Dairy Building: Strategy and tenacity bring a creative office building to full occupancy

In January 2019, the NAI Elliott commercial real estate broker team of Matt Bassist and Riley Henderson took over leasing services for the Dairy Building in close-in Southeast Portland. Leasing activity had lagged after the building was delivered to market, and the project needed new energy and direction. Matt and Riley were hired to execute the ownership’s leasing plan and take the building to full occupancy by attracting creative tenants. Bringing a fresh approach, backed by their own creativity and deep familiarity with the market, the duo set out to deliver on the leasing plan. They worked closely with both prospective tenants and ownership to build a plan that met tenant needs while also delivering on the ownership’s goals. Their strategy—responsive and tailored to the situation—resulted in 100% occupancy in a competitive marketplace. 

Background

Located at 2705 SE 8th Avenue, the Dairy Building is Intrinsic Ventures’ most recent redevelopment project. The building is a single-story warehouse on a 2.5-acre parcel in Portland’s Central Eastside district, originally constructed in 1937. Intrinsic Ventures completed the renovations in late 2017, successfully converting the warehouse building—formerly operated by the neighboring dairy processing facility—into a beautiful office for creative and industrial use. The building is outfitted with tenant amenities including call rooms, conference rooms, recreation areas and shower facilities. Additionally, it boasts one of the highest parking ratios in the Central Eastside.

Need

The owners needed to achieve a higher level of occupancy in the building, in order to convert the construction loan into a permanent loan, which would stabilize the building financially and save Intrinsic a substantial amount in interest payments. But lagging lease rates after the renovations were complete resulted in the owners recognizing the need for a partner that could bring creative thinking and a new direction to the effort.

Solution

Matt Bassist and Riley Henderson of NAI Elliott had already delivered success to Intrinsic Ventures through their leasing efforts at the client’s Ford Building. That assignment initially involved smaller studio spaces, but their innovative strategy of filling larger spaces with creative-industry tenants brought success that led to an ongoing client relationship with Intrinsic Ventures.

For the Dairy Building, the NAI Elliott team leveraged their existing relationships with tenants and brought market-specific strategy to the leasing process, reinvigorating the project. Mindful of Intrinsic Ventures’ overall goals, Matt and Riley worked with a variety of tenants to design a project-specific strategy that incorporated the ownership’s vision for tenant fit, return on investment, and commitment to small businesses featuring creators, makers and doers.

The process wasn’t without challenges, including a competitive market, an unproven location, permit delays on tenant improvements and restrictive zoning. Despite the challenges, the team persevered by balancing patience with both diligence and follow-through, to bring the building to full occupancy. Over a 12-month period, the team took the building from a lease rate of 40% to 100%.

Results

• The building achieved 100% occupancy in 12 months, despite increased competition in the Central Eastside.

• The NAI Elliott team established the building in the market as a thriving office location, generating further interest from potential tenants.

• The team understood tenants’ requirements, and worked through objections by devising solutions that fit their business needs.

• The team delivered consistent communication to the ownership and lender, updating them on market conditions, leasing activity and negotiation progress.