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In a rare, large transaction for downtown Portland these days, Menashe Properties said it bought the 183,735-square-foot American Bank Building for $13.6 million, betting that enough people will return to the office post-COVID to make office investments pay off again.
“Our purchase of the iconic American Bank Building represents a strategic, synergistic investment that not only underscores our commitment to downtown Portland, but also our confidence in the resurgence of the office space sector,” Lauren Menashe, a principal at family-owned Menashe Properties, said in a press release.
Menashe says it got a deal, paying “the lowest dollar-per-square-foot sale in downtown Portland in recent history.” At $13.6 million, the price works out to about $75 a square foot. The last time the building changed hands was in 2014, at $45.1 million, or $245 a square foot.
The previous owner was Houston-based LVA4 Portland ABB LLC, according to public records.
Including the American Bank Building, Menashe Properties says it owns more than 800,000 square feet of commercial real estate in downtown Portland. Included in those holdings is Washington Center, the vacant, boarded-up hulk at Southwest 4th Avenue and Washington Street that for many months functioned as an open-air fentanyl market and smoking site.
The American Bank Building stands next to Pioneer Courthouse Square and is on the National Register of Historic Places. It was built in 1914. Tenants include CVS, Wells Fargo and Morgan Stanley.
Menashe’s purchase comes as many investors are giving up on downtown office buildings, letting them go into foreclosure or giving them back to their lenders to avoid a fight.
When the iconic Jackson Tower, just across Pioneer Square from Menashe’s new purchase, went to auction on the courthouse steps last month, the only bidder was an affiliate of the lender, who offered a $7.5 million “credit bid.” The owner owed $10.7 million, handing the lender a steep loss.
Portland office vacancies are among the highest in the nation. Tech companies who flocked to the city from San Francisco before the pandemic have been among the most willing to let employees work from home, and concerns about safety downtown have kept other workers away. Estimates for the vacancy rate in the downtown core run as high as 40%.
“I strongly believe that, while hybrid work is here to stay for the foreseeable future, office space as a necessary asset class is alive and well, and that the world has begun and will continue to revert closer to the historic mean,” Jordan Menashe, CEO of Menashe Properties, said in the release.
Barry Menashe, father of Lauren and Jordan, founded Menashe Properties in 1978.