NE MLK & KNOTTS DEVELOPMENT OPPORTUNITYimages3.loopnet.com/d2/SUwyuK4ImhhwW9NS_xK2A3m7... · is not intended to indicate or imply affiliation with, or sponsorship or endorsement by,

NE MLK & KNOTTS DEVELOPMENT OPPORTUNITY2716-2732 NE MLK Jr. Blvd • Portland, OR 97212

Offering Memorandum

N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E

Confidentiality and DisclaimerThe information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and

should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified

information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due

diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the

future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or

asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any

tenant's plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable;

however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters

and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of

the information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2018 Marcus & Millichap. All rights reserved.

Non-Endorsement NoticeMarcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or name

is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or

commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY.

PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

NE MLK & KNOTTS DEVELOPMENT OPPORTUNITY

Portland, OR

ACT ID Y0210522

2

E X C L U S I V E L Y L I S T E D B Y

3


4

INVESTMENT

OVERVIEW

PROPERTY DESCRIPTION

NE MLK & KNOTT DEVELOPMENT OPPORTUNITY

PROPERTY OVERVIEW

Marcus & Millichap has been exclusively selected to market for sale the NE MLK & Knotts Development Opportunity. The property is in Portland's Eliot

neighborhood, which boasts an average household income in excess of $107,000 per year. Less than 10 minutes from Downtown, the site has quick

access to major freeways including I-5, I-405 and I-84. Although with the Portland Streetcar nearby, most daily errands can be accomplished without a

car. The property is well located near major employers such as the Nike Factory Store, Legacy Emanuel Medical Center, the Moda Center, Lloyd Center

Mall, the Convention Center and grocers such as New Seasons and Safeway. Nearby parks include Gazebo at Davis Park, Dawson City Park and Irving

City Park.

The development site is zoned Central Employment with a design overlay (EXD), which is a highly desirable zoning because of the increased density

and height limits. The property consists of three parcels totaling 17,857 square feet, and four buildings totaling approximately 7,675 square feet of net

rentable area. The property is currently fully leased. Most of the tenants are on month-to-month holdovers because their leases have expired. The

exception is McMenamins Coffee Roasters whose lease runs through August of 2019. Their option to extend can be terminated when the property is sold

as per the lease agreement.

PROPERTY HIGHLIGHTS

▪ Signalized Intersection at NE MLK Jr. Blvd &Knott St.

▪ Biker's Paradise - Bike Score:99

▪ Very Walkable - Walk Score: 86

▪ More than 35,000 VPD on NE MLK Jr. Blvd

▪ Strong Neighborhood Demographics

▪ Flexible EXD Zoning Allows for a Variety ofUses

▪ 3:1 FAR with a 65 Foot HeightLimit

CLOSE PROXIMITY TO:

13

REGIONAL MAP


6

LOCAL MAP


7

AERIAL MAP


8

9

AERIAL MAP


PROPERTY PHOTOS


10


11

FINANCIAL

ANALYSIS

FINANCIAL ANALYSIS


12

TENANT SUMMARY

FINANCIAL ANALYSIS


OPERATING STATEMENT

13

FINANCIAL ANALYSIS


PRICING DETAIL

14

Sale Price Land Price PSF

$2,500,000 $140 PSF

Income Offsetting Acquisition Annual NOI Land PSF After income Offset

Net Income after Year 1 $94,499 $135 PSF






15

MARKET

OVERVIEW

MARKET OVERVIEW

PORTLAND-VANCOUVEROVERVIEW

The Portland-Vancouver metro is located near the confluence of the

Columbia and Willamette rivers and stretches across the Oregon

border into Washington State. The region is composed of Multnomah,

Clackamas, Columbia, Washington and Yamhill counties in Oregon,

and Clark and Skamania counties in Washington. Mount Hood and the

Cascade Range stand to the east, and the Oregon Coast Mountain

Range lies to the west. The metro contains approximately 2.4 million

residents, with more than 600,000 people residing in Portland, the

area’s most populous city.

MARKET OVERVIEW

METRO HIGHLIGHTS

HIGH POPULATION GROWTH

The Portland-Vancouver metro has recorded more

than 20 years of positive net migration thanks to

expanding industries.

ALTERNATIVE-ENERGY INDUSTRY

Alternative-energy companies are attracted to the

local educated workforce and research institutions

and are locating within the region.

LOW BUSINESS COSTS

The cost of doing business is among the lowest on

the West Coast, supported by no state income tax in

Washington and no sales tax in Oregon.


16

MARKET OVERVIEW

ECONOMY▪ Lower land costs than other West Coast metros, a skilled labor pool and affordable,

abundant power attract companies to the region. The favorable tax structure, with no state

income taxes in Washington and no sales tax in Oregon, also lures businesses.

▪ The metro’s economy has shifted from timber to industries that include athletic and outdoor

activities, clean tech, advanced manufacturing and software.

▪ A diverse group of companies based in the metro include Nike, Daimler, Oregon Iron Works,

Intel and IBM.

SHARE OF 2016 TOTAL EMPLOYMENT

MAJOR AREA EMPLOYERS

Providence Health & Services

Oregon Health and Sciences University

Portland State University

Kaiser Foundation Health Plan of the NW

Legacy Health System

Nike, Inc.

Wells Fargo

Fred Meyer Stores

U.S. Bank

Intel Corp.* Forecast

MANUFACTURING

11%GOVERNMENT

HEALTH SERVICES

EDUCATION AND

+OTHER SERVICES

4%

LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES

18%

AND UTILITIES

TRADE, TRANSPORTATION CONSTRUCTION

PROFESSIONAL AND

BUSINESS SERVICES

2%INFORMATION

16%

5%

14% 10% 6%

15%


17

MARKET OVERVIEW

DEMOGRAPHICS

SPORTS

EDUCATION

ARTS & ENTERTAINMENT

▪ The metro is expected to add nearly 130,000 people through 2021, resulting in the

formation of nearly 50,000 households.

▪ A median home price well-above the U.S. level has afforded 60 percent of

households to own their home, which is below the national rate of 64 percent,.

▪ Of residents age 25 and older, 34 percent hold bachelor’s degrees, and 12 percent

have also obtained a graduate or professional degree.

The metro contains more than 37,000 acres of parks and provides numerous opportunities

for outdoor enthusiasts, including activities at Mount Hood and on the Hood River. The

metro lies 60 miles east of the Pacific Ocean, with 330 miles of beaches along the Oregon

coast. Professional sports teams represent basketball, soccer and hockey. Cultural activities

can be found at various local venues, including the Portland Art Museum, World Forestry

Center Discovery Museum and the Portland Children’s Museum, and plays are staged at the

Portland Center for the Performing Arts. Major colleges and universities including Lewis and

Clark, Pacific University, the University of Portland and Portland State University. The

University of Oregon and Oregon State University are nearby.

37.7

2016MEDIAN AGE:

U.S. Median:

37.7

$60,900

2016 MEDIAN HOUSEHOLD INCOME:

U.S. Median:

$54,500

2.4M

2016POPULATION:

Growth2016-2021*:

5.2%

933K

2016HOUSEHOLDS:

5.7%

Growth2016-2021*:

QUALITY OF LIFE

2016 Population by Age

0-4 YEARS

6%5-19 YEARS

19%20-24 YEARS

6%25-44 YEARS

30%45-64 YEARS

26%65+ YEARS

13%

* Forecast

Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s

Analytics; U.S. Census Bureau


18

MARKET OVERVIEW

19

Steady job gains and new households boost retail demand. The unique character of

Portland has attracted both corporate giants using the market as a testing ground for

new concepts and independent online brands venturing into the brick-and-mortar

model. Over the past year a 365 by Whole Foods, a smaller format market that aims to

meet the millennial mindset, opened in Lake Oswego, while an Amazon Books was

added to the Washington Square mall. Online retailers ModCloth and Blue Nile also

chose Portland for their entrance into physical stores. Retailers stand to benefit from a

local economy that continues to grow; retail sales over the next five years are

anticipated to expand at one of the highest rates in the nation. A slowdown in supply

growth also portends to rising optimism as the vacancy rate will reach its lowest level

of the cycle this year, contributing to rent growth that will be the strongest in a decade.

Robust tenant demand fills new space at a speedy clip. Nearly 550,000 square feet of

retail space is underway across the metro and is expected for delivery over the next 18

months. The largest project under construction is the first phase of the Cedar Hills

Crossing shopping center expansion in North Beaverton, which will be completed next

year. Though retail space is rising across the metro, the vast majority has been pre-

leased, adding greater pressure to an already tight inventory.

• High yields are driving investors to deploy capital across the market. Single-

tenant assets often trade with a going-in cap rate in the low-6 percent band

while some of the best properties dip to the low-5 percent area. First-year cap

rates in the multi-tenant segment fall in the upper-6 to upper-7 percent range.

• Robust rental rate increases and high occupancy are attracting more buyers

to Portland. Limited new development and a strong desire by owners to

continue to hold onto assets will slow sales activity, though, forcing investors

to expand their acquisition parameters.

• An abundance of value-add opportunities in the Northeast and Southeast

corridors will hold buyer interest, particularly in the Central Eastside and

Gateway areas where most properties trade for less than $5 million.

Retail 2017 OutlookYoung, Tech-Oriented Population Has

Retailers Breaking From the Norm

PORTLAND METRO AREA

410,000 sq. ft.

will be completed

6.8% increase in

asking rents

20 basis point

decrease in vacancy

Construction:

Adding to a 3.7 percent increase that

occurred in 2016, the average asking rent

rises to $19.29 per square foot.

Stout retail space demand drops the vacancy

rate to 4 percent at year end, the tightest

level in a decade. A year ago, the rate fell 40

basis points.

* Cap rates trailing 12 months through 2Q17; 10-year Treasury rate through Aug.

Sources: CoStar Group, Inc.; Real Capital Analytics

Deliveries slow to their lowest level since

2013, falling just below the 414,000 square

feet added last year.

Vacancy:

Rents:

Investment Trends


MARKET OVERVIEW

20

• During the first half of the year,

14,600 jobs were created,

bringing year-over-year

employment gains to 27,800. The

construction sector led job growth

over the year by adding 8,100

workers to payrolls.

• The unemployment rate dropped

140 basis points in June from a

year earlier to 3.5 percent, its

lowest reading on record.

EMPLOYMENT

• Deliveries during the last 12

months ended in June slowed

from the 663,000 square feet

opened during the prior yearlong

stretch.

• Finished in November 2016, a

144,000-square-foot Fred Meyer

was the largest completion of the

year. The store anchors a new

shopping center in the Happy

Valley/Damascus area.

CONSTRUCTION

• The vacancy rate fell to 4.4

percent in June, adding to a 20-

basis-point drop that occurred a

year earlier. Net absorption over

the year totaled 748,000 square

feet.

• Vacancy at multi-tenant space

fell 10 basis points over the year

to 5.3 percent while a 40-basis-

point drop was posted in the

single-tenant segment to 4.0

percent in the second quarter.

VACANCY

• The average asking rent shot up

to $19.19 per square foot in the

second quarter, far outpacing a

2.5 percent increase posted last

year.

• Multi-tenant rent growth led the

market, rising 17.0 percent over

the last four quarters to $21.37 a

square foot. A 4.4 percent

increase was registered at

single-tenant space, climbing to

$18.33 per square foot.

RENT

S

PORTLAND METRO AREA

increase in the

average asking rent

Y-O-Y

8.1%basis point decrease

in vacancy Y-O-Y30square feet

completed

Y-O-Y

500,000increase in total

employment Y-O-

Y

2.4%

* Forecast

2Q17 - 12-MONTH TREND


MARKET OVERVIEW

21

Rising Investor Demand for Portland Retail Pushes Prices Upward at Strong Pace

Outlook: Sales activity will be heightened

in the Southeast submarket this year as

retailers and investors chase an influx of

households and well-paying medical jobs.

Vacancy

Rate

Y-O-Y

BasisPoint

Change

SubmarketAsking

Rent

Y-O-Y%

Change

Submarket Trends

Lowest Vacancy Rates 2Q17

Sales Trends

PORTLAND METRO AREA

• Multi-Tenant: Assets appreciated at a steady clip over the past 12 months as the

average price climbed 10 percent to $257 per square foot. Transaction velocity held

stable, led by the Southeast submarket.

• Single-Tenant: Prices in the single-tenant segment also rose 10 percent, bringing the

average price to $384 per square foot. A shortage of suitable listings, though, slowed

deal flow 6 percent from the prior year.

* Trailing 12 months through 2Q17

Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics

Columbia County 1.2% -370 $12.67 -13.3%

Yamhill County 1.9% -220 $17.21 26.5%

Northwest 2.9% 30 $21.06 -14.5%

Westside 2.9% -70 $16.96 1.7%

Northeast 3.8% -20 $17.36 -0.2%

Southeast 3.8% -70 $16.52 7.8%

Southwest 4.4% 20 $28.01 51.8%

Lloyd District 4.6% -60 $22.51 25.7%

Clark County 5.5% -70 $18.43 3.4%

I-5 Corridor 6.1% 10 $19.60 -16.1%

Overall Metro 4.4% -30 $19.19 8.1%


Demographic Highlights

2017 JOB

GROWTH*

FIVE-YEAR

POPULATION

GROWTH**

640,850 or 1.1%

FIVE-YEAR

HOUSEHOLD

GROWTH*

2Q17 MEDIAN

HOUSEHOLD

INCOME

RETAIL SALES

FORECAST**

Metro 36.7%U.S. 21.1%

$3,620 Per Household

$1,422 Per Person

2017 RETAIL SALES PER

MONTH

* Forecast **2017-2022

Metro 1.7%

U.S. Average 1.4%

Metro $69,135U.S. Average $58,672

U.S. $3,785

U.S. $1,454

Annual GrowthU.S. 0.7% Annual Growth

86,000 or 1.7%Annual GrowthU.S. 1.1% Annual Growth

MARKET OVERVIEW

22

• Monetary policy in transition. Despite the Fed raising its benchmark short-term rate three

times in seven months and signaling another rise before the end of the year, long-term rates

have remained stable. The yield on the 10-year U.S. Treasury bond remained in the low- to

mid-2 percent range throughout the second quarter of 2017. The Federal Reserve wants to

normalize monetary policy and, in addition to rate hikes, will likely start paring its balance

sheet.

• Sound economy a balancing act for Fed. With unemployment hovering in the low-4 percent

range, the lowest level since 2007, the Federal Reserve will remain vigilant regarding a

possible rapid increase in inflation if wage growth takes off. Additionally, business confidence

and job openings are near all-time highs. Businesses finally have the assurance to expand

their footprints after years of tepid growth following the Great Recession. The Fed, however,

must now balance economic growth and job creation against wage growth and inflationary

pressures.

• Underwriting discipline persists; ample debt capital remains. Overall, leverage on

acquisition loans has continued to reflect disciplined underwriting, with LTVs typically ranging

from 60 percent to 70 percent for most retail properties. At the end of 2016, the combination of

increasing rates, conservative lender underwriting and fiscal policy uncertainty encouraged

some investor caution that slowed deal flow, a trend that has extended into 2017. A potential

easing of regulations on financial institutions, though, could liberate additional lending capacity

and nominally higher interest rates may also encourage additional lenders to participate.

* Forecast

Sources: CoStar Group, Inc.; Real Capital Analytics

PORTLAND METRO AREA

Capital Markets


PROPERTY NAME

MARKETING TEAM


DEMOGRAPHICS

Source: © 2017 Experian

Created on March 2018

POPULATION 1 Miles 3 Miles 5 Miles

▪ 2022 Projection

Total Population 25,605 213,316 390,279

▪ 2017 Estimate


▪ 2010 Census


▪ 2000 Census


▪ Current Daytime Population

2017 Estimate 47,636 377,707 572,493

HOUSEHOLDS 1 Miles 3 Miles 5 Miles

▪ 2022 Projection

Total Households 12,370 106,837 183,875

▪ 2017 Estimate


Average (Mean) Household Size 2.06 1.95 2.08

▪ 2010 Census


▪ 2000 Census


▪ Occupied Units

2022 Projection 12,370 106,837 183,875

2017 Estimate 12,129 105,273 180,964

HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles

▪ 2017 Estimate

$150,000 or More 13.61% 12.87% 12.16%

$100,000 - $149,000 14.63% 13.67% 14.04%

$75,000 - $99,999 11.31% 11.92% 12.82%

$50,000 - $74,999 17.03% 16.63% 17.60%

$35,000 - $49,999 11.89% 11.09% 11.81%

Under $35,000 31.52% 33.82% 31.54%

Average Household Income $86,530 $86,481 $86,551

Median Household Income $59,955 $57,312 $59,090

Per Capita Income $41,503 $43,153 $40,576

HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 MilesTotal Average Household Retail Expenditure

$71,145 $69,722 $71,178

▪ Consumer Expenditure Top 10 Categories

Housing $20,691 $20,260 $20,560

Shelter $12,487 $12,193 $12,340

Transportation $11,181 $10,885 $11,228

Food $7,988 $7,794 $7,902

Personal Insurance and Pensions $6,392 $6,331 $6,450

Health Care $3,883 $3,699 $3,873

Entertainment $3,755 $3,741 $3,860

Utilities $3,406 $3,294 $3,385

Household Furnishings and Equipment

$2,439 $2,479 $2,523

Apparel $1,946 $1,960 $1,968

POPULATION PROFILE 1 Miles 3 Miles 5 Miles

▪ Population By Age

2017 Estimate Total Population 24,890 206,709 380,271

Under 20 15.83% 14.96% 17.33%

20 to 34 Years 30.97% 31.30% 28.65%

35 to 39 Years 10.26% 10.39% 9.89%

40 to 49 Years 16.07% 15.59% 15.16%

50 to 64 Years 15.27% 17.10% 17.59%

Age 65+ 11.60% 10.65% 11.40%

Median Age 36.47 36.70 36.96

▪ Population 25+ by Education Level

2017 Estimate Population Age 25+ 19,495 162,006 289,342

Elementary (0-8) 2.40% 1.74% 2.21%

Some High School (9-11) 3.18% 3.19% 3.80%

High School Graduate (12) 12.36% 11.19% 12.91%

Some College (13-15) 19.37% 20.26% 21.01%

Associate Degree Only 5.30% 5.46% 5.84%

Bachelors Degree Only 33.52% 34.30% 32.01%

Graduate Degree 23.40% 23.24% 21.36%

23

Income

In 2017, the median household income for your selected geography is

$59,955, compare this to the US average which is currently $56,286.

The median household income for your area has changed by 65.43%

since 2000. It is estimated that the median household income in your

area will be $69,804 five years from now, which represents a change

of 16.43% from the current year.

The current year per capita income in your area is $41,503, compare

this to the US average, which is $30,982. The current year average

household income in your area is $86,530, compare this to the US

average which is $81,217.

Population

In 2017, the population in your selected geography is 24,890. The

population has changed by 25.13% since 2000. It is estimated that the

population in your area will be 25,605.00 five years from now, which

represents a change of 2.87% from the current year. The current

population is 48.36% male and 51.64% female. The median age of the

population in your area is 36.47, compare this to the US average

which is 37.83. The population density in your area is 7,900.60 people

per square mile.

Households

There are currently 11,853 households in your selected geography.

The number of households has changed by 31.35% since 2000. It is

estimated that the number of households in your area will be 12,370

five years from now, which represents a change of 4.36% from the

current year. The average household size in your area is 2.06

persons.

Employment

In 2017, there are 34,051 employees in your selected area, this is also

known as the daytime population. The 2000 Census revealed that

68.89% of employees are employed in white-collar occupations in this

geography, and 31.73% are employed in blue-collar occupations. In

2017, unemployment in this area is 4.98%. In 2000, the average time

traveled to work was 24.00 minutes.

Race and Ethnicity

The current year racial makeup of your selected area is as follows:

75.19% White, 14.21% Black, 0.21% Native American and 2.75%

Asian/Pacific Islander. Compare these to US averages which are:

70.42% White, 12.85% Black, 0.19% Native American and 5.53%

Asian/Pacific Islander. People of Hispanic origin are counted

independently of race.

People of Hispanic origin make up 6.04% of the current year

population in your selected area. Compare this to the US average of

17.88%.

PROPERTY NAME

MARKETING TEAM


Housing

The median housing value in your area was $426,157 in 2017,

compare this to the US average of $193,953. In 2000, there were

4,152 owner occupied housing units in your area and there were 4,871

renter occupied housing units in your area. The median rent at the

time was $596.

Source: © 2017 Experian

DEMOGRAPHICS

24

8


DEMOGRAPHICS

25

Documents

NE MLK & KNOTTS DEVELOPMENT OPPORTUNITYimages3.loopnet.com/d2/SUwyuK4ImhhwW9NS_xK2A3m7... · is not intended to indicate or imply affiliation with, or sponsorship or endorsement by,