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Southtowne Commerce Center, located in Klamath Falls, is one of the largest business parks in
Southern Oregon and is 99% leased to 36 tenants, including the Bureau of Land Management,
US Geological Survey, and Federal Aviation Administration, with 114,427± square feet of ware-
house, office and flex space, along with 4.1± acres of additional land fully-serviced, and zoned for
development. The business park is located on a 13.78± acre site along Washburn Way, between
downtown Klamath Falls, Crater Lake Klamath Regional Airport and Kingsley Field Air National
Guard Base. The majority of new commercial development within Klamath Falls is located along
Washburn Way north of Southtowne, and includes Walmart, Lithia Motors, Fred Meyer, Bi-Mart,
Big 5 Sporting Goods, Staples, and other retail uses.
The property provides a strategic location for its tenants due to proximity to both Highway 140,
with access west to Medford and I-5, and Highway 97, with access north to Bend and south to
Northern California and I-5.
Southtowne Commerce Center is the largest business park in Klamath Falls. There are thirty-six
tenants -- thirty-three are private businesses, and three are federal agencies. Sixty-seven percent
of the space, or 76,300± square feet, has been leased to the same eighteen tenants for over 10
years. Several tenants, including the BLM, have been at Southtowne for over thirty years.
Southtowne Commerce Center, located at 2795 Anderson Avenue, was developed from 1977 to
1994 by the Seller, and is designed to meet demand for a wide range of tenants. It has a combi-
nation of office, flex, light manufacturing, and warehouse uses, in sizes from 1,200± to 13,254±
square feet, with 15 foot to 20 foot ceiling heights, and overhead doors from 10 feet by 10 feet, to
12 feet by 14 feet.
The business park contains a total of five buildings from 6,250± to 73,940± square feet in size, of
concrete block masonry and steel construction, with metal roofs designed for low-cost mainte-
nance. The buildings are planned around 7± acres used for a combination of parking, several
fenced yards, and ample room to accommodate tractor trailers which serve many of the tenants.
There is a total of 53 rental units, with 80% targeted to users who require less than 2,400 square
feet, and options to expand into adjoining units to accommodate growth.
Two office and warehouse buildings of 12,415± square feet and 13,354± square feet were con-
structed in 1980 and 1981, and have been leased long-term to BLM, USGS, and Lincare. The
largest building complex of 73,940± square feet includes the BLM Klamath Falls Field Office. Four
units also within this largest building total 5,000 square feet and are leased to the FAA and USGS,
as part of their overall lease.
The tenant mix of three federal agencies and 33 private companies having long-term tenure of
over two thirds of the leased space provides the owners with a stable income, and relatively low
risk. 2017 net operating income was $517,000, and 2018 is projected to exceed that.
Amajor business strategy of the Seller has been to offer month-to-month leases to the private ten-
ants, which has contributed to the stable occupancy as the local economy has improved. Some
rental increases have been obtained during the last 12 months, with opportunity for a new owner
to increase leases at the property on fifteen other rental units.
There has been a waiting list for tenants. The Seller has been very selective in leasing space to
tenants whose profiles are compatible with existing businesses. Southtowne Commerce Center’s
competitors are much smaller, with fewer than 30 spaces, and cannot accommodate the range of
businesses.
The Seller is offering the Southtowne Commerce Center at Sealed Bid Auction at a significant
price reduction from $7,039,000 to a Published Reserve of $5,895,000, and is including the added
incentive of special short-term seller financing, to accelerate a sale with closing by mid-October
2018 in order to meet the objective of retirement.
The combination of offering the 99% leased business park with 8.8% cap rate, and additional 4.1±
acres of development land, provides a significant and rare investment opportunity for a business
park in the Pacific Northwest. Acquisition of Southtowne Commerce Center provides a new
owner with the options to expand the business park, develop a storage complex to accommodate
boats and RVs, or build-to-suit, all with excellent exposure along Washburn Way.
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