Daily Journal of Commerce
September 29, 2008
By Tyler Graf

Sunset Corridor gets business park

Pacific NW Properties has high hopes for the 108,000-square-foot, four-building development

Pacific NW Properties is making progress on the construction of its Sunset Highway Business Park, a 108,000-square-foot, four-building project along the Sunset Corridor.

In two weeks, they will raise the walls for the development, which is one of the newest projects for the still-struggling area.

Vacancy rates for the area continue to hover around 15 percent, though some brokers claim that’s a lowball figure.

The development company Pacific NW Properties owns and manages more than 3 million square feet of property in the Portland Metro area. The Sunset Highway Business Park will be its newest project.

Sierra Construction is working as the general contractor on the project, which is expected to cost about $9 million.

Tom Stern, president of Pacific NW Properties, said leasing activity typically picks up about 60 days before construction is set to complete. In this case, the building is scheduled to finish in February 2009.

His company has been building office parks since 1990 and has completed about 30 projects in that time. These projects include the Airport Way Business Center, the Milwaukie Business Park and the Shute Road Business Park.

This latest development is located off of Highway 26 and Northwest Shute Road.
The business park will be used for industrial warehouse space, said Evan Bernstein, a broker for Capacity Commercial.

Stern likes to draw a distinction between the vacancy rates for flex space along the corridor – which some brokers say is as high as 20 percent – and industrial/warehouse space, which is level at 5 percent.

“We see Portland as a growing market in the years ahead, but industrial property is not really a growing sector,” Stern said.

More industrial property is needed, he said.

Bernstein believes that development companies only recently became comfortable building warehouse space on speculation, which is what Pacific NW Properties is doing.

And for the developers of the Sunset Highway Business Park, the hope is that the space will act as supplemental space for the larger companies along the corridor, such as SolarWorld, which is slated to have its grand opening on Oct. 17.

“We’re building this under the assumption that some of the space occupied will become support services for some of these bigger companies – the Genentechs, the SolarWorlds, the Intels,” Bernstein said. “And the good news is there’s starting to be a lot of activity in terms of construction.”

The bad news, however, is that there is still a lot of vacant space, said Tim Parker, a broker for Melvin Mark.

He said the submarket continues to struggle because it is among the farthest from downtown Portland.

But Stern believes the Sunset Corridor submarket, and the Portland Metro area as a whole, does not have enough industrial space.

“Warehouse space hasn’t been soft out there like the flex space,” he said.