. By far the most headlinegrabbing transaction was the new high-water mark for Portland’s eastside, which was set by the sale of The Yard to a Bangkok-based investment firm Land and Houses Public Company Limited of Thailand. The 284-unit apartment building sold at just over 50 percent occupied for $446,126 per unit and $551 per square foot, totaling just under $127.0 million. The average cap rate in 2016 was 5.1 percent for all transactions over $10 million, and 4.7 percent for new construction. The market wide range for multifamily cap rates was between 3.8 and 6.1 percent. The City of Portland recently passed new inclusionary zoning which calls for developments with 20 or more units to set aside 20 percent of those units for households making less than 80 percent of the median household income. In response to this new zoning, the city saw a surge in permit applications at the end of 2016 Looking into 2017, economic indicators point toward continued strength within the Portland metro area. The high levels of renting demand are largely due to the substantial job and population growth. Developers are anticipating a strong increase in demand for rental units as the millennial population grows. In 2016, 5,353 units delivered with 3,584 units absorbed. 5,506 units are scheduled to deliver in 2017. Portland is one of the most affordable West Coast cities that is able to draw international employee talent. In 2017, the Portland multifamily market will remain strong and experience moderate growth in rents. The supporting demographics will keep demand high and provide plenty of opportunity for development.


97

Portland multifamily sales & statistics

Sales matrix ($10M+)

Total # of Sales

Highest Price Per Unit

Cap Rate Average Total Sales Volume ($ in millions)

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

25

27

21

8

16

21

20

20

37

49

67

$146,610

$294,077

$455,340

$184,659

$285,149

$395,000

$267,241

$343,017

$456,710

425,000

$466,126

6.1%

5.2%

5.4%

7.2%

5.9%

5.7%

5.7%

5.6%

5.6%

5.3%

5.1%

$458M

$1.1B

$688M

$266M

$485M

$690M

$660M

$702M

$1.2B

$1.7B

$2.8B

2016 MULTIFAMILY SALES DWARFED ALL PREVIOUS YEARS WITH 66 DEALS EXCEEDING $10 MILLION, TOTALING 13,757 UNITS FOR $2.8 BILLION, $1.0 BILLION MORE THAN LAST YEAR.

98

Portland multifamily sales ($10M+) Property

LaSalle

Closing Date

11/14/16

15021 SW Millikan Way

12/14/16

11/18/16

$126,600,000

284

11/30/16

Land & Houses Guardian Real Estate Services

$118,100,000

367

4.60%

Sequoia Equities Mill Creek Residential Trust

$96,000,000

423

4.40%

$226,950 1985

Beaverton, OR

LaSalle Investment Management Holland Partners

$288 3/31/16

$94,000,000

243

2080 NW Front Avenue

$385,117 2015

Portland, OR

$484 12/1/16

8900 SW Sweek Drive

$93,000,000

408

4.20%

Greystar The Carlyle Group

4.50%

$227,941 1998

Tualatin, OR

Kennedy Wilson American Realty Advisors

$274 5/20/16

8150 SW Barnes Road

$81,500,000

357

4.50%

$228,291 1985

Portland, OR The Terraces

3.80%

$349

14790 SW Scholls Ferry Road

Breckenridge

Holland Partners Waterton Residential

$303,534 2015

Tigard, OR

Alara Hedges Creek

Buyer

Seller

$600

18049 SW Lower Boones Ferry Road

Waterline

4.00%

$409,536 2016

Portland, OR

Seven West at the Trails

554

Cap Rate

$239

22 NE 2nd Avenue

Eddyline Bridgeport

$141,750,000

Units Year Built

$255,866 1997

Beaverton, OR Yard


Resource Real Estate Holland Partners

$299 12/2/16

$78,340,000

373

19000 NW Evergreen Pkwy

$210,027 1986

Hillsboro, OR

$215

4.70%

Blackstone Alecta Real Estate Investment


99


One Jefferson Parkway

Closing Date

10/14/16

$78,000,000

Units Year Built

347

1 Jefferson Pkwy

$224,784 1986

Lake Oswego, OR

$211

Riverwalk at Happy Valley

9/29/16

$76,000,000

390

8640 SE Causey Avenue

$194,872 1989

Happy Valley, OR

$217

The Club

12/2/16

$72,980,000

352

2323 NW 188th Avenue

$207,330 1991

Hillsboro, OR

$244

Cook Street

5/17/16

$69,000,000

206

107 North Cook Street

$304,284 2016

Portland, OR

$453

Vue

7/12/16

1717 SW Park Avenue

Russellville Commons

$63,950,000

307

3/1/16

$57,850,000

283

$204,417 1999

Portland, OR

$233 10/11/16

$55,000,000

238

11785 NW Timberview Lane

$231,092 2009

Portland, OR

$240

Evergreen Park

4.90%

Buyer

Seller

Security Properties Friedkin Realty Group

5.00%

MG Properties Group Green Leaf Partners

4.40%

Blackstone Alecta Real Estate Investment

4.50%

Berkshire Property Advisors Lake Union Partners

5.40%

JRK Property Holdings ColRich Group

$278

10320 SE Pine Street

Sofi at Cedar Mill

Cap Rate

$200,163 1951

Portland, OR

100


9/29/16

$54,200,000

369

4619 NE 112th Avenue

$146,883 1989

Vancouver, WA

$177

5.20%

MG Properties Group The Reliant Group

4.80%

Pacific Urban Residential Security Properties

5.60%

Abacus Capital Group Lone Star Funds

Property

Rowlock

Closing Date

10/4/16

6380 NE Cherry Dr

10/4/16

10/5/16

$62,000,000

228

12/9/16

$53,300,000

278

10/5/16

LivCor Bridge Investment Group Partners

$49,500,000

296

5.60%


$46,350,000

336

5.70%

$137,946 1999

Vancouver, WA

LivCor Bridge Investment Group Partners

$165 2/10/16

$45,000,000

177

1030 NE Orenco Station Pkwy

$226,285 2012

Hillsboro, OR

$287 10/31/16

16100 SW Century Drive

$43,100,000

200

5.00%

Investco Real Estate Holland Partners

5.50%

$215,500 1998

Sherwood, OR

Portland, OR

5.50%

$165

12901 NE 28th Street

522 NW 19th Ave

Blackstone Holland Partners

$167,230 1988

Vancouver, WA

Park 19

4.70%

$188

4701 NE 72nd Avenue

Sunfield Lakes


$191,727 1990

Gresham, OR

Platform 14

Buyer

Seller

$365

3181 NE 23rd Road

Madison Park

4.70%

$260,175 2016

Hillsboro, OR

Camden Place

255

Cap Rate

$347

967 NE Orenco Station Pkwy

Vista at 23

$70,000,000

Units Year Built

$256,551 2015

Hillsboro, OR Vector


Brookline Investment Group Berkshire Property Advisors

$206 3/18/16

$42,500,000

101

$410,891 2009

4.00%

Greystar TIAA

$514


101


Powell Valley Farms

Closing Date

10/28/16

$39,500,000

Units Year Built

228

1500 SW Pleasant View Drive

$173,246 2003

Gresham, OR

$202

The Linden

12/8/16

1250 E Burnside St

Sofi at Forest Heights

12/15/16

8/23/16

9/29/16

5.10%

Pacific Urban Residential Security Properties

$37,250,000

225

5.20%

Sage Apartment Communities Kohlberg Kravis Roberts & Company

$37,000,000

240

5.40%

Hamilton Zanze & Company Timberland Framing

$167 1/29/16

13314 SE 19th Street

$35,250,000

198

5.50%

$178,030 1989

Vancouver, WA

Jackson Square Properties Belkorp Holdings

$177 10/4/16

980 NE Orenco Station Loop

$33,500,000

124

4.80%

$236,942 2015

Hillsboro, OR

Gresham, OR

160

$154,167 2014

Vancouver, WA

1167 NW Wallula Avenue

$37,500,000

$184

11800 NE 124th Avenue

Townfair

Grand Peaks Properties The Foursquare Church

$165,556 1999

Gresham, OR

Hub 9

4.70%

$241

2831 SE Palmquist Road

The Meadows at Cascade Park

Gelt Jackson Square Properties

$234,375 2004

Portland, OR

Rock Creek Commons

132

5.20%

Buyer

Seller

$428

1940 NW Miller Road

Parkside

$39,000,000

Cap Rate

$272,860 2014

Portland, OR

102



$327 5/9/16

$31,000,000

265

$116,981 1990 $137

5.90%

Sage Apartment Communities Tokola Properties

Property

The Gables at Mountain Park

Closing Date

12/22/16

2 Jefferson Pkwy

8/30/16

12/9/16

10/1/16

5/24/16

Sage Apartment Communities Tokola Properties

$26,500,000

160

5.60%


$24,900,000

75

4.70%

Robert Johnson LT Anctil Enterprises LLC

$24,660,000

118

4.70%

$184,266 2015

Portland, OR

Front Avenue Corporation ZRZ Realty Co

$343 12/15/16

7700 NE 72nd Avenue

$24,250,000

141

5.50%

$171,986 1990

Vancouver, WA

Aukum Management Belkorp Holdings

$175 10/6/16

1500 SW 12th Avenue

$23,450,000

83

4.70%

$282,530 2016

Portland, OR

Beaverton, OR

5.50%

$438

3155 SW Moody Ave

14305 SW Sexton Mountain Drive

164

$296,022 2015

Portland, OR

Terra at Murray Hill

$29,000,000

$163

4357 N Williams Ave

The Cameron

LaSalle Investment Management Sares-Regis Group

$165,625 1997

Vancouver, WA

Golfside Village

Buyer

Seller

$212

4714 NE 72nd Avenue

The Emery

5.00%

$176,829 1991

Portland, OR

The Wilmore

129

Cap Rate

$233

15800 NW West Union Road

Carriage House

$29,080,000

Units Year Built

$225,426 1991

Lake Oswego, OR Oak Hill


Grand Peaks Properties Summit Real Estate

$439 3/11/16

$23,350,000

138

$169,203 1975

5.20%

Pacific Urban Residential Hamilton Zanze & Company

$197


103


Village at Van Mall

Closing Date

12/9/16

5000 NE 72nd Avenue

6/13/16

8/24/16

4/1/16

2/1/16

$19,900,000

124

5.70%

Piedmont Properties Group PTLA

$18,530,000

120

5.30%

Waldman Management Group Hamilton Zanze & Company

$18,500,000

62

4.30%

Berkshire Property Advisors Urban Asset Advisors

$506 9/1/16

29250 SW Parkway Court

$18,500,000

111

5.50%

$166,667 1990

Wilsonville, OR

Curtis Capital Group Summit Real Estate

$175 5/12/16

16751 SE 82nd Drive

$18,000,000

155

6.00%

$116,129 1972

Clackamas, OR

104

Priderock Capital Partners OpenPath Investments

$284,637 2015

Portland, OR

Vancouver, WA

5.60%

$179

60 SE 10th Avenue

3009 NE 57th Avenue

135

$154,417 1998

Portland, OR

The Park at Fox Pointe

$21,500,000

$166

13830 SW Chinn Ln

Boulder Gardens


$160,484 2000

Fairview, OR

Town Center Park

Buyer

Seller

$182

21933 NE Chinook Way

Lower Burnside Lofts

5.50%

$159,259 1994

Oregon City, OR

Maybeck at The Bend

128

Cap Rate

$173

19839 Hwy 213

Chinook Way

$22,000,000

Units Year Built

$171,875 1995

Vancouver, WA The Preserve


Kleinbub, Fredrick & Angelina Schaaf, Steven Ron

$170 1/11/16

$16,250,000

200

$81,250 1975 $110

7.00%

NFN Investments Diesing, Charles F.

Property

Waverly Gardens

Closing Date

1/15/16

20121 SE Stark Street

4/13/16

10/31/16

2/24/16

6/7/16

Landbank Investments, LLC Winkler Development Corporation

$13,875,000

104

5.80%

Transpacific Investments Foam Street Investments

$13,600,000

120

6.40%

Realvest Dernbach, Dave

$13,450,000

96

5.70%

$140,104 1997

Clackamas, OR

Gallegly, John R. Sunnyside Construction & Development

$153 1/8/16

3050 SW 10th Avenue

$13,250,000

87

5.20%

$152,299 1977

Portland, OR

Kleinbub, Fredrick & Angelina Matteson Companies

$310 3/14/16

18380 NW Heritage Pkwy

$13,100,000

93

5.90%

$140,860 1981

Beaverton, OR

Portland, OR

4.70%

$145

16500 SE 82nd Drive

16804 SE Powell Blvd

32

$113,333 1982

Vancouver, WA

Sterling Park

$14,048,550

$160

10117 NE 9th Avenue

Village 185

Sage Apartment Communities Gallegly, John R.

$133,413 1966

Vancouver, WA

City View

Buyer

Seller

$331

7806 NE 12th St

The Crossings

6.40%

$439,017 2008

Portland, OR

Crown Plaza

147

Cap Rate

$130

4216 N Mississippi Ave

Parkview

$16,230,000

Units Year Built

$110,408 1982

Portland, OR Mississippi Avenue Lofts


Aukum Management Kurilo, Paul

$163 12/7/16

$10,950,000

73

$150,000 1991

5.70%

Michael Kilroy Gordon Irvine

$139


105


Hogan Woods

Closing Date

5/2/16

1645 NE 20th Street

2000 NE 19th Street Gresham, OR

106

$10,820,000

Units Year Built

100

Cap Rate

6.30%

$108,200 1998

Gresham, OR Royal Greens


Buyer

Seller

Sage Apartment Communities McNutt, Robert

$149 5/31/16

$10,500,000

90

$116,667 1970 $121

6.50%

Waldman Management Group Guardian Real Estate Services

601 Union Street, Suite 2800, Seattle, WA 98101

tel +1 206 607 1700

fax +1 206 607 1701

225 108th Avenue NE, Suite 550, Bellevue, WA 98004

tel +1 425 974 4000

fax+1 425 974 4020

1120 NW Couch Street, Suite 500, Portland, OR 97209

tel +1 503 972 8000

fax +1 503 972 8001

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