San Francisco firm takes over as top local landlord
Portland Business Journal - April 20, 2007
by Wendy Culverwell
Business Journal staff writer
Shorenstein Properties LLC, Portland's newest and largest office landlord, is wasting little time making its mark on the market.
The family-owned real estate investment company is making immediate plans to build one and perhaps two new office buildings at Kruse Oaks in Lake Oswego's Kruse Way, and is pressing ahead with its predecessor's plans to construct a 15-story office tower at Southwest First Avenue and Main Street in downtown Portland.
"The fundamentals of the downtown market will support new office construction," said Charles Malet, executive vice president and director of asset management leasing for the San Francisco-based firm.
Shorenstein Properties bought the Portland portfolio of offices and business parks formerly owned by Equity Office Properties Trust from Blackstone Group in March.
The portfolio consists of 46 properties totaling more than 4 million square feet, which makes Shorenstein Portland's largest landlord.
The 4.1 million square feet represent Portland's leading business properties: Umpqua Bank Plaza, Congress Center, Nimbus Center, Lincoln Center, Kruse Way and three properties in Johns Landing.
The company's leaders, including Doug Shorenstein, chairman and chief executive officer, spent the early part of this week visiting the Rose City and introducing themselves and their business to the Portland executive community.
The Portland portfolio represents about 40 percent of the equity investment of Shorenstein's $1.1 billion Eighth Fund.
In all of its funds, Shorenstein partners with major college endowments and foundations as well as families.
The Yale Endowment is its largest investor, followed by the Shorenstein Family.
It views itself as a long-term holder, typically owning properties for 20 years or more, though it says it is nimble enough to sell assets if market conditions are right. Doug Shorenstein said a key element of the company's investment strategy is to purchase properties that will remain well-leased even in a down market.
Along with the real estate, Shorenstein hired Equity's Portland-based staff to manage the properties. Matt Cole, who led the Equity team, is now senior vice president and regional leasing manager for Shorenstein.
"We felt like the people we inherited are good people who know what they're doing," said Glenn Shannon, Shorenstein president.
In addition to the Equity crew, Shorenstein added about six new employees to take over responsibilities once handled in Chicago by Equity's corporate office.
Doug Shorenstein said his company became interested in Portland when it started investing in Seattle a few years ago.
It likes the steady Portland market, which has grown consistently for 11 of the past 13 years, and its vaunted lifestyle reputation. The urban growth boundary, which constrains development, is an attractive feature, as is the stellar portfolio Equity amassed in the years before the company was bought by Blackstone.
The new owner is making one change that should be welcome news to the local office brokerage community.
Where Equity relied on in-house staff to represent it in tenant negotiations, Shorenstein is enlisting outside brokers. It has already hired Grubb & Ellis Co., CB Richard Ellis Inc., Pacific Real Estate Partners Inc. and NAI Norris Beggs & Simpson Commercial Real Estate Advisors to handle leasing negotiation.
Malet said Shorenstein has a standing strategy of using outside brokers to represent it and has had success.
The other Eighth Fund investments include Class A offices in Boston and Washington, D.C., and Media Studios North, a 916,413-square-foot media and entertainment complex in Burbank, Calif.
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