The building is expected to attract a deep-pocketed institutional investor, and may tip off more downtown sale offers.

If the Bill Naito Co. landed a big fish by wooing Target to its Galleria building in downtown Portland, the decision to sell the building is a sign the city is becoming a bigger pond.

With the ink barely dry on the retailer's 15-year lease, the Galleria has vaulted from a sleepy shopping and office building to a retail trophy that's attracting the attention -- and deep pockets -- of institutional real estate investors.

With the former department store's sudden change in fortune, it's no surprise its owners have opted to shop for a buyer. And if it pays off, other local owners of prominent buildings may be tempted to cash in, too.

The Bill Naito Co.'s representatives, from the San Francisco office of Cassidy Turley Real Estate Services, have circulated an offering to a small group of potential buyers.

A summary of the confidential offering says there is no asking price, but that a buyer should pay in cash. It says the Galleria is valued "substantially below" the $84 million it would cost to replace the building.

It touts the Target lease, which brings the building's occupancy to 99 percent. Other tenants include a Brooks Brothers store and Career Education Corp., a for-profit higher education company that operates Le Cordon Bleu culinary school and Sanford-Brown College.

The offering adds that a $15 million renovation is under way, including a new entrance and escalators to Target's second- and third-floor store as well as seismic upgrades.

That kind of improvement would have been unlikely a decade ago. Disagreements between the heirs to Bill Naito, who died in 1996, left the building's future uncertain until a 2005 settlement.

In 2007, the Galleria snagged high-end Brooks Brothers as a tenant, a coup that seemed to lend some momentum to the building as it competed with the retail core around Pioneer Courthouse Square.

The recession stalled that and most everything else until Portland Mayor Sam Adams started courting Target. The Galleria was an early contender in the search for a place to site its urban CityTarget  concept.

Target in particular brings more value than most other tenants could. The company boasts an A+ credit rating from Standard & Poor's, a selling point for institutional investors because it means the retailer is unlikely to default on its lease or other obligations.

"It's an iconic property in this town, and the Target lease has made it measurably more valuable," said Tim Mitchell, senior vice president at Norris & Stevens. "And you have to remember, this lease is just starting. It's never going to be more valuable than this."

Meanwhile, interest in Portland from institutional investors – such as real estate investment trusts, pension funds and insurance companies – is growing, brokers say.

"It really slowed down during the recession, but it's coming back, first in the bigger markets and now in the second-tier cities" like Portland, said Roger Qualman, chief operating officer of NAI Norris, Beggs & Simpson. "Portland is viewed very favorably by these kinds of organizations."

Those investors use real estate to earn a return on large amounts of cash, usually $50 million or more. A Galleria sale could be a signal to owners of other well-positioned buildings.

"When we get a couple of big sales like that, other people start thinking about selling," said Craig Sweitzer, the owner of Urban Works Real Estate. "I think the sale of this property will send that same message to a lot of big landlords in downtown Portland."

–Elliot Njus
Follow @enjus

The building is expected to attract a deep-pocketed institutional investor, and may tip off more downtown sale offers.

If the Bill Naito Co. landed a big fish by wooing Target to its Galleria building in downtown Portland, the decision to sell the building is a sign the city is becoming a bigger pond.

With the ink barely dry on the retailer's 15-year lease, the Galleria has vaulted from a sleepy shopping and office building to a retail trophy that's attracting the attention -- and deep pockets -- of institutional real estate investors.

With the former department store's sudden change in fortune, it's no surprise its owners have opted to shop for a buyer. And if it pays off, other local owners of prominent buildings may be tempted to cash in, too.

The Bill Naito Co.'s representatives, from the San Francisco office of Cassidy Turley Real Estate Services, have circulated an offering to a small group of potential buyers.

A summary of the confidential offering says there is no asking price, but that a buyer should pay in cash. It says the Galleria is valued "substantially below" the $84 million it would cost to replace the building.

It touts the Target lease, which brings the building's occupancy to 99 percent. Other tenants include a Brooks Brothers store and Career Education Corp., a for-profit higher education company that operates Le Cordon Bleu culinary school and Sanford-Brown College.

The offering adds that a $15 million renovation is under way, including a new entrance and escalators to Target's second- and third-floor store as well as seismic upgrades.

That kind of improvement would have been unlikely a decade ago. Disagreements between the heirs to Bill Naito, who died in 1996, left the building's future uncertain until a 2005 settlement.

In 2007, the Galleria snagged high-end Brooks Brothers as a tenant, a coup that seemed to lend some momentum to the building as it competed with the retail core around Pioneer Courthouse Square.

The recession stalled that and most everything else until Portland Mayor Sam Adams started courting Target. The Galleria was an early contender in the search for a place to site its urban CityTarget  concept.

Target in particular brings more value than most other tenants could. The company boasts an A+ credit rating from Standard & Poor's, a selling point for institutional investors because it means the retailer is unlikely to default on its lease or other obligations.

"It's an iconic property in this town, and the Target lease has made it measurably more valuable," said Tim Mitchell, senior vice president at Norris & Stevens. "And you have to remember, this lease is just starting. It's never going to be more valuable than this."

Meanwhile, interest in Portland from institutional investors – such as real estate investment trusts, pension funds and insurance companies – is growing, brokers say.

"It really slowed down during the recession, but it's coming back, first in the bigger markets and now in the second-tier cities" like Portland, said Roger Qualman, chief operating officer of NAI Norris, Beggs & Simpson. "Portland is viewed very favorably by these kinds of organizations."

Those investors use real estate to earn a return on large amounts of cash, usually $50 million or more. A Galleria sale could be a signal to owners of other well-positioned buildings.

"When we get a couple of big sales like that, other people start thinking about selling," said Craig Sweitzer, the owner of Urban Works Real Estate. "I think the sale of this property will send that same message to a lot of big landlords in downtown Portland."

–Elliot Njus
Follow @enjus