Friday, February 19, 2010
Portland State nears $24M deal to buy Market Center
Portland Business Journal - by Wendy Culverwell Staff writer
The state of Oregon will pay $24 million for a nine-story office building in Portland to house Portland State University administrators.
The Oregon University System board of regents recently approved the purchase of Market Center, 1600 S.W. Fourth Ave. The Legislature has also tentatively approved the deal.
Washington Capital Management, which paid $12 million for the property in 1990, is the seller. Market Center was built in 1968 and renovated in 1991.
In addition to nine floors of office space, it has 164 parking spaces on two levels. A similar building would cost about $45 million to build.
PSU leases about 66 percent of Market Center for classrooms, a performance hall and administrative offices.
The school leases the space for $22.50 per square foot and believes it can lower its costs by acquiring the building.
The money the university spends to rent space at Market Center will be re-directed to pay off debt associated with the purchase. Officials project a $280,000 profit this year, based on current rent.
Soaring enrollment is driving the decision.
The school set an enrollment record last fall with nearly 28,000 students, a 6.6 percent increase in just one year.
Market Center is the third downtown office building to command a seven-figure price in recent months. The pending sale offers fresh evidence that the market for commercial real estate is rebounding after coming to a near standstill in 2009.
LoopNet, a commercial real estate data service, reported property sales in Portland decreased 78 percent in 2009 to $663 million.
The $24 million sale of Market Center translates to about $197 per square foot, which is somewhat higher than the amounts paid in two recent downtown transactions.
KBS Realty Services paid $181 per square foot for One Main Place in January and American Pacific International Capital paid $159 per square foot for the office portion of KOIN Center in a December deal.
The One Main Place and KOIN Center deals involved some distress while Market Place is 100 percent leased.
Against that background, a local real estate appraiser said the $24 million price tag for Market Center makes sense.
“It doesn’t shock me,” said Brian Glanville, managing director of Integra Realty Resources, a Portland commercial valuation firm.
Glanville appraised Market Center several years ago, but wasn’t involved in the current sale.
PSU uses Market Center to house its finance, administration, communications and legal offices as well as the offices of academic affairs and the provost. The Department of Theater Arts is temporarily quartered at Market Center, along with The Center for Sustainable Processes and Practices and the Oregon Built Environment and Sustainable Technologies Center.
Non-PSU tenants include AT&T, Bean Investment Real Estate, Jack Nadel International and SnapNames.