Specht Development pushing the boundaries of real estate deals – Portland Business Journal

Back in the mid-1980s, Northeast Airport Way was a two-lane road that ran from Portland International Airport east to Northeast 138th Avenue and no farther. It was a somewhat quiet area of town at the time, with little going on commercially save for a Costco.

Fast-forward three decades, however, and the area along Airport Way has become a hive of bustling commercial and industrial activity. Sprawling warehouses line the now four-lane road — which has since been extended all the way to Interstate 84 — as do hotels, chain restaurants and a giant IKEA.

One of the first projects to kick off that eventual hive was a 170,000-square-foot industrial project led by Gregory Specht, who at the time of the project’s completion in 1988 worked for Scherzer-Moore Partners, a well-regarded Portland real estate investor. Specht left Scherzer in 1990 to launch his namesake business, but not before picking up a valuable real estate lesson.

“Over time, I’ve learned rule No. 1 in real estate: follow Costco,” Specht said. “It worked on Airport Way, it’s worked in Clackamas, in Tigard, in Beaverton. It’s worked a lot.”

Indeed, Specht Development has found a fair share of success developing a wide range of project types in all those areas and then some over the past 30-some years. But there’s more to Specht’s prolific longevity than its projects’ proximity to Costco stores. Specht himself, a former University of Oregon Ducks tight end who played with legendary quarterback Dan Fouts, is a dealmaker whose hunches and relationships have served him well through several decades and multiple recessions.

His moves, both during a four-year stint with Scherzer and since then, have found him and his team in good fortune, from acquiring a ho-hum business park in Beaverton that later became Nike’s go-to locale for expanding to developing huge industrial projects and making prominent buys of buildings like the old headquarters of children’s apparel brand Hannah Andersson and One Pacific Square.

As the office and multifamily markets cool, and as industrial land all but disappears, Specht Development finds itself heading into a future where land-use policies might just make Woodburn the next industrial hotspot and where continued demand in Portland’s Central Eastside Industrial District keeps the area high up on Specht’s radar for another new project. Getting in on the right deals — and early — will be key to Specht’s future, just as it has been key in its past as one of the metro region’s most prominent real estate powerhouses.

“It’s easy to do a real estate deal,” Specht said. “It’s not easy to do a good one.”

Industrial evolution

Born and raised in Salem, Specht earned a degree in business administration degree from UO and cut his teeth on real estate after college by building and selling a few residential houses in Salem, as well as working for the company now known as Ticor Title. He was also involved in several projects that converted hotels in downtown Portland into affordable housing.

In 1986, Specht joined Scherzer-Moore, where he helped the firm, backed by the D.C.-based National Electrical Benefit Fund, to acquire land in Wilsonville for 250,000 square feet of industrial space and in Vancouver for an office project. In addition, the firm acquired 54 acres for the Beaverton Creek Business Park in 1988. At the time, the property wasn’t close to much.

“I used to say it was in the middle of nowhere but in the middle of everywhere,” Specht said.

But Nike was on the rise, and soon the shoe giant came knocking, looking for space to lease. They started with a couple thousand feet here and there; by 2013, they were up to 250,000 square feet and wanted more. According to Specht, who officially founded Specht Development and Specht Properties in 1990, Nike wanted all of the square footage in the business park — more than 500,000 total — even if that meant relocating other existing tenants.

“And that’s what happened,” Specht said, adding that Nike also currently leases a prime six-acre property in the business park. That property, which is currently forested, is “the best greenfield development site on the west side,” Specht said.

Specht sold the business park, save for the six-acre parcel, in 2016 for more than $50 million. It’s also sold a few of its industrial projects for pretty pennies in the past year, including the roughly 500,000-square-foot Interstate Crossroads Distribution Center — which Specht developed with PCCP — for $56 million and the Stafford Distribution Center in Wilsonville for $28.2 million. The latter sold to the Goodman family, one of Portland’s longstanding real estate families.

“Specht was a great group to work with,” said Greg Goodman. “They have a great reputation in the business and lived by their word the whole way” through the transaction.

Woodburn frontier

Industrial has always been a favorite property type for Specht. The company has developed millions of square feet of industrial property, including, most recently, the massive Vista Logistics Park, a 733,000-square-foot project in Gresham done in partnership with New York Life Real Estate. That project is complete but has not yet signed any leases.

But with other developers tying up some of the last remaining large parcels of industrial property in the metro region for Amazon distribution centers, Specht is finding that farther afield from Portland may be the next frontier.

“It’s certainly true,” said Stuart Skaug, a senior vice president with CBRE, of the tight inventory of industrial land in the region. He said the issue is about more than simple supply within the urban growth boundary, however. Though making more land available would help alleviate the situation, bringing more of the existing land up to shovel-ready status would be a big help, too.

“If you have a company that is looking for a site, and you have to tell them that there are powerlines on it, some wetlands, maybe it’s on a slope and that it could take seven to 30 months just to entitle it, they’re going to say nope,” he said.

For Specht, the next “middle of nowhere, middle of everywhere” might just be Woodburn. The company is on the verge of purchasing 108 acres of land in Woodburn that could be developed for a range of industrial uses. Specht said the company won’t build anything speculative on the property; there plenty of “build-to-suit opportunities out there.” They pitched the site to Amazon, but the retailing giant went to Salem instead, supposedly for the larger workforce potential.

Though many companies say they won’t locate south of Wilsonville, Skaug said for most distribution-minded companies looking to serve the Northwest, Woodburn will look the same as Salem, Portland or Vancouver on a map.

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“If you are looking to site a regional distribution center for the entire Northwest, Woodburn works,” he said.

If that’s true, Specht may yet again be ahead of the game as it shores up its plans for Woodburn. The company would also like to get its hands on a block in the Central Eastside, and it will also continue with its construction and property management business lines, which have found it overseeing projects such as the remodel of the U.S. Bancorp Tower.

As for Specht himself, at age 68 he’s just making the turn and starting the back nine of his career. He could see Todd Sheaffer, Specht’s current president who joined the firm in 1996, taking the helm someday, but Specht has no plans to ease up anytime soon. Even if he does retire someday, he’d love nothing more than to see something developed on those six forested acres that Nike’s leasing.

“If they run the tape out on their lease, it will be 2043,” he said. “I’ll be 93 years old — and I’m going to build something on that property.”

CLOSER LOOK

The Sompany: Specht Development/Specht Properties

Business: Real estate development, construction and property management

Founded: 1990

CEO: Gregory Specht

Employees: 14

Development total: 9.5 million square feet of industrial and commercial property

Notable projects: Vista Logistics Park,1010 Flanders Building,

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