Broker Investment Analysis

Salvation Army
Front Street Campus

1887, 1901 & 1977 Front St NE — Salem, OR 97301

Prepared by AJ Nash — Tradition Real Estate Partners
Date March 13, 2026
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Portfolio at a Glance

Three contiguous buildings on ~1.49 acres in Salem's Opportunity Zone
Admin Office
$592K
1887 Front St NE
3,039 SF · Built 1994
Single-story office
Multifamily / Shelter
$1.35M*
1901 Front St NE
14 Units / ~18,500 SF · Built 1966
*Adjusted for catastrophic deferred maintenance
Warehouse
$810K
1977 Front St NE
7,370 SF · Built 1990
Single-story industrial
Adjusted Combined Value
$2.75M
Reflects engineering-adjusted multifamily at $1.35M + admin $593K + warehouse $810K
Key Designations
Opportunity Zone IC Zoning Willamette Greenway
Low-Income Community · 4 contiguous parcels · All owner-occupied by TSA
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The Campus — Site Context

~1.49 contiguous acres on Front St NE · Willamette River west, Highland neighborhood east
Front St view of campus
Front St NE — Looking West at Campus
Salvation Army signage, shelter/multifamily behind trees, parking area
Multifamily building from Academy St
Academy St NE — Multifamily/Shelter Building
1901 Front St NE · 14-unit, 2-story building, south elevation
Front St looking north
Front St NE — Looking North from Campus
Neighborhood context, tree-lined corridor, adjacent businesses
Campus south parking area
Academy St NE — South Parking & Greenspace
Surface parking, tree canopy, Willamette River greenway beyond

Location Character: C-Class Industrial/Service Corridor

Front St NE is a working corridor — welding shops, sign companies, reentry services, and food pantries. Not a Class A location, but that's the opportunity: below-market land cost, mission-aligned neighbors, and an Opportunity Zone designation that rewards investment in exactly this type of area.

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01

Property-by-Property
Analysis

Detailed valuation, condition, and market positioning for each asset

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Admin Office — 1887 Front St NE

Functional small office with straightforward value proposition
Building Details
3,039 SF single-story office
Built 1994 · 0.54 AC site
6 surface parking spaces
FAR: 0.13 (significant excess capacity)
Market Position
Comp median: $194.81/SF
Range: $135 – $233/SF
8 comparable sales analyzed
Owner-occupied, 0% vacancy
Risk Assessment
LOW RISK
Simplest asset in the portfolio. Clean condition, fair-market pricing. No hidden surprises expected.
Conservative (Q1)Mid-MarketOptimistic (Q3)
$483,756$592,605$663,924
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Multifamily / Shelter — 1901 Front St NE

Critical valuation disconnect — engineering findings materially impair market value
Building Details
14 units · ~18,500 SF GBA
3-story wood-frame · Built 1966
0.27 AC · FAR 1.75
16 surface spaces (1.14/unit)
R-2 occupancy · Max capacity: 85
Market Position
Comp median: $148,000/unit
Range: $87.5K – $262.5K/unit
Vacancy: 7.1% (vs 6.0% submarket)
Best comp: Glen Villa — 14 units, 1967, sold $123K/unit
Valuation Disconnect
CRITICAL
Valuing this at $2.07M ($148K/door) assumes a functioning multifamily asset. The Oct 2025 engineering review reveals catastrophic deferred maintenance that fundamentally impairs this assumption. A sophisticated buyer must underwrite at land value + discounted shell.
Conservative (Q1)Recommended TargetComp Median
$1,225,000$1,350,000$2,072,000

Recommended Underwriting: $1.2M–$1.4M (Land + Discounted Shell)

The Oct 2025 engineering assessment reveals: uncharacterized hazmat (lead/asbestos), no fire sprinklers, exposed electrical conduit, severe ADA deficiencies, and compromised mechanical systems. Level 3 building code alterations (triggered by touching >50% of the building) will mandate six-figure compliance upgrades. Deduct $750K–$1.2M in specialized remediation costs from any target offer. The $2.07M comp median is a fatal underwriting error if applied to this asset in its current condition.

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CIDA Building Review — Critical Findings

October 2025 walk-through reveals significant renovation requirements at 1901 Front St NE
🔥

Non-Sprinklered Building

No fire sprinkler system. Renovation >50% triggers mandatory installation. Fire-rated doors painted over.

⚡

Electrical Deficiencies

Exposed conduit wiring, extension cords throughout. Original system inadequate for current or expanded use.

🔧

Plumbing & Mechanical Failures

Fixtures out of order, active water leaks, stained ceiling tiles, damaged HVAC ducting. Full MEP evaluation needed.

♿

ADA Non-Compliance

Single ramp access, no elevator, upper floors inaccessible. 25% of renovation costs must fund accessibility.

☣

Hazardous Materials Risk

1966 construction: likely lead paint and asbestos in ceiling tiles, flooring, finishes. Full hazmat survey required.

📐

Low Ceiling Heights

Multiple areas below 84" code minimum (as low as 72.5"). Code requires 7' minimum finished ceiling.

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Warehouse — 1977 Front St NE

Straightforward industrial asset in a tight vacancy market
Building Details
7,370 SF single-story warehouse
Built 1990 · 0.54 AC site
1 drive-in + 1 exterior dock
16 surface parking spaces
Market Position
Comp median: $109.86/SF
Range: $87 – $160/SF
Submarket vacancy: 3.7%
Strong industrial fundamentals
Risk Assessment
STABLE
Functional warehouse in a supply-constrained market. Ideal for vocational training or support operations.
Conservative (Q1)Mid-MarketOptimistic (Q3)
$664,053$809,788$1,176,855

Industrial Market Tailwind

Marion County 1–2 Star industrial vacancy is just 3.7%. Limited new supply and steady demand support both user value and lease-up at $8–10/SF NNN.

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02

Financial Assessment

Aggregate valuation, income potential, and investment returns

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Aggregate Valuation & Income Potential

Combined portfolio economics across three scenarios
Unadjusted Mid
$3.47M
Adjusted Value
$2.75M
Target Offer
$2.2–2.6M
AssetEst. Annual RevenueLease TypeMarket Rate
Admin Office (3,039 SF)$42,500 – $54,700Modified Gross$14–18/SF
Warehouse (7,370 SF)$51,600 – $73,700NNN$7–10/SF
Multifamily (14 units)$117,600 – $156,800Residential$750–1,000/mo
Stabilized Portfolio Total$211,700 – $285,200Est. NOI: $150K – $210K (after OpEx & vacancy)
Implied Cap Rate (at Mid-Market)
4.3% – 6.0%
Consistent with secondary-market mixed-use portfolio of this vintage
All-In Basis (Acquisition + Renovation)
$3.0M – $3.8M
Assumes target acquisition ($2.2M–$2.6M) + $750K–$1.2M renovation + minor CapEx
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Financial Subsidies & Tax Incentive Stack

This property sits at the intersection of multiple public incentive programs — a rare alignment that materially improves investment economics
Opportunity Zone (OZ)
Capital Gains Elimination
All parcels sit in a qualified Opportunity Zone (Low-Income Community). Deploy capital gains from other transactions to receive: deferral of existing gains, reduction through stepped-up basis, and complete elimination of new gains on appreciation if held 10+ years. This is the single most powerful tax tool available on this deal.
Urban Renewal Funds
Not Available — Outside Boundary
Per the City of Salem Urban Renewal Areas map, these parcels fall between the Riverfront Downtown URA (south) and the North Gateway URA (north/east). Urban Renewal grant funds are not available for this location. However, a proposed North Waterfront URA is under consideration — if adopted, this campus could be included in the future.
Enterprise Zone
3–5 Year Property Tax Abatement
If warehouse/office spaces are used for eligible operations, the site could qualify for Salem's standard Enterprise Zone property tax abatement on all new building improvements and equipment. This directly reduces your annual holding cost during the stabilization period.
Workforce & Training Grants
WIOA / WorkSource Oregon
If the warehouse is utilized for vocational training and veteran job placement, tap into employer training subsidies (WIOA, WorkSource Oregon) that reimburse a substantial percentage of wages during training periods. Aligns directly with the A Place for Vets mission.

Why This Matters: Incentive Stacking

These programs are not mutually exclusive. A buyer can layer OZ capital gains benefits + Enterprise Zone tax abatement + workforce training credits on the same property simultaneously. On a $3.5M+ deal with $1M+ in renovation, the cumulative tax and subsidy benefit could exceed $400K+ over the hold period. Note: Urban Renewal funds are not currently available, but the proposed North Waterfront URA could add another layer if adopted.

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Opportunity & Risk Matrix

Strategic advantages weighed against material execution risks

Value Drivers

  • 🏗
    Contiguous 1.49-acre campus — Assembly value exceeds sum of parts; hard to replicate in-market
  • 📉
    Motivated seller signals — Simultaneous valuation + building assessment indicates active disposition
  • 🎖
    Veteran housing conversion — Existing R-2 shelter use creates permitting baseline for transitional housing
  • 🔨
    Construction synergy — Self-perform captures $75K–$150K in GC margin
  • 💰
    Incentive stacking — OZ + Enterprise Zone + WIOA on one deal (see Slide 11)

Material Risks

  • 🚧
    Renovation cost uncertainty — Sprinklers, hazmat, ADA, MEP could exceed estimates significantly
  • 📋
    Willamette Greenway overlay — Compatibility review adds time and regulatory complexity
  • ⚖
    Code compliance triggers — >50% alteration hits Level 3: sprinklers, seismic, full ADA
  • 📊
    Oregon rent control (SB 608) — Annual increases capped at 7% + CPI
  • 🌊
    Environmental exposure — River proximity + IC zoning history warrants Phase I ESA
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Recommended Acquisition Strategy

Five-step playbook for executing this deal

Target portfolio price: $2.2M – $2.6M

Anchor at engineering-adjusted value ($2.75M) and negotiate down. The catastrophic deferred maintenance at 1901 Front St justifies a $700K+ discount from comp-median aggregate. Use Level 3 code upgrade costs as hard leverage.

Budget $750K – $1.2M for multifamily renovation

Fire sprinklers ($15–20/SF), hazmat abatement, ADA compliance, MEP overhaul, interior reconfiguration. Get hard bids during due diligence.

Structure as Opportunity Zone + layer all available incentives

Deploy capital gains, file Enterprise Zone abatement, enroll in WIOA training credits. Stack every available program. Monitor the proposed North Waterfront URA for potential future grant eligibility.

Engage City of Salem planning early

Clarify Greenway compatibility, conditional use path for transitional housing, and monitor status of proposed North Waterfront Urban Renewal Area.

Include the 1935 Front St NE parcel in the deal

The 6,098 SF strip between warehouse and multifamily is excluded from initial valuations but critical for campus circulation and future expansion.

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Broker Recommendation: Cautiously Opportunistic

Target Price

$2.2M–$2.6M

Engineering-adjusted: land + discounted shell at 1901, market at 1887 & 1977

All-In Basis

$3.0M–$3.8M

Including $750K–$1.2M renovation, minor CapEx, and closing costs

Stabilized NOI

$150K–$210K

4.3%–6.0% cap rate; improves materially with incentive stacking

IDEAL BUYER PROFILE

Mission-driven operator with construction capability, property management infrastructure, and a long-term hold strategy. The campus layout (admin + housing + warehouse) maps directly to a veteran services hub. This is a rare three-building campus with an ideal buyer already identified.

INCENTIVE ADVANTAGE

Opportunity Zone + Enterprise Zone + WIOA training credits create a three-layer incentive stack. Estimated cumulative benefit: $400K+ over the hold period, materially reducing the effective cost basis and accelerating returns. A proposed North Waterfront URA could add a fourth layer.

Independent investment analysis prepared by Tradition Real Estate Partners. Informed by third-party engineering assessment (October 2025) and comparable market data. Not an appraisal. All projections should be independently verified. Not financial or legal advice.
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