$2.2-Mil Remodel Underway at 1001 Fifth Ave.

PORTLAND-A public-areas remodel of the 1980s-era 1001 Fifth Avenue building is underway. The $2.2 million project, including public spaces and retail areas, is scheduled for completion at the end of the year. Yost Grube Hall is the designer and Baugh Construction is the general contractor.

The building is owned by Equity Office Properties Trust, which recently completed a $7.3-billion merger with Spieker Properties. The merger made EOP the largest class A office building owner in greater Portland and several other West Coast markets, but did not include 1001 Fifth, which had been one of EOP’s few holdings in the region.

The first of four phases concluded recently when work was completed along Fifth Avenue side of the building. “Lobbies, other common areas and elevator cabs are all being modernized, as well as the retail areas,” says Clint Benson of CB Richard Ellis, the broker hired by EOP to lease up the building. “The building was built in 1980 and at that point it was common that brick exterior siding look was brought into lobbies, but that era has now changed.”

The 376,159-sf building is 12.5% vacant, which is a little bit higher than average but better than the 20% vacancy it had after a law firm relocated to one of the new buildings in town, an energy company downsized and city government tenants moved back into owned space after the completion of a new building.

Annual asking rates are between $21.95 per sf and $24.95 per sf, and won’t likely be dropped due to the money being spent on the remodel. “The building provides enough value for the companies it works for that the asking rates are very fair related to the overall market,” says Benson.

Benson says many tenants in the building recently have renewed leases, which means vacancy should continue to head in the right direction. Currently, the law firm Harrang Long Gary Rudnick PC is negotiating an expansion lease.

In the middle of its lease, the firm is expanding by 50%, from 3,000 sf to 9,000 sf. “And I can’t give you any names right now, but we are in active negotiations with two full floor tenants” for the vacant 18th floor, formerly leased by the Kell Alterman law firm.

In the missed-opportunity pile goes Palm Inc., which leases a half-floor (8,000 sf) in the building. The handheld computer was reportedly negotiating for a full floor of its own, but recently froze its expansion plans while the market figures itself out. “They are in wait-and-see mode,” says Benson.

Thanks to its purchase of Spieker properties, EOP all of a sudden owns 42 office buildings in the region. On a square footage basis, that equates to about 3.8 million sf, making EOP by far the largest owner of class A office space in the region. The combined portfolio is over 94% leased on a direct basis. Another 3% is available on a sublease basis.

In the Central Business District, the company now owns three office buildings totaling about 875,000 sf. In addition to the 376,159-sf 1001 Fifth Avenue building it owned prior to the merger, EOP now owns the 269,091-sf Benjamin Franklin Plaza at 1 SW Columbia and the 229,510-sf One Pacific Square at 220 NW Second Ave.

In the Kruse Way submarket, EOP now owns around 14 buildings totaling more than 1.3 million sf, plus a couple of extra building lots. And that’s if you don’t include the six-building Lincoln Center development across Interstate 5 and a few miles down Highway 217 in the Washington Square area. At 726,000-sf, it is the Portland region’s largest suburban office complex.

The last of EOP’s inherited office product are the 14-building, 700,000-sf Nimbus Corporate Center in Beaverton, which is a flex product, and four office buildings totaling 335,000-sf in the John’s Landing submarket just south of Downtown Portland. The John’s Landing buildings include 5550 Macadam (41,398 sf), River Forum I & II (194,396 sf) and RiversideCentre (99,898 sf).