PORTLAND, ORE. — Harrison Street and 1547 Data Center Real Estate Fund II, an affiliate of fifteenfortyseven Critical Systems Realty, have purchased the historic Pittock Block Building, a 302,262-square-foot, mixed-use asset in Portland’s central business district, for $326 million. The seller was Also Investment Co.
The price is the highest transaction cost in Oregon since 2015, according to JLL, which brokered the deal.
The 302,200-square-foot building is one of the most connected data center buildings in the United States, serving 179 service providers, according to the buyers. Additionally, the property is one of only two primary internet exchanges in the entire Northwest. The property also features office suites and retail space.
The acquisition of Pittock Block is the second investment for Harrison Street and 1547 following the purchase of the Wells Building, a carrier hotel and data center in Milwaukee.
The Pittock Block is named after Portland publishing magnate Henry L. Pittock, whose house was located on the property until construction. The building was developed by a subsidiary of the Northwestern Electric Co. and several other investors, primarily as an office building with an electrical and steam generation plant in the three-story sub-basement serving the Portland westside.
In 1986, Alco Investment Company purchased the property as a distressed asset with investment advisor Leavitt Shay as the developer. Shortly after, several long-distance companies expressed interest in leasing space at the building due to its proximity to one of the major telecom companies, whose regional switching hub was located near the building, making the Pittock Block the primary neutral cross-connection point in the Portland Metro.
“About the same time, the Internet became more widely adopted and internet service providers that were also interested in gaining access to the neutral telecommunications infrastructure, built data centers in the building,” says Doug Rosen, chief investment officer for Alco. “As a result, we oversaw a major retrofit of the building in 1999 that set the building up to take on these types of tenants.”
The JLL Capital Markets team representing the seller included Buzz Ellis, Conan Lee and Adam Taylor.
“The data center segment of the market has performed extremely well during the pandemic, if not better than pre-COVID levels,” says Ellis. “We anticipate investor interest to remain strong in alternative investment asset classes such as data centers, which will continue to drive record pricing.”