Fidelity National Title relocates to North Portland's Rivergate

Daily Journal of Commerce (Portland, OR), Oct 22, 2008 by Tyler Graf

Fidelity National Title has found a new home for its off-site document management and storage facility, leasing 100,750 square feet within the new Kelley Point Distribution Center Phase II, Building 4, in North Portland's Rivergate submarket.

The move marks a growth of 45,000 square feet of space for the company, which had been located at the Stockyards Commerce Center on Hayden Island. The space will be used by Fidelity National Title's subsidiary FNTG National Records Center Inc.

The company will be the first tenant in the 200,000-square-foot building.

According to the company, it was essential to relocate to larger space close to Interstate 5 in North Portland, so the company could serve clients in both Oregon and Washington.

The five-year, fixed-rate lease is expected to commence in December, and Tyler Sheils, a broker for the transaction for Grubb & Ellis, believes it's a significant deal for an otherwise lumbering market.

"With the current climate of the market, there is a fair amount of institutional industrial product that's coming out of the ground, but (these properties have) been lean on finding tenants," Sheils said. "Overall, (with the) the economics right now, landlords are really doing everything they can to attract a high-credit tenant like Fidelity."

Jonathan Rubey, an industrial broker for Colliers International, agreed, saying landlords are getting very aggressive in how they attract tenants. During the third quarter, landlords began sweetening deals by giving new tenants free rent and other concessions.

In the coming months, he sees landlords dropping rental rates further.

"It's absolutely a tenant's market right now," Sheils said.

During the third quarter, rental rates held steady at an average of 42 cents per square foot, which was a one-cent drop from the second quarter. In the Rivergate industrial area, however, rental rates remain low, hovering in the 35- to 36-cents range per square foot.

Rubey attributed this to Rivergate's high vacancy rate, which at 11.1 percent is the second-most vacant submarket behind only Gresham/ southeast Portland, which is at 13.6 percent.

Rivergate's vacancy rate may increase in the near future: About 700,000 additional square feet of industrial property is slated to be available in the coming quarters.

Though guarded, Sheils remains optimistic about a turnaround in the market, believing a 180-degree shift back toward landlords will happen soon.

Still, he doesn't expect it to occur overnight. For the Fidelity National Title deal, Sheils said, the landlords were extremely willing to put together "as lean a deal" as they could, but he would not divulge what the deal entailed.

Landlords - such as the owners of the Kelley Point Distribution Center, CalWest Industrial Properties - may now feel more compelled to take what they can get for properties, Rubey said.

"If you're a landlord, we're just saying (as brokers), 'Well, we just need to find someone to get in there,' " he added.

Attracting big users to Southwest submarkets, such as Wilsonville and Tigard, is more difficult than the North and Southeast submarkets, according to Rubey, simply because there's less space available.

"Because there's so much vacancy (in Rivergate), that shaves a few pennies off the asking price," Sheils said.