What the Numbers Show

Tier 1 Sites

The analysis found that there are only nine sites in the UGB that are both 25 net acres or larger and can be developed within 180 days. Washington County has five of these sites, followed by three in Multnomah County and one in Clackamas County.7 The number of very large sites is even more limited. There is only one 50-acre and one 100-acre site in Tier 1.

Beyond shovel-ready availability, there are a handful of economic factors that drive the suitability of industrial sites for immediate development. A closer look at the nine Tier 1 sites reveals that the number of sites attractive to a broad range of potential traded-sector cluster companies is even smaller. Of the nine sites, two are for lease only, which is typically less desirable to potential users who, anticipating significant capital investments, want to own rather than lease.

It is also more difficult to secure financing for a land lease versus a fee-simple ownership project.

Another Tier 1 site is of an irregular shape and would require an unusual development footprint, possibly increasing costs and precluding market-accepted building design.

One last factor is, of course, price. One site is currently for sale at a price that is much higher than industrial development could support and it is unclear when, if ever, the current owner will align the asking price with current industrial market pricing.

The net result is only five Tier 1 sites that can meet the business retention, expansion or recruitment criteria for a broad range of potential users.

It is important to recognize that, for site selectors, these requirements are the absolute minimum requirements for a location to even be considered. Meeting these requirements is like reaching first base in a baseball game: all significant, potential employers require much more than simply meeting the minimum threshold. To make it all the way home, many factors must fit for the transaction ultimately to work and result in hiring.

The smaller the inventory of sites that meet even the minimum requirements, the less the regionís odds are of successfully making it to first base, let alone hitting a home run and successfully recruiting the employer. Given the regionís lagging wages and incomes, it should be our goal to increase our opportunities for success by ensuring that we have a variety of development ready sites.

"No one wants to go to their company president with only one possible site."

Peter Bragdon, senior vice president of legal and corporate affairs for Columbia Sportswear, in reference to his experience with site selection.

Tier 2 and 3 sites

The analysis found 16 Tier 2 sites (seven to 30 months from shovel ready) and 31 potential Tier 3 sites (more than 30 months to shovel ready) within the UGB and selected urban reserves. The bulk of these sites are in either Washington or Multnomah counties. Here again, the number of larger sites is very constrained. Tier 2 has no 100- plus acre sites, and only four 50-plus acre sites. Tier 3 has only four potential 50-plus acre and six potential 100-plus acre sites.

The few large sites in Tier 2 and 3 face significant challenges to becoming ready, including the need to complete brownfield clean up, build infrastructure such as roads and sewers, remediate wetlands and assemble parcels currently under multiple separate ownerships.

Ten of the potential Tier 3 sites would require aggregation of parcels in separate ownership, and ownership ranges from two owners up to 17 owners, depending on the site. The more owners involved, the more complex and lengthy the development process would be. Twenty of the sites in Tiers 2 and 3 will require some kind of state, regional or local action such as concept planning, annexation or UGB expansion to become development ready.

All of these steps can be challenged through the land-use process. Thirty-one of the Tier 2 and 3 sites face multiple challenges. The table to the right shows the variety of challenges faced by sites in the pipeline.

The largest sites face tremendous challenges and limitations. One is West Hayden Island, which has extensive environmental limitations associated with future marine terminal development and will require annexation into the city of Portland. Three sites are outside the current urban growth boundary and one is limited to aviation-oriented, lease-only development. In sum, there are very few of the largest sites currently available and the supply of future large sites is equally or even more constrained.

Demand for land

Being market ready is critical as industrial land development is very cyclical. According to an analysis by Business Oregon and NAIOP, the majority of the demand for industrial lands comes in short bursts. Fifty percent of all industrial land acres developed in the study area over the past 20 years came during two three-year peak periods of development (1996- 1998) and (2006-2008).8 If the region does not have developable sites ready to go when the growth cycle hits, it will miss the opportunity for significant job and income expansion for a decade or more. How our region grows jobs and improves wages and incomes depends on getting these sites ready for employers. The goal of this inventory study is to move conversations forward so our region can better coordinate, recruit and grow the number of traded-sector employers and grow jobs.

Land-banked parcels

The analysis excluded land-banked parcels (owned and held for future expansion by existing firms) and sites with structures comprising more than 25 percent of the land area for redevelopment. While land-banked parcels may become available for recruitment in the future, there is currently no way to judge if or when this might occur. Redevelopment of occupied parcels may be possible but is generally not broadly attractive to targeted cluster industry companies due to uncertain timing and costs that can greatly exceed market rates for industrial land in other parts of the country or world. Additional analysis of redevelopment costs and opportunities was outside the scope of this analysis.

7 This analysis only included the area within the Metro UGB, or adjacent urban reserves. It did not examine industrial sites outside the Metro boundary.

8 2011 Industrial Lands Policy Paper: Large Lot Supply & Demand, Business Oregon (Source: Costar, NAIOP). Analysis of industrial construction square footage reported in Costar for all parcel sizes converted to acreage assuming an average 30 percent coverage ratio.