BKM Capital Partners Acquires 450,000-Square-Foot Light Industrial Park in Metro Portland, OR

Firm Caps Off Banner Year of Activity with $500 Million in Acquisitions

PORTLAND, OR, December 12, 2023 – BKM Capital Partners, a vertically integrated institutional fund manager, has acquired the 217 Distribution Center, a five-building, multi-tenant industrial park in Metro Portland. An institutional investor sold the 451,062-square-foot asset for an undisclosed price. 

Situated at 10950-11065 SW 11th St. in the Portland-metro city of Beaverton, the 1970s-era property is comprised of 13 units ranging in size from 9,945 to 67,459 square feet. It features 68 dual-dock-high and 12 grade-level loading capabilities, up to 24-foot-clear heights, and access to 14 railway dock doors. Less than 9% of its total footprint consists of office space.

“This transaction presented a prime opportunity to acquire a critical mass of infill light industrial square footage at a nearly 50% discount to replacement cost in one of our target markets,” stated Brett Turner, Senior Managing Director of Acquisitions and Dispositions at BKM. “The Beaverton industrial submarket is greatly supply constrained, with a 2.5% vacancy and new construction accounting for just 1% of inventory.”

As part of its value-add strategy, BKM intends to invest approximately $4 million in capital improvements, including upgrades to roofs, parking lots, landscaping, HVAC systems, interior spec TIs, and updates to the signage and paint scheme to bring the asset to brand standards. Plans call for increasing the number of units from 13 to 15, decreasing the average unit size from 34,697 to 29,975 square feet. 

With a high-visibility location along Highway 217, and quick access to the entire Portland Metro and broader Pacific Northwest, the asset caters to regional and national logistics-focused tenants. The complex is currently 100% leased to mostly credit tenants including Nike, Rexel, Blue Ocean Logistics, and the Beaverton Police Department. BKM intends to leverage the asset’s 3.5-year WALTs to correct in-place rents, which are 20% below market rates, over its 60-month hold period.

The 217 Distribution Center was one of several industrial assets the undisclosed institutional seller was looking to liquidate by year’s end. The off-market transaction comes on the heels of BKM’s sale of the neighboring Beaverton Industrial Center to STAG Industrial in the third quarter. 

The transaction also caps off a year of significant activity for BKM, which strengthened both its investment capabilities and its Western U.S. industrial portfolio via several strategic acquisitions and dispositions. 

“The small-bay industrial real estate market continues to demonstrate strong fundamentals and provide value-add, seller distressed investment opportunities,” said Brian Malliet, BKM’s Chief Executive Officer. “The hard work and dedication of our team has made 2023 another banner year for our company and served as a testament to BKM’s expertise in sourcing and executing transactions that generate attractive returns for investors and partners as reflected in the successful completion of $500 million in acquisitions this year.” 

In 2023, BKM acquired 14 properties totaling 2.2 million square feet in 43 buildings in Portland, OR, Las Vegas, NV, Denver, CO, and Northern and Southern California. The acquisitions brought the firm’s total portfolio to over 10 million square feet in six states.

Additionally, ownership interests in BKM’s Pacific Business Center (748,000 square feet) in Henderson, NV and Backlot Burbank (306,000 square feet) in Burbank, CA were acquired by StepStone Real Estate through a new partnership formed earlier this year.

“Looking ahead, we are poised for continued success, with plans to deploy another $200 million in the first quarter of 2024 alone,” Malliet added. “Our team's relentless pursuit of excellence and our strategic vision position us at the forefront of the industry, and we are excited about the opportunities that lie ahead for BKM Capital Partners."