2017 Industrial Lands Inventory



2017 Industrial Lands Inventory

Project Background

The availability of large, development-ready employment lands is critical to expanding and attracting traded-sector businesses and middle-income jobs. On average, a traded-sector worker in the Portland metropolitan region¹ earns 42 percent more than other workers. In an income tax dependent state such as Oregon, these higher wage jobs generate more revenue to fund schools, parks and other public services. The Portland-metro region competes globally to attract these coveted jobs so it is important to have an adequate inventory of sites where businesses can locate. This analysis shows that inventory has decreased.

This 2017 inventory update – commissioned by Greater Portland Inc., Metro, NAIOP, Port of Portland, Portland Business Alliance and Portland General Electric – focuses on the development status of large 25+ net acre industrial sites in the Portland region. The goal is to help inform continued local, regional and state efforts to ensure an adequate supply of land to attract traded-sector jobs. This effort builds on previous 2011 and 2014 inventories, and is updated periodically to reflect market changes, investments and development activity.

Findings

As a result of the strong economic cycle, the number of large industrial sites in the regional inventory decreased from 54 to 47 sites between 2014 and 2017, a reduction of 550 gross acres.
  • Of the 47 sites in the 2017 inventory:
  • There are 10 Tier 1 sites; 11 Tier 2 sites; and 26 Tier 3 sites.
  • Six new sites were added to the inventory since 2014: one Tier 1 site and five Tier 3 sites.
  • Thirteen sites were removed from the inventory since 2014 due to development (nine sites), environmental constraints that reduced the site size below 25 net acres ready for development (two sites), and sites that have been sold and are being held for future development (two sites).
The charts below compare the 2011, 2014 and 2017 inventory changes.
 


There are relatively few unencumbered Tier 1 sites remaining in the inventory.
  • Tier 1 sites are considered ready for development in six months.
  • Since this inventory was compiled in June 2017, seven out of 10 Tier 1 sites have seen market activity with development agreements, which will likely remove them from the market this year.
  • If the seven Tier 1 sites with development agreements are executed, there will be zero 50 to 99-acre Tier 1 sites in the inventory, reinforcing the need to focus on property owner site readiness investments.
  • There are zero 100-acre Tier 1 sites in the region.
 

Significant challenges remain to move sites to market, particularly for sites that require aggregation, and higher need Tier 3 sites.
  • Larger sites can face significant development challenges that may require the focus of policymakers. This includes infrastructure, transportation, land assembly, brownfield cleanup, natural resource mitigation, and local and state legislative actions (e.g., annexation, zoning and concept planning).
  • Thirteen Tier 2 and Tier 3 sites require aggregation of parcels owned by multiple parties, and the region does not have aggregation tools in place.
  • Fifteen of the 26 Tier 3 sites are high-need sites that are expected to take five years or more of site readiness work. In some cases, industrial development may not be feasible due to cost.
  • Sixty percent of Tier 2 and Tier 3 sites require infrastructure investments.
  • Based on the detailed site assessment analyses completed following the 2011 and 2014 inventories², estimated infrastructure costs for 19 of these sites (1,385 gross acres) are more than $143 million. These sites represent half of the Tier 2 and Tier 3 sites with infrastructure challenges.
    • $2.30 average cost per gross SF.
    • $106,000 average cost per acre.
This inventory update shows slower movement between tiers than the 2014 update, but more market absorption of sites.
  • In 2014, 11 sites moved up a tier as compared to four sites in 2017.
  • Due to site readiness investments, nine sites have been fully or partially developed since 2014. Only three sites were developed between the 2011 and 2014 inventory.
 

Return on Investment

Since 2011, 15 sites3 from the inventory have developed or are currently under development, with important regional economic outcomes.

Development completed (2011-2017)
  • Six sites with 4 million square-feet on 225 acres.
  • Estimated jobs between 2,500 and 2,750 with average annual wage of $50,000.
  • Estimated 2,500 additional indirect and induced jobs created as a result of development.
  • $230 million in investment in real property (hard costs only).
  • $500,000 annual property tax revenues generated (expected to increase after local property tax abatement ends).
  • $5.2 million in annual state income tax revenues.
Currently under development (2017)
  • Nine sites with 4.78 million square-feet on 350 acres.
  • Capacity for 2,800 to 3,250 jobs.
  • $500 million in investment in real property (hard costs only).
 
Supporting documents:  
1  Metro region includes the Metro urban growth boundary and selected urban reserves.
2  2012 Phase 2 (12 sites), 2014 Clackamas County Strategically Significant Employment Lands Project (21 sites), and 2015 Washington County Regional Industrial Site Assessment Project (15 sites)
3  Technically 14 sites from 2014 inventory due creating two development sites (over 25 net developable acres) out of Site 21: GVBP East.