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Nearly million-square-foot warehousing, office space used for grocery distribution near Milwaukie

A joint venture of two real estate funds has purchased a 62-acre industrial facility in unincorporated urban Clackamas County near Milwaukie.

Ares Management and an affiliate of Specht Development closed Oct. 26 on a $48.5 million purchase at 6433 S.E. Lake Road, currently used as a distribution center for grocery wholesaler and retailer SuperValu, which will continue to occupy the facility after acquiring it from United Grocers in June 2017.

United Natural Foods Inc. on Oct. 22 finalized a $2.9 billion deal to buy fellow food wholesaler SuperValu. At the end of SuperValu's lease, the joint venture plans to renovate and modernize the Milwaukie-area property with new roofing, dock doors and structural upgrades.

Specht Development spokesperson Amy Rosenberg said the property buyers thought United's buyout of SuperValu might become a last-minute factor in the propery sale, but the buyout did not turn out to affect the terms of the property sale at all. Rosenberg said the joint venture is not allowed to talk about the terms of SuperValu's lease so she could not say when the lease ends or whether tenants will have to move out to make way for the renovations.

SUBMITTED PHOTO - A map showing the area in unincorporated Clackamas County currently leased by SuperValu.The 992,190-square-foot property includes space for warehousing, distribution, manufacturing, freezers/coolers, truck maneuvering and excess trailer storage. It has a separate 48,000-square-foot office building on the site.

"This investment makes sense for many reasons. Located inside the I-205 freeway, it is well-situated to the Portland metropolitan core, and the buildings can be utilized in a multitude of ways," said Greg Specht, CEO of Specht Development.

"Both our acquisition costs and our expected renovation costs will allow for extremely competitive rental rates to be offered to future tenants. General industrial market vacancy rates, combined with historically low vacancy in the Clackamas/Milwaukie area, bode well for this property's future absorption."

"This acquisition fits the Ares Real Estate Group's longstanding investment strategy of identifying high-quality, infill properties in need of substantial repositioning and improvement," said Jay Glaubach, partner in the Ares Real Estate Group. "It also continues our practice of partnering with best-in-class developers and sponsors like Specht Development."

Portland-based Capacity Commercial Group served as the sole real-estate broker for the off-market transaction.

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