Amazon sets trend for other warehousers
Where's the land?
The shortage of shovel-ready plots available for industrial development in the Portland metro area has developers looking as far afield as Ridgefield, Wash., to the north and Woodburn and Salem to the south.
At least in the short term, East Multnomah County will likely reap the benefits of scarcity as distributors seek berths in two business parks that still have space to spare.
"The big story about warehouses is Amazon," said Greg Specht, CEO of Specht Properties and Development. "They're really (setting) the dynamics of what's going on in the industrial arena."
The e-commerce giant has gobbled up distribution space here at a breakneck pace, acquiring approximately 3 million square feet in Salem, Troutdale and Hillsboro in the past year. Another 1 million-foot fulfillment center in Portland was announced as The Outlook went to press on Monday.
That will make competition tighter for open warehouses, including the massive concrete boxes in Specht's just finished three-warehouse project on Southeast 223rd Avenue in Gresham.
Greg Specht was standing inside Building C, a 494,000-square-foot structure that, along with two smaller buildings, cost about $65 million to build. He thought it likely that two renters would "break it in half," and also expects to see multiple tenants in Buildings A and B.
"What I like about (developing) out here is the city of Gresham — they're really, really good to work with, compared with other jurisdictions that I won't name," Specht commented on Thursday, Sept. 14.
Several hundred brokers, builders, appraisers and other real estate bigwigs clustered in the warehouse for the annual NAIOP bus tour sponsored by the Oregon chapter of a commercial real estate development association. The group has dropped the words behind its acronym.
"The vacancy rate is what is supporting the development. What we're seeing is sites being pre-leased before construction," commented Tom Knecht of the Capacity Commercial Group.
Knecht echoed the comments of many in attendance, highlighting the simple lack of available land along the Interstate 5 corridor. He said developers who would prefer to build in Portland may now settle for Salem instead.
Steve Wells, a senior managing director at Trammell Crow Company, said he had expected the next market cycle to center in Troutdale. While several lots are still open in the Troutdale Reynolds Industrial Park, Amazon's big buy hoarded much of what was available.
He predicted that larger-scale speculative projects, which are built first before tenants have been confirmed, would likely become more common.
"Our Amazon project was the biggest build-to-suite (in Oregon) at the time it was signed," he said. "We're already seeing one million in spec in other parts of the country."