By Meghan Hall
As the Portland office market and the suburb of Hillsboro continues to grow, opportunities for investment have risen. A premier flex building within the submarket has been posted for sale, according to information obtained by The Registry. Home to Novus Labs, the building is priced at $14 million, or about $265 per square foot.
The property is located at 1365 NE Amberglen Parkway and totals 52,746 square feet. Built originally in 2001, the asset is currently 100 percent leased to Novus Labs, an engineering consultant. Novus has a lease term of seven years, providing in-place cash returns, according to an offering memorandum released by CBRE and obtained by The Registry. The lease is expected to expire in November of 2028.
The facility serves as Novus Lab’ research and development facility with 48 labs, 18 Radio Frequency Isolation chambers, audio isolation rooms and a device library. The facility remained operational, even throughout the pandemic, according to CBRE.
“…The facility is vital to Novus Labs’ regional corporate success story,” explains the OM.
Because the building is complete and operational, CBRE notes that the property can be acquired at a discount to replacement cost. As the Portland commercial real estate market continues to grow, and as construction costs continue to rise due to supply chain disruptions and inflation, replacement costs for flex space are topping $400 per square foot. The asset, therefore, would allow investors to purchase a “high-profile” asset at an attractive price when compared with current replacement costs.
In recent years, the Hillsboro submarket has been steadily growing. While other markets experienced vacancy spikes as a result of the pandemic, flex and R&D assets “demonstrated remarkable resilience.” Vacancy, states CBRE, remains below six percent, while year-over-year rent growth came to 3.4 percent. Over the past decades, the Hillsboro submarket has seen rental rates for flex space increase by 73 percent.
“Positioned in the middle of the Silicon Forest, adjacent to picturesque Amberglen Park, and in close proximity to Intel, GEnentech, Nike and Oracle, the property offers investors an opportunity to acquire an exceptional asset within one of the most coveted and high-growth submarkets in the Pacific Northwest,” states the memorandum. “…Buyers will enjoy significant downside protection due to increasing land values in a growing West Coast market.”
Limited supply and high demand has bolstered rental rates, and companies across the high-tech, life sciences and apparel industries are competing for space. This growth is anticipated to continue; Portland is one of 16 U.S. cities which have generated ore tech jobs than graduates, and it is the eighth ranked metro for tech job growth, according to CBRE’s 2021 Scoring Tech Talent report. The metro has reported 73 percent job growth over the past two decades. Sectors in cloud computing and semiconductors have also generated 330,000 square feet of recent demand.
Hillsboro itself also has 26 percent of the state’s STEM jobs. Additionally, the presence of a growing data center market and overall diversity of industries makes both the submarket’s business environment and commercial real estate sector relatively stable. Fundamentals are expected to improve as such companies continue to expand.
As of this writing, CBRE had not yet returned The Registry’s request for comment.