Growth strategy
Harborgate Works must redeploy the fifth of its converted-warehouse office portfolio left empty by the hybrid-work shift — and find the growth plan again.
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Harborgate Works owns and operates 14 office properties converted from early-1900s warehouses: about 1.9M square feet in Portland's Pearl District and Tacoma's Dome District. Before 2020 the portfolio ran at 92% occupancy; today it runs at 71%, as hybrid schedules shrank tenant footprints and two tenants did not renew. Net operating income (NOI) is $28.4M a year, down from $36.8M, and the family owners have a $50M capital pool and a directive: deploy it to grow income, not to defend the old valuation.
Three redeployment options are on the table:
1. Lab conversion: convert two Pearl District properties (380,000 square feet combined) to life-science lab space, where Portland rents are high but two new lab towers are also opening 2. Residential conversion: convert one property (300,000 square feet of floor plate) to about 160 apartments, where the warehouse windows and core layout make only some floors viable 3. Self-storage conversion: convert the weakest Tacoma property (78,000 net square feet of storage after conversion) to climate-controlled self-storage, the least glamorous use in the portfolio
The family wants a recommendation grounded in the numbers and in the market data, not in which option is fashionable. You advise the family.
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