Industrial Market Trend Is High Tech Expansion

PORTLAND-The high tech industrial sector is in the midst of a healthy recovery after a bout of the Asian Flu, according to a just released third quarter market report by Grubb & Ellis.

Several new projects have been announced recently, and not just in the Sunset Corridor: Intel has purchased land at West Union to build a new R&D campus that is expected to ass up to 6,000 workers by 2015; Merix is investing $90 million to help increase capacity, including a 90,000-sf expansion on Portland’s eastside; LSI has announced a major hiring expansion at its Gresham facility; Sun Microsystems has begun construction of a new facility is Hillsboro; and in Clark County, WaferTech has made plans to hire 300 employees and double production by 2001.

Lease rates are also ticking up a bit, according to the report, averaging 35 cents for shell space and hitting 40 cents in the hottest projects. Flex rates are also up, averaging 65 cents in the third quarter after averaging 59 cents in the second quarter, while class A flex asking rates are as high as $1.10.

“This is good news for developers who have been waiting for warehouse and distribution rate to rise enough to justify speculative construction,” concludes the report. “At 35 cents the margins are still very tight and most developers will hold out for build-to-suit opportunities, but speculative construction may begin again if rates rise to between 38 cents and 40 cents.”