Flex Development Increases in Q3
- Three new construction starts occurred in the third quarter, bringing the total number of projects physically under construction to five.
- The unique combination of flex property attributes—such as mid-level ceiling height, highly adaptable interiors, roll-up doors, and preponderance in the suburbs—combine to support selective feasibility of new development projects. Tenants seeking a combination of affordability and trendy amenities can find solutions within flex properties, which speaks to the value of these assets.
- Well-tenanted and well-located flex properties indeed offer attractive value to investors, as seen in Q3’s institutional sale of Nimbus Oaks Business Park. Santa Monica, CA-based Vista Investment Group, in a joint venture with Acre Valley Real Estate Capital, entered the Portland market by acquiring Nimbus Oaks from IPERS & RREEF.
- Market-wide vacancy levels continued holding steady during the quarter, offering a measure of stability to landlords.
- Rental rates remain healthy at a reported average of $1.065 PSF per month on a blended basis. This represents a modest quarterly increase, but 1.3% off from the $1.079 peak of flex rental rates in the third quarter of 2016.
- Overall, the Portland region’s flex property market delivered consistent performance in Q3 and is set to experience moderate expansion as development feasibility gradually increases in key submarkets.
Quick Fact: $34 Million
- Two investment sales totaled $30.7M and averaged $148.46 PSF
- One owner/user sale totaled $3.3M at $159.10 PSF