Portland law firm Miller Nash and Bay Area internet pollster SurveyMonkey are leaving the U.S. Bancorp Tower.
The moves will leave about 100,000 square feet of vacant office space in the iconic “Big Pink,” Oregon’s second tallest building and its largest office building, and suggests the recent weakness of the downtown office market will continue in 2023.
There is, arguably, a bright side to the Miller Nash and Survey Monkey moves. Both plan to remain in downtown. Some significant operators in the central business district – Umpqua Bank, Liberty Mutual, and Unitus Community Credit Union among them – have relocated major offices into the suburbs.
“The firm has indeed informed Unico Properties that we will not be renewing our lease at the U.S. Bancorp Tower,” said Miller Nash spokesman Drew Butler. “Miller Nash continues to be dedicated to downtown Portland and we look forward to being part of the city’s growth in the years ahead.”
The firm’s lease at the U.S. Bancorp Tower extends through November. He added Miller Nash is mulling several options for its next location but declined to say more about its prospects.
Several sources familiar with the Miller Nash move said the leading contender to be the law firm’s next home is the nearly complete 11 West office and residential tower in downtown’s West End.
The 24-story building, located at 1140 S.W. Washington St., was developed by the Downtown Development Group and is expected to be completed later this year. Greg Goodman, head of Downtown Development Group, declined to comment.
SurveyMonkey has leased between 5,000 and 6,000 square feet in the Brewery Blocks in the Pearl District. The Bay Area tech company is downsizing from two full floors in the U.S. Bancorp Tower, about 40,000 square feet.
Neither SurveyMonkey nor the company’s local real estate broker returned emails or phone calls.
It’s hard to understate the impact of the pandemic and related economic headwinds on the office market. As COVID-19 emptied office buildings and employees stayed home, graffiti, litter and homeless camping in downtown Portland grew worse. And as it became clear that office workers weren’t willing to give up their new remote work arrangements, businesses began to reevaluate their need for office space.
The downtown market suffered more than 1.2 million square feet of “negative net absorption” in 2022. That’s more than the entire U.S. Bancorp Tower.
The absorption numbers were even worse in 2021 and 2020. In all, tenants walked away from 4.1 million square feet of downtown office space over the last three years, an unprecedented number, according to research compiled by the brokerage Jones Lang LaSalle.
Companies have put a record 2 million square feet of space they already occupy on the sublease market.
“Portland’s recovery and stabilization is likely years away,” Jones Lang LaSalle concluded in its October 2022 quarterly report on office leasing.
Unico Properties, co-owner and manager of the U.S. Bancorp Tower, refused to talk about Miller Nash or SurveyMonkey.
Brian Pearce, Unico executive vice president, pointed out that just about every office building has suffered “reduced occupancies” as the working world went virtual after the pandemic hit.
“We are experiencing nothing different,” Pearce said.
It’s far cry from 10 years ago when Unico successfully “repositioned” the office building as a haven for tech companies and other “young creatives.” It knew that U.S. Bancorp would shrink its footprint in the building so Unico launched a major renovation and remodel. It allowed bikes and dogs into the building.
As a result, when the bank gave up 180,000 square feet in the building, Unico was able to fill much of the space leasing to firms like SurveyMonkey, the software company New Relic and the online publisher Digital Trends. Occupancy at Big Pink surged to 97%.
But now, with some social media firms on their heels and laying off large numbers, Unico and many other downtown landlords are exposed to the industry’s ups and downs.
“Tech will reduce their footprint in 2023, but superior Class-A buildings, where owners curate first-class tenant experiences in fully amenitized space, will continue to succeed,” Pearce said.
But for all the bad news, Pearce and others voiced some upbeat sentiments. There seem to be more people working downtown. Some of the mess downtown has been cleaned up. Tenants are expressing high interest in the new buildings coming on the market.
“It feels like we are bottoming out,” said Todd Gooding, president of the SKB Cos., another downtown building owner. SKB has landed an intellectual property law firm for its American Bank Building at 621 S.W. Morrison St., and is working on another major lease in the building. “There are some green shoots out there.”
Pearce was positively Churchillian in his outlook.
“We’ve been through this before, and just as we did then, we will rebound,” he said. “Downtown Portland and downtown Portland office buildings are still, and will continue to be, a desirable destination for tenants and visitors alike.”
Miller Nash has about 180 lawyers and paralegals, according to its website, about half of them in Portland. It was one of the first tenants in the U.S. Bancorp Tower, which opened in 1983. Miller Nash for years served as the lead law firm for the bank when it was independent and top management was based in Portland.
— Jeff Manning; jmanning@oregonian.com
Source: news.google.com
