PORTLAND, OR—Portland is quickly becoming a viable competitor to the likes of Seattle and the Bay Area. That is, if Los Angeles-based Vista Investment Group has anything to say about it.
Chances are a fourth large Portland investment in the last 18 months carries a fair amount of weight. Vista recently acquired Hollywood Station, a 69,112-square-foot mixed-use building in the Hollywood District.
With its $22 million acquisition of Hollywood Station, the privately held real estate investment firm has now invested more than $100 million since entering the Portland real estate market in 2017. Visa built its 500,000-square-foot portfolio in less than two years.
The local portfolio includes Nimbus Oaks, a flex/business park in Beaverton, Customs House in Portland and last month’s acquisition of the Cornell West office building in Beaverton. The company’s fifth acquisition in Portland, a multifamily property in the submarket of Vancouver, WA is set to close escrow in May.
“Greater Portland remains a key target market for us,” said Vista president Jonathan Barach. “It represents a relative value compared to more mature markets like Seattle and the San Francisco Bay Area, while demonstrating similar strong market fundamentals and demographics.”
Hollywood Station is anchored by a 50,000-square-foot 24 Hour Fitness Super Sport Gym, which recently extended its lease for an additional 10 years. The fitness facility is one of the busiest among 24 Hour Fitness’ chain of 400 clubs throughout the country.
The building also includes 17,000 square feet of office space leased to a variety of local businesses, as well as 2,000 square feet of street-level retail. The property was 95% leased at closing.
Located at 4224 NE Halsey St., the 13-year-old property is adjacent to Interstate 84 and the TriMet MAX light rail Hollywood/NE 42nd Avenue transit center station that serves the TriMet’s Blue, Green and Red Lines providing access throughout the greater Portland area. The property includes a covered four-story parking garage with 220 stalls.
“Hollywood Station was a deal we had seen before,” Barach tells GlobeSt.com. “When the opportunity came back around at opportunistic pricing, we jumped on it. It sits very prominently off the 84 Freeway in a great neighborhood of Portland. Gyms, and especially high quality brands like 24 Hour Fitness, are one of the few bright spots in the new paradigm for brick and mortar retail. The newly constructed multifamily property next door and having Providence Health as a neighbor didn’t hurt either.”
Vista Investment Group represented itself in the transaction. Blake Federinko, Brandi Ho and Michael Jenkins from MAJ Commercial represented the seller.
National retail is in a state of massive change, but Portland’s retail property market has remained resilient in the face of those changes. Its very strong 2018 has, for the most part, carried into the first quarter of 2019, according to a report by Kidder Mathews.
The economic factors such as strong population growth, job growth and the lack of a sales tax that make the retail market in Portland so appealing have continued to stay similarly strong one quarter into 2019. The direct vacancy rate remained at its lowest point of all time quarter-over-quarter. In addition, total and direct rental rates remained relatively static quarter-over-quarter growing by 50 and 60 basis points, respectively. Portland-area shopping centers continued impressive occupancy gains as total and direct vacancy fell by roughly 25%, says Kidder Mathews.