55 west - loopnet...property highlights flexible and creative design 55 west has been...
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55 West5555 NE MOORE COURT, HILLSBORO, OREGON 97124
1120 NW Couch Street • Suite 350Portland, OR 97209www.ngkf.com
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THE OFFERINGNGKF Capital Markets, as exclusive advisor, is pleased to present the opportunity to acquire the fee-simple interest in 55 West, three newly renovated, interconnected Class A office and flex buildings totaling 195,320 square feet in Hillsboro, Oregon. Located in the Sunset Corridor, dubbed the “Silicon Forest” due to its concentration of technology minded tenants, this submarket is the epicenter of Oregon’s technology industry and boasts a vacancy rate of 5.8%. Corporate neighbors include Nike, Intel, Wells Fargo, Salesforce.com, Yahoo, SolarWorld, and Genentech, among others.
Building 2, with 47,800 square feet, is 100% leased to Lattice Semiconductor Corporation through October 2022. Buildings 1 and 3 are currently vacant, offering tremendous upside potential and flexibility. The campus environment in a park-like setting lends itself to a headquarters location, or a multi-tenant, high-quality office complex.
55 West provides the investor with stable, in-place income from Lattice Semiconductor, while leasing the vacant space creates an opportunity for substantial value upside.
55 WEST - PROPERTY SUMMARYBuildings 1, 2 & 3 - Hillsboro, Oregon
Property Type Suburban Class A Office & Flex ParkProperty Size 195,320 SFNo. of Buildings ThreeNo. of Stories One to ThreeYear Built;Renovated 1984 to 1999; Renovated 2016
Parking3.8 spaces/1,000 SF Overall4.2 spaces/1,000 SF Bldgs 1 & 3
Site Area 16.2 Acres
Occupancy25% (Building 2 leased to Lattice Semiconductor)
Sale Price To Be Determined
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INVESTMENT HIGHLIGHTS
Institutional Grade Asset55 West is a former corporate headquarters campus that has been extensively renovated in the past year, transitioning from a high-quality single-tenant asset to a best in class, high-identity, multi-tenant office and flex park.
Dominant Economic Region Location55 West is located within the City of Hillsboro and Washington County, both of which are leading economic drivers in the Portland metro region. The City of Hillsboro is home to the region’s largest employer Intel, with its largest worldwide workforce of over 18,000
employees. Washington County is the second most populous and one of the fastest growing in the state, and boasts the 2nd lowest unemployment rate of any county in Oregon (4.1%; March 2016).
Strong Office Submarket55 West is located in the Sunset Corridor, which is the largest suburban office submarket in the Portland metro region at over 12 million square feet. It also has one of the lowest submarket vacancy rates reported at 5.8%, significantly below the overall Portland metro suburban rate of 7.1%.
Value-Add with Strong Income BaseWhile only 25% leased, the existing lease of Building 2 to Lattice Semiconductor provides a substantial supporting income stream, allowing the owner to focus and execute on the important value-add component of the investment.
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PROPERTY HIGHLIGHTS
Flexible and Creative Design55 West has been renovated/repositioned with a focus on flexibility and a highly desirable employee experience. The multiple buildings are interconnected and allows for multiple lease-up scenarios. High-ceilings, large open spaces, extensive natural light, and outside gathering areas deliver the type of workplace environment that is desired in today’s marketplace.
Effectively NewWith extensive renovation occurring over the past year, and new tenant improvements to be built in Buildings 1 & 3, upon stabilization the asset will be effectively new and well positioned for favorable long-term operation.
Rare Walking Access to Suburban MAX Regional Light Rail Line StationThe property is within 1,000 feet of the Hawthorne Farm MAX light rail station, connecting to downtown Portland approximately 15 miles to the east, and effectively all directions of the region from there.
Abundant ParkingBuildings 1 and 3 to be leased have a parking ratio of 4.3 spaces per 1,000 SF. This exceeds that of the competitive market set, and is particularly favorable given the proximity to MAX light rail service.
Access to Extensive Area AmenitiesNearby services include shopping, restaurants, banks, hotels, medical clinics, an athletic club, and more; most within walking distance and all within one-mile.
Building 1 Building 2 Building 3 Connector Total
Total Square Feet 45,800 SF 47,800 SF 98,820 SF 2,900 SF 195,320 SF
Year Built/Renovated 1984/2016 1985 1999/2016 1999/2016
Current/Planned Use Office Lab/R&D Office Hallways
BUILDING 1
BUILDING 2
BUILDING 3
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SUBMARKET HIGHLIGHTS
Sunset Corridor a Corporate MagnetFor decades the Sunset Corridor has been known as the Silicon Forest, reflecting its high-tech industry dominance with such companies as: Intel, Epson, Oracle, Tokyo Electron, Salesforce.com, Yahoo, and McAfee. Less recognized, but just as significant, major companies in a much broader range of industries are also represented including Nike, Solarworld, Genentech, Columbia Sportswear, Farmers Insurance, Volkswagen Credit, Wells Fargo, and Bank of America, among others.
Strong Demand for Office SpaceSince the market recovery began in late 2010, the Sunset Corridor office vacancy rate has dropped from approximately 14 percent to 5.8 percent, representing approximately 1.7 million square feet of net absorption during this time period.
No New ConstructionWhile the Sunset Corridor office submarket has experienced a strong recovery over the past several years and has a current vacancy below 6 percent, due primarily to the high cost of new construction, no new speculative office space is currently under construction or anticipated to occur for at least 18 to 24 months.
Dramatically Rising Rental RatesAverage Class A/B asking rents for suburban office space in the submarket have increased at an annualized rate of nearly 10% since 2012, from $16.08 per square foot in 3Q 2012 to $21.89 per square foot in 2Q 2016. Given the low existing vacancy, lack of new construction, and continued demand, the trend of rising rental rates should continue as well.
Large Space ScarcityThere is a scarcity of large blocks of space available in the Sunset Corridor, with combined Buildings 1 & 3 being the largest current availability.
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55 WEST - PROFORMA FINANCIAL SUMMARY55 West - Hillsboro, Oregon
Current Occupancy 25%Existing Building 2 NNN Rent Income $517,252 ($10.82/SF/Year)
Current Market Rent (NNN): Building 1: Building 2: Building 3:
$15.50/SF/Year$12.50/SF/Year$18.50/SF/Year
Pro-Forma NNN Expenses Estimate $7.50/SF/YearPro-Forma Year 3 NOI (95% occupancy) $2,953,301
FINANCIAL HIGHLIGHTS
Support of Existing Base Income StreamThe existing lease of Building 2 to Lattice Semiconductor extends for approximately six more years through October 2022. The current base rental income of $517,252 combined with their NNN expense reimbursement provides a substantial supporting income stream, minimizing the potential challenge of negative carrying costs during the project lease-up.
Discount to Replacement CostThe property is anticipated to trade at a price below replacement cost, estimated to be +$200/SF for
Buildings 1 & 2 and +$300/SF for Building 3.
Proforma Financial SummaryA broad range of lease-up scenarios exist for Buildings 1 and 3. For general reference purposes, presented below is a Proforma Financial Summary reflective of one potential lease-up scenario.
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1120 NW Couch Street • Suite 350Portland, OR 97209
www.ngkf.com
EXCLUSIVE ADVISORS
DAVID SQUIRESenior Managing Director
KEVIN SHANNONPresident, West Coast Capital Markets
DAVID HILLSenior Managing Director