For 22 years now, we have been doing lease work in the Kruse Way Submarket of Lake Oswego, OR. In that time, we have represented JP Morgan Chase, Cisco Systems, Jensen Investment Management, The Clorox Company, McDonald’s Corporation, Auxier Asset Management and several other fine firms in finding and negotiating for office spaces.
We have gained a specialty here because two of the biggest real estate firms in the world have the exclusive for lease listings on many of the buildings in the submarket. And of course, sharp tenants recognize that conflict of interest in hiring the landlord’s representatives. So, we are called on as tenant reps for some fine assignments. We know the submarket well, and achieve great rates, terms and conditions for our clients.
What’s going on now? First off for this study, we consider the submarket to consist of the predominantly Class A buildings in the area from Kruse Way Place down Meadows Road to and through Centerpointe. The best of the buildings in this general market area. There’s recently been a lot of turnover in the submarket and it has caused a slight increase in vacancy to 13%. This submarket because of the huge amount of lending and subprime lending companies as tenants, got hammered in the 2009 to 2012 period. Vacancy rates then hit 25%+. But for the most part vacancy rates over the years, have hovered between 5-15%.
Recently the collapse of Aequitas, and some exits by other tenants like Autodesk has created vacancy. But likewise, many of the vacancies came in the higher end Kruse Way buildings. Because of that, while the vacancy rate overall has increased a bit, we are seeing higher asking rates and actual rates achieved by the landlords on average. As many of the vacancies have been in these higher end properties. The top asking rates along Meadows Road can be as high as $34/rsf/yr. FS.
We recently negotiated an excellent lease rate for our 12,000rsf client Jensen Investment Management at the 5500 Meadows building, with a Tenant Improvement allowance from the landlord that covered all our client’s TI needs.
While this market was once considered the best submarket location in the Portland Metro, higher appreciations of rent have since occurred in the Portland Central Business District. This is similar to the urban trends we see in Seattle, San Francisco and other markets we are in.
These days this submarket averages a bit below $30 per square foot. However, finding clients great deals is what we are about. For instance, we have seen 2 spaces that are available for sublease at asking rates of $25-26/rsf/yr. And we would counsel our clients to offer much less than that.
If you are interested in getting a terrific space and rate in this market, some of the biggest companies in the US have used us on Kruse Way. And local firms have also used us again and again. For renewals or new leases.