gallagher design building - capital pacific · site plan key parcel: land area: ±2.69 acres...

Gallagher Design BuildingAbsolute NNN Single Tenant Asset with New 11-Year Lease in Portland MSA

11150 SW Allen Blvd, Beaverton, OR, 97005

https://www.google.com/maps/place/11150+SW+Allen+Blvd,+Beaverton,+OR+97005/@45.4776403,-122.7944191,17z/data=!3m1!4b1!4m5!3m4!1s0x54950c17d03ab947:0x5f780d5f34fe3768!8m2!3d45.4776403!4d-122.7922304

ADDRESS:11150 SW Allen Blvd, Beaverton, OR, 97005

PRICE: $9,000,000CAP: 6.00%

LEASE TYPE. . . . . . . . . . . . . . . . . . . . . . . . Absolute NNN - Zero Landlord

Responsibilities

LEASABLE SF . . . . . . . . . . . . . . . . . . . . . . ±49,800 SF

PRICE PER SF . . . . . . . . . . . . . . . . . . . . . . $181

LAND AREA . . . . . . . . . . . . . . . . . . . . . . . . ±117,176 SF; ±2.69 Acres

LEASE TERM . . . . . . . . . . . . . . . . . . . . . . . 11 Years

LEASE COMMENCEMENT . . . . . . . . . . . April 1, 2017

RENT COMMENCEMENT . . . . . . . . . . . August 1, 2017

LEASE EXPIRATION . . . . . . . . . . . . . . . . . March 31, 2027

YEAR BUILT . . . . . . . . . . . . . . . . . . . . . . . . 1962-1997; Remodeled 2017

PARKING . . . . . . . . . . . . . . . . . . . . . . . . . . ±45 Spaces

Gallagher Design Building

The Gallagher Design Building is a 50,000 SF asset fully occupied by Gallagher Design, a preeminent design and fabrication operation with a second location based out of L.A., serving primarily nationally-recognized brands. The Tenant executed a brand new 11-year Absolute Net lease with an August 2017 rent commencement.

The Subject is a mission critical site for Gallagher Design and is well-positioned within the Portland MSA in an urban west side location directly off Highway 217 on-off ramps. The Tenant has invested $1M in improvements thus far, with continued upgrades through Spring 2018 totaling approximately $2.5M; all permits are in place with the City and will include a substantial office build-out.

GALLAGHER DESIGN BUILDING | 2

https://www.google.com/maps/place/11150+SW+Allen+Blvd,+Beaverton,+OR+97005/@45.4776403,-122.7944191,17z/data=!3m1!4b1!4m5!3m4!1s0x54950c17d03ab947:0x5f780d5f34fe3768!8m2!3d45.4776403!4d-122.7922304

• Gallagher has been in operation for 20+ years and is a leader in experiential design and fabrication for nationally-recognized brands with locations in portland and los angeles.

• Brand new 11-year lease with Scheduled 10% rent bumps every 5 Years.

• Absolute net lease provides zero Landlord responsibilities.

• Major improvements of $1M have been invested by Tenant thus far with continued T.I.s to be completed Spring 2018 totaling approximately $2.5M.

• Significant barriers to entry in tight industrial-zoned submarket along Highway 217.

• Close proximity to established clients such as Nike and among some of Oregon’s largest employers.

• Excellent accessibility along major Highway with location between Interstate 5 and Highway 26.

• West side location only 15 minutes from Portland’s CBD.

• Highway visibility provides exposure to 100,000+ vehicles per day.

• High demographic, dense surrounding residential base of 350,000+ residents.

• Located in the state’s highest-earning county for 2016.

Core Characteristics


Gallagher Design is a creative experience agency, trusted by the world’s most influential brands to strategically design and execute their most innovative, ambitious and immersive experiences. With offices in Portland, San Francisco, Los Angeles, and New York, Gallagher Design

is a collective of tech-forward artists, designers, engineers, production specialists, fabricators and craftsmen working at the intersection of graphic, architectural and industrial design.

Gallagher Design works to bring the experience of top brands and products into the physical world, designing and building high quality environments. Gallagher Design owns entire projects from idea to execution and has created immersive experiences for world-class youth and pop culture brands, including Nike, Levi’s, TNT, Cole Haan, Sony PlayStation, Beats by Dre, and Visa.

About the Tenant

NOTABLE CLIENTS

ABOUT GALLAGHER DESIGN

http://www.glgr.com/about-us/

TWO OF OREGON’S LARGEST EMPLOYERS, MINUTES FROM GALLAGHER DESIGN BUILDINGBoth Intel and Nike are in the middle of sizable expansions, creating more jobs and likely new residential developments in the Beaverton-Hillsboro area. Construction on an additional 3.6 Million SF at Intel’s Ronler Acres is ongoing. Intel currently employs 17,500 - more than anywhere else the company operates - with more jobs to be added upon completion. Intel is the Portland Metro Area’s top employer.Nike’s World Headquarters is undergoing a $150 Million expansion which includes two buildings, totaling 1.3 Million SF. Nike currently employs 6,000 people, having added an additional 2,000 employees since construction.

[ NIKE’S BEAVERTON EXPANSION ]

INTELINTEL

NIKE

GALLAGHER DESIGN BUILDING

Fortune 100 Employers

PORTLAND

1.3 MILLION SF EXPANSION

3.9 MILES TO GALLAGHER

8,000 EMPLOYEES

3.6 MILLION SF EXPANSION

11 MILES TO GALLAGHER

17,500 EMPLOYEES


Area Zoning


217

ZONING LEGENDIndustrial

Office/Industrial

Community Service

Residential

Regional Center

BARRIERS TO ENTRYThe surrounding zoning shows the industrial sub market alongside Highway 217 with a variety of surrounding uses and a significant residential base. The extremely limited industrial and office-industrial zoned land provides significant barriers to entry for close-in competition in the sub market.

DENSE SURROUNDING RESIDENTIALThe Subject benefits from a dense surrounding residential base to the west with 23,177+ households with continued growth of 4.6% over the last 6 years, similar to the growth rate to close-in portions of east Portland.

217


Site Characteristics

SUBJECT OUTLINEMAP KEY

ADJACENT TO FREEWAY INTERCHANGE

HIGHLY EXPOSED SITE (140,000+ VPD)

SITUATED EQUIDISTANT TO HIGHWAY 26 AND I-5

AMPLE TRUCK MANEUVERABILITY

PRIVATE DRIVE PROVIDES ACCESS

FRONTAGE ALONG HIGHWAY 217

PROXIMITY TO PUBLIC TRANSPORTATION

217

SW ALLEN BLVD

118,200 DAILY

22,607 DAILY


Proximity to Highway

HIGHWAY PROXIMITYGallagher Design Building has a highly visible, prominent location along Highway 217 and the Allen Boulevard interchange. Highway 217 acts as the main connector to I-5 South and Highway 26 to the north. Portland’s Central Business District (CBD) is a 15 minute drive via Highway 26. The site benefits from excellent accessibility and exposure as Highway 217 is one of the region’s most trafficked highways with over 100,000 VPD.

217

SOUTHBOUND

NORTHBOUND

HWY 263 MILES

CBD8 MILES

I-55 MILES

118,200 DAILY


Aerial ENTERPRISE ZONEThe northern portion of Highway 217 is an Enterprise Zone created by Business Oregon to encourage business investment and development through property tax relief (land and existing improvements do not qualify) for three to five years. The Enterprise Zone hugs the immediate east and west portions of the northern part of Highway 217 that make up the industrial sub market.

DIVERSE EMPLOYMENT BASEThe Subject is nearby the Sunset Corridor (Highway 26) that has attracted major employers to the area. Nearby commuter rail lines and bus transportation provided by Tri-Met and close proximity to the Sunset Corridor provide a diverse surrounding employment base with excellent accessibility.

MAJOR AREA EMPLOYERS EMPLOYEES Intel 17,500 Nike 8,000 Columbia Sportswear Company 1,800 IBM - Linus Tech Center 1,600 Maxim Integrated Products 1,500 Wells Fargo Call Center 1,300 Kaiser Permanente Westside Hospital 1,200 OHSU Tuality 1,200 Tektronix 1,000 Reser’s Fine Food 700 (Estimated) Laika 394 Genentech 300 International Paper 150 (Estimated)


26

26

26

217

217GALLAGHER DESIGN BUILDING | 9

SITE PLAN KEY

PARCEL:

LAND AREA: ±2.69 ACRES

BUILDING AREA: ±49,800 SF

LEASABLE:

INGRESS/EGRESS:

Site Plan Not To Scale

Site Plan

SW LEE AVE

SW ALLEN BLVD

217

SEE PAGE 11 FOR FLOOR

PLAN


Floor Plan

MASTER FLOOR PLAN

tenant improvementsGallagher Design took control of the Premises April 2017 with a rent commencement of August 2017. Gallagher has invested $1M thus far in initial improvements to be completed by the end of September 2017, with ongoing improvements to be completed Spring 2018 for a combined total of approximately $2.5M. A large portion of improvements includes a significant office build-out for administrative purposes; all permits are lined up with the City.

$2.5MTOTAL PROJECTED IMPROVEMENTS

Please contact Capital Pacific for more information

InteriorRe-configuration of interior spaces to accomodate specialized production areas for development/fabrication, welding, woodwork, painting, and large office portion for administrative and management purposes.

Improvements will include brand new ADA compliant restrooms and upgrades to plumbing, electrical, and HVAC.

Estimated Completion: September 2017

Structure/ExteriorRoof upgrades, window replacement, and upgrades to reinforced unit masonry.

Estimated Completion: Spring 2018


Income & Expense

PRICE $9,000,000

Capitalization Rate: 6.00%

Price Per Foot: 49,800 Square Feet $181

NET OPERATING INCOME SUMMARYSCHEDULED INCOME Per SFScheduled Rent: 10/1/2017 $10.84 $540,000Equals: Effective Gross Income $10.84 $540,000

Less: OPERATING EXPENSES Per SFCAMS NNNProperty Taxes NNNInsurance NNNTotal Operating Expenses NNN -

Equals: NET OPERATING INCOME $540,000

7/28/2017 [ <www.CapitalPacific.com> ]

Income & Expense

PRICE $9,000,000

Capitalization Rate: 6.00%

Price Per Foot: 49,800 Square Feet $181

NET OPERATING INCOME SUMMARYSCHEDULED INCOME Per SFScheduled Rent: 10/1/2017 $10.84 $540,000Equals: Effective Gross Income $10.84 $540,000

Less: OPERATING EXPENSES Per SFCAMS NNNProperty Taxes NNNInsurance NNNTotal Operating Expenses NNN -

Equals: NET OPERATING INCOME $540,000


This information has been secured from sources we believe to be reliable but we make no representations or warranties, expressed or implied, as to the accuracy of the information. Buyer must verify the information and bears all risk for any inaccuracies.

Financial Summary


Rent Roll

TENANT INFO TERM

Tenant Name Size Date Monthly RentPercent Increase

Annual Rent PSF Cap Rate

Gallagher Designs 49,800 8/1/2017 $45,000 $540,000 $10.84 6.00%8/1/2021 $49,500 10.0% $594,000 $11.93 6.60%

Occupancy Date : 4/1/2017 8/1/2025 $54,450 10.0% $653,400 $13.12 7.26%

Lease Expiration : 3/31/2028

Option 1 4/1/2028 FMR

Option 2 4/1/2033 FMRLease Notes

Current Totals: 49,800 $45,000 $540,000 $10.84 6.00%


RENT SUMMARY

Comments: Absolute Net lease - Tenant is responsible for all operating expenses, including all repair and replacement of structural and non-structural building expenses. Tenant has four month of rent abatement upon commencement. Tenant has two, five-year option periods with six months notice, never to be less than the then-current rental rate. Lease terms also call for the tenant to have a first right to purchase if the Property is offered for sale.



Rent Roll


Lease Abstract

PREMISES/TERMTENANT Gallagher Designs, Inc.SQUARE FEET 49,800 SFLEASE TYPE Absolute NetLEASE COMMENCEMENT April 1, 2017LEASE EXPIRATION March 31, 2028TERM 11 YearsOPTIONS 2, 5-Year Options; 180 Day’s Notice

UTILITIESTenant is responsible for all utilities to be paid directly to billing authority.

TENANT’S OBLIGATIONSTenant is responsible for the maintenance, repair and replacement of every part thereof, structural and non-structural (whether or not such portion of the Premises requiring repair, or the means of repairing the same are reasonably or readily accessible to Tenant and whether or not the need for such repairs occurs as a result of Tenant’s use, any prior use, the elements of the age of such portion of the Premises) including, all plumbing, HVAC, electrical, lighting facilities and equipment, fixtures, walls (interior and exterior), foundation, ceilings, roofs (interior and exterior), floors, windows, doors, plate glass and skylights, landscaping, driveways, parking lots, fences, signs, sidewalks and parkways adjacent to the Premises.

LANDLORD’S OBLIGATIONSLandlord has no obligation, in any manner whatsoever, to repair and maintain the Premises nor the building located thereon, equipment therein, whether structural or non-structural.

LEASE PROVISIONS

RIGHT OF FIRST OFFERTenant has the right of first offer to purchase the Premises should Landlord make the Premises available for sale. Landlord shall extend an offer to Tenant and allow the 30 day’s from the date Tenant receives offer to respond, prior to listing the Premises for sale. Note, Tenant has waived their right of first refusal for present sale.

ASSIGNMENT & SUBLETTINGTenant may not assign lease without the prior written consent of Landlord, yet may sublease up to 20% of the leased Premises without Landlord’s approval so long as Landlord receives a copy of sublease prior to possession of the subleased premises by a subtenant.

FINANCIAL REPORTINGLandlord may request a copy of Tenant’s financials no more than once per year, within 30 day’s notice.

TI ALLOWANCELandlord to provide $1.5M allowance to Tenant for their build-out monthly, or at Tenant’s option bi-monthly alongside copies of current invoices to be paid from such specific draw. All design plans are subject to prior Landlord approval. This may be handled by 1) TI allowance to be held back in escrow from Seller funds, or 2) purchase price is reduced and Buyer assumes responsibility for paying out T.I. allowance.

RENT/EXPENSES10% Increases every 5 Years.

BASE RENT4/1/2017-7/31/2017 Rent Abated (Excludes NNN)8/1/2017-7/31/2021 $45,000/Month $540,000/Annually8/1/2021-7/31/2025 $49,500/Month $594,000/Annually8/1/2025-3/31/2028 $54,450/Month $653,400/Annually

OPTIONSRent to increase to Fair Market Rental rates , never to be less than the preceding period.4/1/2028-3/31/2033 FMR4/1/2033-3/31/2038 FMR

TAXESTenant is responsible for direct payment of Property Taxes to taxing authority.

INSURANCETenant is responsible for maintaining property and liability insurance policies.


Q&A with Capital Pacific

Q: ARE THERE ANY ENVIRONMENTAL CONSIDERATIONS?

A: A recent Phase I was performed by Hahn and Associates, Inc. in January 2017 concluded no Recognized Environmental Conditions (RECs) at the property. Note, a No Further Action (NFA) was granted by the State of Oregon in 2002 due to gasoline and diesel fuel underground storage tanks decommissioned by removal in 1990.

Q: PRIOR TO TENANCY IN 2017, WHO PREVIOUSLY OCCUPIED THE GALLAGHER DESIGN SPACE?

A: The site was built-to-suit for Reser’s Fine Foods, one of Oregon’s largest privately-held businesses with national distribution, who used the Premises for food processing, office and storage purposes from the 1960s through 2015. Reser’s consolidated two Beaverton production and distribution facilities including the Subject’s location, and purchased a 30-acre site in Hillsboro.

Q: DOES GALLAGHER REPORT SALES?

A: Tenant must provide a financial statement no more than once per year, within 30-days upon request by Landlord.


Demographics

5 MINUTES

10 MINUTES

15 MINUTES


1-MILE

3-MILES

5-MILES

5 Mins 10 Mins 15 Mins2010 22,709 157,732 412,8382017 24,163 172,028 450,2222022 25,384 182,864 479,648

5 Mins 10 Mins 15 MinsAVERAGE $68,806 $90,544 $101,777MEDIAN $51,294 $64,489 $73,482

1-Mile 3-Miles 5-Miles2010 15,017 130,633 333,4802017 16,035 140,899 363,0822022 16,857 149,040 386,446

1-Mile 3-Miles 5-MilesAVERAGE $68,920 $88,951 $102,570MEDIAN $54,135 $63,560 $73,471

POPULATION

2017 HOUSEHOLD INCOMES

Drive-Time Demographics Radius Demographics

HIGHEST ANNUAL AVERAGE WAGE

IN OREGON

WASHINGTON COUNTY


About Beaverton

BEAVERTON OVERVIEWThe City of Beaverton is located seven miles west of Portland, Oregon, in the Tualatin River Valley, encompasses 19.6 square miles, and is home to more than 94,000 residents. The city is Oregon’s sixth largest city and the second-largest incorporated city in Washington County.

EDUCATIONThere are over 39,000 students in 51 schools from grades K-12 in the Beaverton School District (the third largest district in Oregon). Nationally acclaimed for their students’ high SAT scores, Beaverton schools have formed strong partnerships with area businesses. Several highly regarded private schools as well as some of the region’s best state and private universities and community colleges are also located within 30 miles of Beaverton.

WORKFORCEBeaverton is located in the heart of Oregon’s “Silicon Forest”, home to many of the world’s top companies such as Nike, IBM and Tektronix, and now an emerging array of Bio Science firms including, Welch Allyn, Micro Power Electronics, Inovise and Blacktoe Medical.Beaverton’s labor force includes approximately 42,015 workers. Beaverton and Washington County offer a large number of highly knowledgeable, trained and skilled workers.

INCOMEWashington County experienced the highest annual average income in Oregon for 2016. The County has experienced annual increases of 10.5% over the last five years, adjusted for inflation, the highest wage growth in the Portland metro region, and the second highest wage growth on a net basin in Oregon.

EXPANDING BUSINESS OPPORTUNITIESBeaverton is working to retain and recruit local businesses and add value to its region’s economy. They have established a number of programs to assist their business community. The Business Assistance Program helps existing businesses grow by providing assistance in business planning, finance, market research, site selection, and other business education opportunities. The Workforce Development program uses a partnership model to provide workforce training. Since its inception the program has leveraged nearly $1 million toward the retention of more than 700 employees and the creation of 500 jobs in Beaverton.

ENTERPRISE ZONE EXPANSIONThe Enterprise Zone is a State of Oregon economic development program that allows for 100 percent property tax exemptions for up to five years. In March 2013, the city’s application to expand the zone by 2.93 square miles was approved by the state. The most recent expansion includes all eligible industrial and commercially zoned land within the city limits including a 0.64 square mile area in unincorporated Washington County. Vernier Technology and Vanguard EMS are the first two companies to take advantage of this program, which represents a total investment of $4.7 million.

BEAVERTONPOPULATION

94,015

AVERAGE HH INCOME

$80,092

MEDIAN HOME VALUE

$$310,319


23rd

LARGEST METRO AREA IN THE US

PORTLAND MSAPOPULATION

2.31 million

AVERAGE HH INCOME

$79,377

Portland Metro

SOURCE: PORTLAND BUSINESS JOURNAL

PORTLAND MSA TOP 20 EMPLOYERS

COMPANY ± EMPLOYEES

Intel 17,500US Federal Government 17,500Providence Health & Services 15,239Oregon Health & Science 14,616State of Oregon 14,200Kaiser Permanente Northwest 11,881Legacy Health System 10,436Fred Meyer 10,237City of Portland 8,558Nike 8,000Portland Public Schools 6,266Multnomah County 5,616Wells Fargo 4,617Portland State University 4,353US Bank 4,000Beaverton School District 3,905PeaceHealth Southwest 3,300Portland Community College 3,255Vancouver School District 3,200Evergreen Public Schools 3,100

URBAN GROWTH BOUNDARY (UGB)Portland constrains its development to a tight ring around Portland’s center. This has led to the re-development of a large portion of downtown, a number of mid-rise and high-rise developments, and an overall increase in housing and business density. UGB’s limitations on development have also led to increased property values over the years.

HIGHLY DIVERSIFIED ECONOMY & SKILLED WORKFORCELeading economic drivers are renewable energy, technology, health care, and professional services.

High tech employment is responsible for the employment of 72,100 people (7.2% of labor force).

30% of workers have a bachelor’s degree.

Home of Intel, Nike, and Adidas America.

LOW COST OF DOING BUSINESSCNBC ranked Oregon 19th for cost of doing business.

IN-MIGRATIONAccording to surveys by United Van Lines, Oregon has been ranked as the #1 state for in-migration over the past 3 years.


MICHAEL [email protected] | (503) 675-8381

PETER [email protected] | (503) 607-0197

KEVIN ADATTO [email protected] | (503) 675-7726

SCOTT FRANK [email protected] | (503) 675-8383

DAVID GELLNER [email protected] | (206) 693-3349

SEAN MACK [email protected] | (503) 675-8378

SEAN TUFTS [email protected] | (206) 693-3352

[ Copyright © 2017 Capital Pacific LLC ]

NATE FLIFLET [email protected] | (206) 457-8613

gallagher design building - capital pacific · site plan key parcel: land area: ±2.69 acres...

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