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O F F E R I N G M E M O R A N D U M

SE MLKRETAIL BUILDING

1 5 2 5 S E M L K J R . B L V D

P O R T L A N D , O R E G O N

O W N E R / U S E R O P P O R T U N I T Y

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

C O N F I D E N T I A L I T Y & D I S C L A I M E R

The 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.

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

Marcus & 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 P R O P ERT Y S H O W I N G S ARE BY APPOINTM E N T O NLY.

P LEA S E C O NSULT Y O UR MARCUS & M I L L I CHAP A G E N T FOR M O RE D E T A I L S .

OFFICES THROUGHOUT THE U.S. AND CANADA

www.marcusmillichap.com

N AT H A N D R A K EAssociate

Direct: (503) 200-2046 // Fax: (503) [email protected]

License: OR 201218242

M I C H A E L K A P N I C KSenior Vice President of Investments


License: OR 960500191, WA 6176

P R E S E N T E D B Y

S A L E S C O M P A R A B L E SP R O P E R T Y O V E R V I E W

01

TABLE OF CONTENTS

02 03M A R K E T O V E R V I E W

Property Overviews e c t i o n 1

10P R O P E R T Y O V E R V I E W

12

SE MLKRETAIL BUILDING

1 5 2 5 S E M L K J R B L V D , P O R T L A N D , O R , 9 7 2 1 4

1525 SE Martin Luther King Junior Boulevard was built in 1951 using reinforced concrete. The building consistsof approximately 4,124 square feet of gross leasable area situated on a 0.09-acre parcel of land. The property iszoned Central Employment (EX), which allows for a variety of uses including retail, office and residential.

The current tenant, Expert Auto Repair, has operated at this location since 2001. They recently purchased theirown building on SE Powell and will be vacating the building at the end of May 2019. This provides the rareopportunity for an operator to purchase a retail/office building in Portland’s burgeoning Central EastsideIndustrial District well below replacement cost. The property is adjacent to new development projects such asthe Clay Creative, 1510 Technology Center, Waterman Building, Pitman II and Glass Lab.

A qualified operator can acquire this building with an SBA loan, which would require a 15% down payment.Current interest rates are approximately 4.85% assuming a 5-year fixed term amortized over 25 years. Aqualified operator can expect to pay approximately $4,870 per month in debt service.

• Close In Southeast Portland Location

• Flexible Zoning – EX (Central Employment)

• High Street Visibility

• Adjacent to New Development in the Area

• Rare Owner/User Opportunity

• Two Overhead Bay Doors

• Large Skylights and Windows

• High Ceiling Height

• Exposed Beams and Trusses

• Reinforced Concrete Construction

I N V E S T M E N T H I G H L I G H T S

P R O P E R T Y O V E R V I E W

13

PRICING DETAIL // 1525 SE MLK JR BLVD

P R O P E R T Y O V E R V I E W

SALES PRICE // $995,000

PRICE PER FOOT // $241

GROSS LEASABLE AREA // 4,124 SF

LOT SIZE // 0.09 AC

ZONING // EX

LOAN TO VALUE // $845,750 (85%)

INTEREST RATE // 4.85%

DOWNPAYMENT // $149,250 (15%)

TERM // 5 YEAR FIXED

AMMORTIZATION // 25 YEARS

MONTHLY PAYMENTS // $4,870

SBA FINANCING QUOTE

YEAR BUILT // 1951

25

Sales Comparabless e c t i o n 2

26C O M P A R A B L E P R O P E R T I E S

1525 SE MLK Jr. Blvd

(SUBJECT)

834 SE Sandy Blvd

1420 NW Everett St

135 NE 9th Ave

522-523 SE Clay St

603-619 SE 6th Ave

SALES COMPARABLES

1

2

3

4

5

SALES COMPARABLES MAP

27

Avg. $422.54

$0.00

$60.00

$120.00

$180.00

$240.00

$300.00

$360.00

$420.00

$480.00

$540.00

$600.00

1525 SE M L

King Blvd

834 SE

Sandy Blvd

City

Radiator

Building

135 NE 9th

Ave

522-523 SE

Clay St

603-619 SE

6th Ave

Average Price Per Square Foot

SALES COMPARABLES

C O M P A R A B L E P R O P E R T I E S

28

PROPERTY NAME

MARKETING TEAMSALES COMPARABLES

.

Tenants Lease Type

Subject Property: Vacant N/A

Asking Price: $995,000

GLA: 4,124 SF

Price/SF: $241

Year Built: 1951

Zoning: EX

1525 SE MLK JR BLVD1525 SE MLK Jr. Blvd, Portland, OR 97214

1

Tenants Lease Type

Close Of Escrow: 11/20/2017 Vacant N/A

Sales Price: $1,000,000

GLA: 2,500 SF

Price/SF: $400

Year Built: 1930

Zoning: EX

834 SE SANDY BLVD834 SE Sandy Blvd, Portland, OR 97214

2

1420 NW EVERETT ST1420 NW Everett St, Portland, OR 97209

1

NOTES

The Buyer plans to occupy the building as Blizzard Motors, which

is an automotive company.

NOTES

The Buyer plans to utilize the existing space for personal storage,

then redevelop the property several years from now.

SALES COMPARABLES

Tenants Lease Type



GLA: 5,888 SF

Price/SF: $382

Year Built: 1946

Zoning: EX

29

PROPERTY NAME

MARKETING TEAM

rentpropertyaddress1

.

4

Tenants Lease Type



GLA: 4,026 SF

Price/SF: $408

Year Built: 1925

Zoning: IG1

522-532 SE CLAY ST522-532 SE Clay St, Portland, OR, 97214

NOTES

The Buyer plans to occupy the building for his own use.

SALES COMPARABLES

5

Tenants Lease Type



GLA: 6,700 SF

Price/SF: $403

Year Built: 1927

Zoning: EX

603-619 SE 6TH AVE603-619 SE 6th Ave, Portland, OR, 97214

NOTES

The Buyer plans to occupy the building as Black Box CRM, which is a tech company.

rentpropertyaddress1

3

Tenants Lease Type



GLA: 2,500 SF

Price/SF: $520

Year Built: 1926

Zoning: IG1

135 NE 9TH AVE135 NE 9th Ave, Portland, OR, 97232

NOTES

The Buyer plans to occupy the building as 52 Limited, which is a tech company.

31

Market Overviews e c t i o n 3

PORTLANDOREGON

MSA POPULATION2,226,009

33

The Portland-Vancouver metro is located near the confluence of theColumbia and Willamette rivers and stretches across the Oregon borderinto Washington State. The region is composed of Multnomah,Clackamas, Columbia, Washington and Yamhill counties in Oregon, andClark and Skamania counties in Washington. Mount Hood and theCascade Range stand to the east, and the Oregon Coast MountainRange lies to the west. The metro contains approximately 2.4 millionresidents, with more than 640,000 people residing in Portland, thearea’s most populous city.

Overview

[ Portland-Vancouver]

M A R K E T O V E R V I E W

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 INDUSTRYAlternative-energy companies are attracted to the local educated workforce and research institutions and are moving to the region.

LOW BUSINESS COSTSThe 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.

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.

33

34

SPORTS

EDUCATION

ARTS & ENTERTAINMENT

▪ The metro is expected to add nearly 120,000 people over the next five years, resulting in the formation of nearly 64,000 households.

▪ A median home price well above the U.S. level means 60 percent of households can afford to own their home, which is below the national rate of 64 percent.

▪ Of residents age 25 and older, 35 percent hold bachelor’s degrees, and 13 percent have also obtained a graduate or professional degree.

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

opportunities, 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.

QUALITY OF LIFE

* Forecast

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

Analytics; U.S. Census Bureau

37.92017

MEDIAN AGE:

U.S. Median:

37.8

$63,000 2017 MEDIAN

HOUSEHOLD INCOME:

U.S. Median:

$56,300

2.4M2017

POPULATION:

Growth2017-2022*:

4.9%

948K2017

HOUSEHOLDS:

6.7%

Growth2017-2022*:

2017 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

14%

MARKET OVERVIEW

M A R K E T O V E R V I E W

DEMOGRAPHICS

35M A R K E T O V E R V I E W

Booming healthcare, technology sectors bolster demand for office space, keeping

vacancy tight. A relatively lower cost of doing business compared to other West

Coast metros and a growing population of young professionals is driving corporate

growth in the Portland metro. Gains in the tech and healthcare sectors in particular

are bolstering demand for quality office space marketwide. Companies including

Amazon and Google are expanding their footprints and healthcare firms have added

more than 13,400 employees during the past 12 months. Elevated demand has

pushed the vacancy rate to one of the lowest among the major metros in the first

quarter while vacancy in medical office buildings hovered in the tight 3 percent

band.

Construction accelerates. The tight vacancy rate is making it increasingly difficult for

tenants to find quality space and as a result, construction will pick up considerably

this year. Development is on track to reach its highest level in over 10 years in 2018.

A chunk of supply additions are build-to-suit, including roughly 1.3 million square

feet of Nike’s headquarters expansion. An additional 722,000 square feet of space is

designated for medical office use, the majority of which is leased, minimizing impact

on vacancy in medical office buildings.

Robust Tech and Healthcare Hiring FuelDemand For Quality Office Spaces

* Cap rates trailing 12 months through 1Q18; 10-Year Treasury up to March 29

Sources: CoStar Group, Inc.; Real Capital Analytics

Investment Trends

Office 2018 Outlook

3.3

million sq.

ft. will be

completed

1.4% increase in

asking rents

40 basis point

increase in vacancy

Construction:

Rents:

Vacancy:

Deliveries pick up considerably from the

480,000 square feet completed the previous

year as 3.3 million square feet is completed

metrowide.

The average asking rent climbs to $25.92 persquare foot, adding on to the 4.8 percentincrease posted the prior year.

Net absorption of 2.6 million square feet will

not outpace completions, lifting vacancy to

9.6 percent in 2018.

• Relatively higher returns and lower entry costs than in nearby California andWashington keep out-of-state buyers active in the Portland metro. Averagefirst-year returns can be up to 100 basis points higher in Portland than inother West Coast major markets.

• Demand has picked up for assets in Portland’s CBD during the past 12months ending in March. Elevated demand lifted the average price up nearly20 percent for office buildings, to around $300 per square foot. Properties inthe area change hands with first-year yields in the mid-5 percent band onaverage.

• Heightened tenant interest in Clark County has bolstered investors’appetites for assets here. The majority of sales were of Class B buildings inVancouver. Cap rates in Clark County are roughly 100 basis points higherthan the metro average.

MARKET OVERVIEWPORTLAND AREA METRO


• During the year ending in the

first quarter, roughly 23,400

positions were created. Hiring

was led by education and health

services with the addition of

14,900 jobs.

• The unemployment rate has

held steady in the high-3

percent band in March. The

tight rate is making it difficult for

employers to find quality

workers and is restraining hiring.

EMPLOYMENT

• Completions declined

considerably from the 1.4

million square feet completed

the prior annual period. The

Southeast, Southwest and

Lloyd District submarkets

received the majority of

deliveries last year.

• More than 2.5 million square

feet of office space is

underway metrowide, with

completion dates scheduled

through 2019.

CONSTRUCTION

• Metrowide vacancy ticked

down 30 basis points during

the past 12 months to 9.7

percent. Nearly 840,000 square

feet was absorbed during this

time.

• Vacancy in Class B/C office

space fell 60 basis points

during the past four quarters to

9.6 percent. Class A vacancy,

on the other hand, held steady

at 9.7 percent year over year.

VACANCY

• Building on a 2.5 percent

increase the prior year, the

average asking rent climbed 4.4

percent during the past 12

months to $25.40 per square

foot.

• Above-average rent growth

was recorded in the CBD. Here,

rent for marketed space rose

6.7 percent during the year to

$32.19 per square foot in the

first quarter. Rent in the CBD is

the highest metrowide.

RENTS

increase in the average asking rent Y-O-Y

4.4%basis point increase in vacancy Y-O-Y

30square feet completedY-O-Y

576,000increase in total employment Y-O-Y

2.0%

* Forecast

1Q18 - 12-Month Trend

PORTLAND AREA METRO


Bidding Picks Up For Class A Office Buildings,Pushing Prices Higher

Outlook: Investors continue to target

properties in south western Portland,

near Beaverton. Several corporate

headquarters are located here. Cap rates

in the area average in the high-6 to low-

7 percent band.

Vacancy RateY-O-Y

BasisPoint

Change

SubmarketAsking

Rent

Y-O-Y%

Change

Yamhill County 2.6% -290 $21.82 0.0%

Columbia County 3.4% 0 $15.00 0.0%

Southeast 5.3% 40 $24.58 2.7%

Northwest 5.4% -300 $25.77 11.5%

Lloyd District 5.6% -200 $30.06 13.2%

Northeast 5.6% -100 $15.02 -0.7%

Westside 6.3% -60 $22.85 1.8%

Clark County 8.6% -200 $20.95 -0.1%

Southwest 11.1% 80 $20.95 0.9%

CBD 12.9% -10 $32.19 6.7%

I-5 Corridor 14.9% 160 $25.12 3.3%

Overall Metro 9.7% -30 $25.40 4.4%

Submarket Trends

Lowest Vacancy Rates 1Q18

Sales Trends

• The number of sales slowed during the prior 12-month period, through transactionspicked up for Class A properties. Increased sales of higher-tier assets lifted prices up14 percent to $260 per square foot.

• Average first-year returns for office assets have held steady in the low- to mid-6percent range for the past four years.

* Trailing 12 months through 1Q18

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

* 2017

**1Q18



• Fed raises benchmark interest rate, plots path for additional increases. The Federal

Reserve increased the federal funds rate by 25 basis points, lifting the overnight lending

rate to 1.75 percent. The Fed noted that inflation has broadly reached its objective,

while the domestic economy is performing tremendously well as tax cuts power

household spending and corporate investment. As a result, the Fed has guided toward

two additional rate hikes this year, likely in September and December, while setting the

stage for as many as four increases in 2019.

• Lending costs rise alongside Fed rate increase. As the Fed continues to lift interest

rates, lenders are increasingly tightening margins in order to compete for loan demand.

Despite these efforts, borrowing costs remain on an upward trajectory, which may

prompt investors to seek higher cap rates or pursue greater returns in secondary

markets. However, robust economic growth and rising net operating incomes are

keeping selling prices elevated, which may widen an expectation gap as property

performance and demand trends remain positive.

• Lending continues to be highly competitive. While the Fed has committed to

tightening policy, global markets and foreign central banks are keeping pressure down

on long-term interest rates, restraining the 10-year Treasury to the 3 percent range.

Banks, commercial mortgage-backed securities (CMBS) and life insurance companies

are providing debt for office assets, with leverage at banks typically capped at 65

percent. Meanwhile, life insurance companies will typically provide capital with

leverage between 60 and 65 percent, with CMBS offering up to 70 percent. Lender

spreads have narrowed in recent months, while 10-year loan structures will typically

range between 4.25 and 5.25 percent, depending on tenancy, location, sponsorship and

loan-to-value ratio. Minimum debt service coverage required is 1.3 times expected

asset revenues, supporting debt yields of 8.5 percent. The national economy should

grow strong and office demand should support a 10-basis-point decline in vacancy to

13.7 percent nationally.

Include sales $2.5 million and greater

Sources: CoStar Group, Inc.; Real Capital Analytics

Capital Markets


39D E M O G R A P H I C S

DEMOGRAPHICS // 1525 SE MLK JR BLVD

445,389To t a l Po p u l at io n Within

5 Mile R adi u s

GENDER

54.0%

46.0%

Average Household Income within

5 Mile Radius

Median Housing Value within

5 Mile Radius

204,835To t a l H o u s e h o ld s in

5 Mile R a d i u s

20.47%From 2000

$87,967 $60,011

40D E M O G R A P H I C S

Income

In 2017, the median household income for your selected geographyis $57,558, compare this to the US average which is currently$56,286. The median household income for your area has changedby 60.23% since 2000. It is estimated that the median householdincome in your area will be $67,004 five years from now, whichrepresents a change of 16.41% from the current year.

The current year per capita income in your area is $31,516, comparethis to the US average, which is $30,982. The current year averagehousehold income in your area is $75,181, compare this to the USaverage which is $81,217.

Population

In 2017, the population in your selected geography is 31,128. Thepopulation has changed by 12.18% since 2000. It is estimated thatthe population in your area will be 31,502.00 five years from now,which represents a change of 1.20% from the current year. Thecurrent population is 48.36% male and 51.64% female. The medianage of the population in your area is 35.12, compare this to the USaverage which is 37.83. The population density in your area is9,880.95 people per square mile.

Households

There are currently 13,013 households in your selected geography.The number of households has changed by 22.94% since 2000. It isestimated that the number of households in your area will be 13,509five years from now, which represents a change of 3.81% from thecurrent year. The average household size in your area is 2.35persons.

Employment

In 2017, there are 8,823 employees in your selected area, this is alsoknown as the daytime population. The 2000 Census revealed that59.43% of employees are employed in white-collar occupations inthis geography, and 39.74% are employed in blue-collar occupations.In 2017, unemployment in this area is 5.25%. In 2000, the averagetime traveled to work was 25.00 minutes.

Race and Ethnicity

The current year racial makeup of your selected area is as follows:66.24% White, 20.42% Black, 0.36% Native American and 2.39%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 countedindependently of race.

People of Hispanic origin make up 8.40% of the current yearpopulation in your selected area. Compare this to the US average of17.88%.

Housing

The median housing value in your area was $350,493 in 2017,compare this to the US average of $193,953. In 2000, there were6,323 owner occupied housing units in your area and there were4,262 renter occupied housing units in your area. The median rent atthe time was $530.

Source: © 2017 Experian

DEMOGRAPHICS // 1525 SE MLK JR BLVD

N AT H A N D R A K E Associate


License: OR 201218242

M I C H A E L K A P N I C KSenior Vice President of Investments


License: OR 960500191, WA 6176

P R E S E N T E D B Y

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