California Investor Buys Five-Building Distribution Center in Portland's Highest-Priced Industrial Deal of 2023

BKM Capital Partners Plans to Extend Buying Spree into 2024

DECEMBER 20, 2023–A Southern California-based real estate fund manager bought a five-building light-industrial park in the largest industrial deal of the year by total price in Portland, Oregon.

BKM Capital Partners, based in Newport Beach, acquired the 451,000-square-foot 217 Distribution Center in Beaverton for $67 million from Kansas City Life Insurance, a source close to the deal told CoStar News.

While some industrial real estate investors are pulling back in the face of high borrowing costs and oversupply concerns, BKM has now spent over $500 million this year in Oregon and several other western states this year, with more planned in the first months of 2024.

“Looking ahead, we are poised for continued success, with plans to deploy another $200 million in the first quarter of 2024 alone,” CEO Brian Malliet said in a statement.

The multi-tenant property built in the late 1970s at 10950-11065 SW 11th St. has up to 24-foot-clear heights and access to 14 railway dock doors. The buyer plans to spend $4 million on upgrades at the business park, which is fully leased to such tenants as Nike, French electrical firm Rexel, Blue Ocean Logistics and the Beaverton Police Department.

The purchase "represented 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,” BKM Senior Managing Director Brett Turner said in the statement.

The property has high visibility along Highway 217, which provides close access to the rest of greater Portland, making the business park appealing to regional and national logistics companies, the company said.

Plus, Beaverton's industrial submarket has a low 2.5% vacancy rate, with very little new construction planned, Turner said. Given the high tenant demand, BKM plans to eventually raise rents at the 217 Distribution Center, which it said are 20% below market rates.

“Suitable development land here is nearly non-existent, so the threat from new supply is minimal," said John Gillem, CoStar's director of market analytics in Portland.

The Beaverton purchase brings BKM’s total acquisitions this year to over $500 million for 14 properties totaling 2.2 million square feet in Portland, Las Vegas, Denver and California, the company said.

The acquisitions bring the size of the firm’s total portfolio to over 10 million square feet across six states.

View the Article on CoStar.com.