Summer 2016 Bridging Central Eastside News Covering Important Issues, Trends, and Developments in the Close-in eastside Commercial Areas Table of Contents Project Updates...... 1, 4-9 PROJECT UPDATES The YARD...... 4 BLOCK 75...... 4 Wow! I guess that is the first reaction and also a diminished lack of mixed use when looking at the Central East side’s zoned sites that can be acquired. The MILL CREEK & OREGON BALLET...... 4 real estate development and project list office guys can now with the EOS overlay, FOWLER SELLS/ACQUIRES SITE...... 4-5 as we head beyond mid 2016. We see spread throughout the district, have many SACKHOFF CONTINUES APARTMANTS...... 5 it every day when we travel the close in more chess spots on the board to move TRINSIC CLOSES ON E. BURNSIDE...... 5 eastside; cranes in the air; construction their pieces. Incentivized by Portland hav- PLEW DROPS/KILLIAN PICKS UP...... 5 trailers; blocked off streets; concrete ing one of the lowest office vacancy rates O’BRIAN GOES SKYWARD...... 6 trucks rumbling around and recently nat- in the U.S. and some headline grabbing JUPITER HOTEL TO EXPAND...... 6 tily dressed guys with out of state license news in the last couple years of smaller CLAY CREATIVE ALREADY LEASED...... 7 plates eyeing sites and buildings. Un- complete companies and larger branches LOCA LEASING UP...... 7 doubtedly the Central Eastside is moving of tech firms choosing or looking at Port- TOWNE STORAGE FACELIFT...... 8 into a golden time with multiple interest- land for operations, developers are mov- PLANNING COMMISSION CHANGES SE QUAD PLAN...... 1-2 ing real estate projects with cutting edge ing to fill the need. I see office nudging VALUATIONS GETTING CRAZY...... 3 design and materials. Apartments reach- apartments out of the development lead KNOW OCCUPANCY & SEISMIC ISSUES...... 9-11 ing into the air; new restaurants; high tech in certain core areas. The Central Eastside The corner kitchen...... 11-12 tenants signing leases in new creative is well positioned for this wave as its funky buildings; glassy smaller industrial office and cool building stock; underdog seedy New food options, Cider Riot New Space...... 11 buildings hugging smaller corner lots; a (in a good way) entrepreneurial milieu and Wayfinder Beer, morrison hotel gone/home slips in new grocery and hardware store; newer access to services, good food/beverage New Ramen world, New English Soccer Pub and bigger breweries and distilleries; This options; promity to the downtown core Big Name seattle chefs...... 12 robust current of growth does not seem and surrounding residential areas and Right 2 dream too...... 13 to be slowing down as we may head in good multi-mode transportation options, Project updates 2...... 14-17 the next few years from class 3 rapids into make this neighborhood ripe for office Fischels, 811 SE Stark, Uncorked Studios, some major exciting Class 4 hydraulics development. Oh almost forgot, honorable City skips a step...... 14 of real estate development and invest- mention goes to another burgeoning prod- PDX Compressor, Co-working spaces, Beam finishes...... 15 ment. While apartments dominated this uct type: HOTELS! You knew it was going Family Markets...... 15-16 latest round of building, the development to happen, hotels are on fire on the West- Trimet...... 16 gun sights have turned a bit more on to side (and nationally) with no less than 15 Tevis...... 16-17 the creative or industrial office category. hotels planned or under construction in Mackenzie’s Building...... 17 Don’t get me wrong, apartments are mak- the Pearl and downtown so some “leak- ing a big imprint on the Central Eastside age” into the Central Eastside is inevitable. OMSI Campus...... 18-20 and there are more coming but there is Let’s take a look at first at the apartment Harsch Going Tall...... 20 a slight cooling breeze flowing into that category and projects that are rising or Clinton triangle...... 21 sector that is bolstered by some remote soon to be spurting out of the ground. Parking...... 22-23 sonic rumblings of the term “saturation” ODOT BLOCKS UPDATE...... 24 (continued on page 4)

Planning Commission Made Changes to Southeast Quadrant Plan Whew! Is it over yet? Well yes, but given I am not talking about the Portland incessant rain, but rather the 5 year plus Central City Plan 2035 and for us over here on the eastside, the Southeast Quadrant Plan. The dozens of meetings and multiple open houses entail- ing tons of paper documentation are mostly over with the City of Portland adopting the Southeast Quadrant Plan last July.

A brief history. The Central City Plan 2035 is an update of the original plan from 1988. A lot has changed since then and as the city says about those changes and the plan on their website: The Central City plays a crucial, unique role in the health and well-being of the city of Portland and the region. New challenges now confront the Central City. To continue to reinforce its key role for the regional economy, land use planning and air quality these challenges need to be addressed. They include climate change, jobs, housing, equity, educational and workforce training, congestion and avenue to provide opportunities for a growing and diverse population. Central City Plan 2035 will be the primary guiding policy document for the Central City with goals, policies and tools designed to make Portland’s urban core more vibrant, innovative, sustainable and resilient. (continued on page 2) (cont.) Southeast Quadrant Plan

It started with a more satellite view plan- adds to congestion, parking issues, lack renovated and repurposed occurredin the ning process with the adoption of the The of affordability and stressing the trans- last 6-7 years to accommodate a grow- Portland Plan in 2012. That was followed portation network and also in conjunction ing cadres of firms from a whole host of over the next 3 years by a much more pre- potentially crowding out freight and other different types of uses and companies cise, specific and detailed process of the 3 uses thus making it difficult for existing in: tech, design, food/beverage, textiles, individual Quadrant Plans of the Central and new industrial businesses to operate non-profits, services and more proved the City with the Southeast Quadrant Plan and survive. On the other side: Those who point. which covers the Central Eastside being want to see the Central Eastside having last. 30 stakeholders (businesses; property the ability and flexibility to accommodate Industrial Office (EOS) Everywhere owners; neighborhood groups; non-profits) a wider and higher degree of uses of the were involved and for over three years, “New Economy” that is attracted to vi- When the Stakeholder Advisory Com- design charrettes, open houses, com- brant central city cores. These more dense mittee came to their conclusions and sent munity walks, building tours, business and less industrial uses and companies, their recommendations to the Planning forums, working group meetings, along they believe will bring more and better Commission it was basically a draw in my with input from the CEIC, neighborhood paying jobs, innovation, entrepreneur- mind as no one like usual got everything. associations, and the Portland Business ship and vitality to the neighborhood, the The industrial preservationists wanted Alliance took place and resulted in a draft central city and the metro region. Both to limit substantially application of the plan completed late spring 2015. As it says sides agreed substantial zone changes EOS and the other side wanted to see it in the plan: Stakeholders were primarily (mostly to higher mixed use zones) would everywhere in the district. The EOS grew concerned with two things: protecting the not be necessary or be prudent and there to reach its tentacles to other parts of the industrial land and providing transporta- is already a decent inventory of such land Central Eastside but left some significant tion options and parking solutions. But in the district. The big tool underlying the swaths of industrial land and buildings that I think is too simplistic and overly discussion was a further application of the intact in the pure IG1 designation. So broad, especially regarding transportation industrial office overlay or what is known you would think that after all this work, where changes can only be advisory and as the EOS (Employment Opportunity outreach and give and take by so many needs tons of money to bring to reality. Sub-Area) which was adopted initially in people it would sail through with recom- Discussions covered a broad range of 2007 as a way for building and property mendations intact, right? At the Plan- sub-topics (and yes a bit heated at times) owners to attract and accommodate a ning Commission hearings last summer revolved around congestion, connections much more flexible category of businesses dozens provided testimony regarding the to the river, freight movement; job density, in the industrial zone (IG1) and thus aforementioned competing viewpoints economic development, OMSI, building catalyzing investment and renovation of a and everything in between. So it was a preservation, housing, bikes/pedestrian ac- growing inventory of older and obsolete bit of a mild shocker when the Planning cess, infrastructure and more. While there buildings. Though it was adopted right Commission went against the Stakeholder were nuances and subplots, if you want to around when our great recession emerged Advisory Committee and applied the EOS capsulize the big two viewpoints it could and in a fairly small geographical area, (industrial office) designation throughout be boiled down to the following: Those the EOS even in difficult economic times the whole Southeast Quadrant. Point for who wanted to preserve the industrial has largely been deemed prophetic and the guys wanting the land use flexibility sanctuary (zoning) to preserve valuable very successful. Several large and more that EOS brings. There were a few other legacy businesses thus limiting or slowing smaller projects entailing older dilapidated Planning Commission Changes that are down more dense uses which many feel and mostly multi-story buildings being noted below.

OMSI: OMSI, several years ago, came out with a glitzy and grandiose plan for not only their campus, but over 30 acres of adjoining prop- erties showing a huge amount of office space, parking and more. The immense and somewhat unrealistic scope of this plan along with he lack of engagement with the CEIC and other businesses was almost as contentious as the plan itself. But, it was the large housing compo- nent that really got people talking. OMSI wanted the potential for housing as it would be another tool for them to monetize their valuable land assets while also using it as a complimentary component of a vibrant, 24 hour Innovation District. But stakeholders thought housing was a too isolated area with no services and would affect freight movement through the area. The Planning Commission moved more to- wards OMSI’s position by delineating all their property with the most flexible mixed use zone possible; Central Employment: EX, but only to allow housing by the strict standards of a conditional use on part of the property. To proceed with any sort of major new development OMSI would need to complete a master plan.

Other aspects of the final Plan are as follows:

Rezone of a small area south of the Clinton Light Rail Station (Clinton Triangle) to Mixed Use (Central Employment; EX) • • Amend use allowances in the EOS to address amount of industrial office allowed on different size parcels, or in existing buildings (60,000 sf on parcels 20,000 sf or less and 3:1 on larger parcels) • Rezone of over 20 parcels and approximately 10 acres (mostly along MLK/Grand) of Industrially zoned land to their current comprehensive plan designation of Central Employment (EX) • Require a Disclosure Statement signed by non-industrial users acknowledging that there are various impacts associated with locating in an industrial district. Exact language will be finalized in the coming final meetings on the Central City Plan. I am a bit tired now. I am glad that we now have some goalposts going forward. The city has adopted the Comp Plan and now goes to the Land Conservation and Development Commision at the State and a year for appeals, so it will not be effective until early 2018.

PAGE 2 Valuations…it is getting a bit Crazy? railroad blocks along MLK; then into the 90’s with OMSI’s move to Station L; and other investments by Rejuvenation and other owner I have written about some of the increases in org/city-center-jobs) Companies too are coming user companies. Into the 2000’s other little value of buildings and land in the Central out of their suburban campus closed mentality nodes of investment and development starting Eastside for some time now. As I recount the wanting to be part of the action, energy, laying the groundwork for the explosion today as prolific price increases I have seen, especially amenities and of course to get those highly Beam’s Eastbank Commerce Center and later over the last 24 months, I always usually end educated millennials on their rosters. This has with Olympic Mills, developments that really with the caveat that prices should “moderate” been helped along with many cities direct stuck a stake in the ground showing adaptive shortly, or how these type of price escalations investment to spur development and close in reuse could be very successful on a larger scale are not sustainable. I seem to get proven wrong density with both dollars and application of and firms would flock to such spaces. We cannot every 6 months or so as I review both com- more flexible zoning and land use in what were diminish what food and restaurants have pleted deals and ones in escrow (rumors too) once down trodden under developed neighbor- contributed as when legacy places like Le Bistro that are maneuvering towards the finish line. Is hoods. In the Central Eastside public investments Montage and Produce Row hung in there, then there one particular reason for what is has been such as the Eastbank Esplanade over a decade were joined by more upscale options like Clark a two, three or in some cases a four-fold ago, then more recently light rail, and the Lewis and Le Pigeon and others which really increase in commercial real estate prices Central streetcar represent huge investments. Addition- sent a message that Central Eastside is the place Eastside? Not really but rather it is a perfect ally the application of an overlay to allow more to be. When the great recession hit in 2008- storm of mostly positive factors coming together flexible uses have and will continue to attract 2009, the Central Eastside really only took a to push prices skyward. investment and development. It is not one thing glancing blow as values and development took a but a bit of everything mentioned above coming short respite as activity starting picking up fairly Let me give you a view from my standpoint. The together at a moment in time…this moment. early after in 2010-11 with the start of the first macro reasons center around a very robust major apartment project. Other smaller rehab economic rebound in Oregon led by the All of this has translated into some fairly projects helped along with the trolley coming, Portland market. Oregon was recently named incredible value appreciation city wide but more light rail not far off, and also Burnside and Couch the best performing economy by Bloomberg and visibly in the core areas of the Pearl, downtown becoming a couplet. The pace has quickened geo- with Portland having over half the population of and the close in eastside. For mixed-use land, the metrically every year after that. the state, we are a big reason for that. We have blizzard of apartment demand and construction been boosted by a sustained cavalcade of has pushed EX zone land from $5-$60 psf land 5 I was looking back on some sales of buildings, positive, nation-wide, publicity touting, Portland’s or so years ago up past $200 psf. If the EX zoned especially that much sought after vintage livability, creativity, smart land use policies (I may site has a high Floor to Area ratio (9:1) and 8000-10,000 (IG2) sf building, and found several question that) food culture, bike craziness, height possibility (250’) like the Fishels site that in the 2010-2011 time frames at under $80 psf. I environmentalism, desired quirkiness and luckily is in escrow, and there are very few of these then look at some of the recent sales of similar our proximity to hugely expensive (and drought sites around, then values get up even higher type buildings and the pricing is at $220.00! Sure ridden) California that has and will continue to towards $300 psf. Apartments, while not slowing pricing amps up somewhat if the building is at or send companies and operations of larger right now, are showing some very nascent signs near a good commercial corridor (Hawthorne; companies (mainly tech) northward. Also it used of slowing down and are quickly being replaced Madison; Belmont; Morrison; Sandy and now SE to be tough to get the big finance guys and by the office development groundswell. 7th), is in good shape, and has a bit of parking, but developers to take a look at our “Triple A” little still close to a 3 fold increase in less than 5 town as it did not have the size, appreciation and The Central Eastside is also blessed with some years! One weird aspect is that the larger stable economy. No more and the Central cool old building stock (such as older multi-story buildings (30,000 sf) in some cases have Eastside is also a very interesting sub-market warehouses) which have been rather cheap and languished with a couple deals staying around (still behind the Pearl and downtown) for them were prime empty canvas for redevelopment $100 psf. Maybe they were just not very well too as they all want to be part of the sustained into the type of gritty open and flexible spaces informed sellers, or “sneaky” buyers. One “move to the city center” which is happening in that both start-ups and established firms are phenomenon is the recent jump in industrial land cities across the country. I remember talking to craving, and for many years were pretty darn prices. With the Southeast Quadrant Plan which Jeff Pickhardt, of Key Development, who is cheap. Add in that the area is close to some is part of the bigger city-wide Comprehensive building the Yard, the 21 story apartment retail vibrant traditional eastside neighborhoods and Plan now concluded with the creative office tower at the Burnside Bridgehead. When looking has good transportation accessibility and you overlay coming to the whole district we are for both equity and financing back in 2012, or so have the frosting on the development and seeing industrial land which used to garner he said, it was a tough sale as the finance guys investment cake. Oh! Also forgot the “Big MO”. something in the $30-$40 range going up “did not get” the Central Eastside. In talking to That is MOMENTUM, though somewhat squishy, towards $100, especially again if you are on or the same stuffed shirts 6-12 months later the it is a real factor. It starts slow where a company, near a commercial corridor. tune had changed as several formerly reticent a developer, investor, or even the city makes a investment companies were now pushing loan commitment to an under developed area which Where are we going? I might have to say it again, documents to him across the table. Additionally promotes some very prescient and risk taking and then potentially get proved wrong for what many real estate private equity guys and business and developers seeing an opportunity, might be the third or fourth time in predicting developers see the second tier cities like make the leap, invest and stick it out through “moderating” values which everyone should Portland as under-rated and neglected markets some tough years. Everyone wants to be on the want. When prices jump so drastically, so quickly, with low values plus they do not have the go to back side of a wave of growth and prosperity the danger of them coming down just as war with the huge global guys in the big cities and you cannot under estimate how initial drastically becomes a bit more realistic. The thus pushing returns lower. As mentioned, there successful risk taking in development can Central Eastside fortunately has too much going is a strong nation-wide movement back towards perpetuate itself. It often starts in “fits and for it to have any sort of big “correction” even in the central city which is being pushed by starts” and can fizzle out, but more than often it another recession but such doubling or tripling, millennials (retirees too) wanting the conve- eventually gains its footing and builds on itself. or values cannot obviously sustain itself, but look nience, energy and cultural attractions that have This happened in the Central Eastside back as far for continue strong price appreciation and some grown in many cities core areas. (Check out as the late 1980’s with development along SE 2nd stability at higher levels driven by both users and local economist Joe Cortwright’s Surging Center in Produce Row with Pacific Coast Fruit and developers who believe the value wave in the Job Growth report here. http://cityobservatory. Randy Millers commitment; the three former Central Eastside has not crested.

PAGE 3 PROJECT UPDATES (continued from page 1) The Yard: This is the mother of all creates a series of projecting windows, south waterfront but will continue to apartment projects and as you read terraces and balconies” is the descrip- seek out a long term solution in the this, this behemoth rising at the north tion from one architectural website… core area. end of the Burnside Bridge will prob- I will leave it at that. The project will ably be close to being completed. have 69 residential units; 8400 sf of re- Fowler Sells - Acquires Farm In the works for over 4 years and tail and 32,000 sf of office and a tight Restaurant Site: Brad Fowler is very the brainchild of Jeff Pickhardt (Key 40 car parks but of course room for thoughtful and also conservative not Development), out of Hood River and millions of bikes. It will be open and always attributes people think of first partners, the Yard brings the first real buzzing later this year. when they hear the term “developers”. high rise to the Central Eastside since I might have to add the word prescient the Weatherly building was to the mix as he was really the first to constructed over 70 years ago. With see the potential of the Central East- 276 apartment units and 21,000 sf side as a coming residential neighbor- of retail, its size alone will look like a hood when he bought two sites right redwood of building amongst willows off NE 6th and Couch almost a decade nearby. Another thing is its design ago. He bided his time and waited which in renderings looked pretty dar- through the last downturn ready to ing and cool or at least interesting so turn a shovel when he saw the area that many concerned about the height had really weathered the recession and scale of the project thought “Let’s well as its sprouts of trendiness and wait until it gets built” before reserv- Mill Creek & Oregon Ballet Theater: growth started gaining momentum. ing judgement. Well it is here and the In the works now for almost two years, He had ready a 70 unit called Eastside feel is a bit sinister with its dark color- this 200 plus apartment development Lofts (11 small retail spaces too on ing and positioning and lack of glass in on a key bridgehead site at SE 6th/7th ground level) thoughtfully designed our often times dreary city. You kind and Belmont/Morrison formerly the project ready and broke ground in of expect bats to fly out of its insides home of the Oregon Ballet Theater, 2012 and he hit the wave perfectly. or Darth Vader’s space ship to land on by probably the most aggressive His project was occupied fairly quickly top…maybe it will get better with age. developer in the market, Mill Creek with rents above performa and when Residential. The project is now rising I talked to him back then, I thought A new twist is that Key Development is up to street level and beyond. Though phase II was a no brainer and would now trying to add a skywalk over SE 3rd scaled down from their initial thinking, be another home run. He was not to the retail building across the street this huge block development with up convinced the apartment run in Port- called the Side Yard building which to 10,000 sf of retail will be a game land had long term legs and thought is garnering a bit of negativity from changer for this area of the Central as Alan Greenspan once coined that those in the neighborhood as it comes Eastside. Their first thought was to go there might be some “irrational exu- late to the party and “clutters” the high maybe up to 10 stories, but that berance”. So Fowler sold his Central view corridor and bridgeheads already faded and the developer went with Eastside project late last year to a 1031 dense development feel. the standard “five over one” project exchange buyer out of California for which will have a few live work units a big price and cap rate below 5%! Block 75: Beam Development’s 10 and extensive street level retail. “We Let’s review; buy a well located site, story building at the Bridgehead is are excited about our first Central East- time the market perfectly with a well- also close to completion and is look- side project and given the energy in designed desirable project, sell at the ing pretty darn interesting especially the neighborhood continues to build, top of the market, make millions. Easy as you move around the building. “It we think we will just add to making as Pie! Real Estate Development 101! has articulated bundles of rectangular this area more vibrant where more Fowler is not done and is shifting his tubes. The push and pull of the tubes residents will be able to live and work development guns to another type of in the same close in neighborhood development scenario. He bought two thus not adding to congestion making parcels right on SE 7th where one of the district a more 24-7 environment” Portland’s more pioneering restaurants says Mill Creek’s Portland honcho Sam has held court for over a decade. Farm Rodriguez” Oregon Ballet Theater quietly started bringing wholesome, suffering from some smothering debt local and organic food to the close in put their property on the market two eastside 13 years ago in a little quaint years ago looking to cash in and give bungalow house off E. Burnside. themselves some financial breathing room and find more economical space. Always getting great reviews, superb They had a challenging time trying to service and often lines for seats espe- stay in the area making multiple offers cially for Breakfast Farm just called it to buy buildings but just could not find quits. Fowler was a big customer and the large reasonably priced space that lover of the place and now is in design was conducive to their needs. They for a mega size project of office and finally inked a deal for a semi-tempo- retail which could stretch up to 14 rary warehouse type space over in the stories. It could provide a great Beam’s Bridgehead Projects PAGE 4 PROJECT UPDATES

the nexus of Sandy; Burnside and 12th. where people can be mostly taken Termed the Burnside Delta it will be a from off the streets to get sober, stabi- 7 story project with 84 units and 2000 lized and assessed and hopefully move sf retail and a measly per his history, on to other progressive city services 22 parking spots and actually looks instead of sending them to jail which pretty good which is more an attribute really helps no one. Trinsic struck a to having Vallaster & Corl as the archi- deal to buy their 10,000 sf parking lot tects and anything can look good in for over $1,100,000 and giving them relation to the ugly Linden apartment 12 spaces in the parking garage and building across the street. His design thus increasing their project unit count did not get too much pushback from by over 50%. Chiers says they will use the city Design guys except for them to the money as a seed to hopefully de- try to create more of an arcade (build- velop more long term beds for alcohol ings that extend over the sidewalk) and drug recovery somewhere else feel like other lower Burnside older in the city. It took some figuring but buildings. Summertime is the expected looks like they paid around $178.00 psf time for this complex to get going. for the land, after all is said and done. The project is under construction with Trinsic Finally Under Construction on spring 2017 completion slated. Burnside Site: This deal I have now written about a couple of times, is Plew Drops Project…Killian Picks it done and dirt is moving. To briefly Up and Starts Running: John Plew has recap, this property hit the market a lot going on. He is operator of close almost three years ago which is a key to a dozen bars and restaurants in Fowler Project On East Burnside 18,000 sf EX zoned property along East Portland and trying to grow one con- counterpoint to the Burnside Bridge- Burnside/MLK/Grand and was quickly cept the Thirsty Lion regionally if not head buildings a few blocks away. put under contract by Trinsic Residen- nationally with locations in Phoenix tial, a huge Dallas based apartment de- and Denver. Plew was also behind the veloper. What took place over the next successful revamp of the Central Bowl On the Drawing Boards two years was some significant “mov- which has become a Central Eastside ing and shaking” to finally achieve staple and success story in bringing Sackhoff Continues his “Apartment what will be a 157 unit project, with energy and vibrancy to the Belmont/ Factory” in Central Eastside: Dennis pretty much the same program as Morrison corridor. With that project Sackhoff doesn’t mind a good fight or he got a half block mixed use zone pissing people off as he rushes to meet site across the street at SE 10th/Mor- apartment demand in the close in rison/Belmont. He wanted to catch areas. A long time partner in what has the apartment wave with a 105 unit often termed to be Portland’s largest project in one of the best commercial home building company, Arbor Custom corridors in the close in eastside and homes, he has a thick skin and damn provide a bit of a counter point to the torpedoes attitude when building Killian’s titanic LOCA (goat blocks) next especially apartments in the last 4-5 door. He spent his time and dough years throughout many older tradition- to finish the design and got close al neighborhoods. Tearing down exist- to pulling permits but undoubtedly ing houses, building to the maximum many of the projects, which means the wanted to take a piece off his very full density often with no parking and standard 5 wood framed floors over a chessboard as Killian has bought the less than awe inspiring architecture concrete first floor: somewhat anemic site and is under construction with and construction in close in neighbor- car parking of 50 spots; tons of biking more apartments. “It just makes a hoods, are part of his tactics and his at 240 and the prerequisite roof top tons of sense for us with our project MO and more importantly highlights common area terrace. One cool thing across the street as we are highly the shortcomings of our city code and which the design commission wanted mobilized with our contractor there regulations that allows much of what them to do was to extend the second and can move on construction of this he does. Hey it’s a free market! Just floor out over the sidewalk to create site seamlessly” says Noel Johnson ask those active in the Division Street, an “arcade” which several buildings of Killian Pacific. They are minimally Beaumont or Kerns neighborhoods further east on Burnside have and they changing the project other than up- who have tangled with Sackhoff and have been demanding of all Lower ping the parking to 33 spaces with the mostly came out the losers in the Burnside development. What really “stackers” so as not to have to go back cage match. He is currently under threw gum into the cranks on this was through design review which means construction of 60 units on the Old Trinsic going to the neighbor, CHIERS they can juice the throttle and get the Wives Tale restaurant site at 13th and which is the city’s remedy to people project done much quicker. Sandy and now is buying the triangle suffering from chronic alcoholism, drug piece of property a couple of blocks abuse or mental health issues. Their away behind Michael’s Sausages at location on SE MLK consists of 18 beds PAGE 5 PROJECT UPDATES

Tim O’Brien goes Skyward in to bring down the size of the project. latest Central Eastside project: But is this really their job or even Tim O’Brien has been busy since exit- legally under their prevue? But they ing stage left a few years ago from the think it is and that they have the preeminent apartment brokerage firm power to potentially force O’Brien and HFO he co-founded. He struck out on his team to scale down the project for his own to “push himself” and create more “compatibility” to the surround- some great apartment projects that ing area. Really? Is this not what the fit well with their neighborhood and city wants and fought for especially surroundings. His first project, Lower in light of the urban growth bound- our hip, quirky and very artsy lodgings Eastside Lofts at 10th and SE Ankeny, of ary not being expanded and the city along E. Burnside has proven to hit 64 units is up and completely leased (and Metro) wanting to house tens of a popular niche. A former rundown (and just sold), but he loves the Cen- thousands of residents in the urban budget hotel, it was remade with tral Eastside and its potential which core (mostly in apartments) and a veneer of cool with off kilter murals has led him to a much more visible site where in the latest comp plan they are and artwork on the walls, an outdoor and what is turning out to be quite a increasing FAR and heights in selected party courtyard gathering spot in the bit larger project. He has been working core areas to prepare for all these new middle, and just a feel that you are with the property owners, the Bol- citizens? I also wonder how the 21 here to be festive and stay up late linger family, for going on 3 years now story “Yard” project and the Burnside mostly with a cocktail in your hand, a on a prime half block bridgehead site Bridgehead escaped these guys. Hypo- fedora on your head, a soul patch un- at SE Grand/Belmont (a parking lot critical? Do you think? It frustrates der your lip and skinny rolled up jeans. where Dutch Brothers is there now). Tim O’Brien too. “This is one of the It also helps that good food and a cozy What was once a six story project has few sites in the Central Eastside that vibe with music almost every night now sprung upward to potentially 15 allows for higher buildings and there is at the Doug Fir is a few steps away. stories. “We just saw the opportunity already precedent with the Weatherly Well they are taking this up a notch with the Bridgehead site that this is building and now with the Burnside with the purchase of a mostly vacant one of the few places in the Central Bridgehead. We are trying to do what site across SE 9th along Burnside. At Eastside that allows higher buildings the city and Metro has been pushing only 8800 sf the Jupiter had to get and we wanted to take advantage of for years, which is well designed and economical and they went to the go to that to be a bit more daring and dense compact development in the core chick architect on the Central Eastside, to create something iconic” O’Brien along existing commercial corridors Carrie Strickland at Works partnership says. Here is the rub since the project with mass transit.” He hopes to change to up the game on design and layout. is in the East Portland Grand Avenue some minds when they get to the De- Having Works familiar glassy cube feel Historic District (that is a mouthful), sign Commission for a formal meeting the addition will have 67 rooms in 6 the building design was reviewed by which should be more of the arbiter stories and the desired arcade feature, the Historic Landmarks Commission of context and height than the Historic meaning the building “leans” over the first. While these guys gave some Landmarks Commission. The project sidewalk like other older buildings in favorable feedback (many think they which does not have a name and still the Burnside corridor. The big hook dumbed down the design to a much will require some changes should have will be an eye-popping expansive retro more bland appearance) on the sev- around 200 units, with over 100 park- lobby with some small complementary eral architectural iterations that were ing spaces in two above ground levels retail (maybe a tattoo parlor, serving presented but in the two meetings and retail along SE Grand. He has at high octane fresh fruit ciders and free there was some alarm at the size and least another 6 months before digging range ostrich meatballs playing Lou height by 5 out of 6 of the commis- in the ground. I hope he sticks to his Reed over and over). The big draw sioners and definitely some pressure guns and we get some higher buildings they hope will be a large open event and scale where they should be which space on the second floor with an out- are the bridgehead sites. door patio with fire pit geared towards weddings, art events, bar mitzvahs, Jupiter Hotel Looks to Expand Across you name it. It is working its way the Street: With over 15 hotels through design review (Type III) for a planned in Portland with almost all of proposed summer construction start… these in the core area, it was inevi- just you wait, more hotels are coming table that the Central Eastside would our way in the Central Eastside! starting seeing some of this wave of development. This incredible uptick in hotel construction I am told is that we were substantially short of hotel rooms coming out of the recession and also because Portland is for all it’s Portlandia character is on many people’s list to visit…maybe it is all the parents coming to see their kids who moved here (without jobs?) in the last few years? Anyhow, the Jupiter Hotel, PAGE 6 PROJECT UPDATES

Office Market Starts to Bloom. Clay about projects and ideas. This layout Creative Leased Before it is Finished: actually results in less square footage The apartment market is still steaming per employee than the older tradi- along but to tell you the truth there tional office layout and thinking. One are a few cracks out there as so many cool thing is they left many of the artis- units come on line and the higher end tic graffiti strewn walls of the former demand for units is showing signs of burned out industrial building intact as leveling off. The next somewhat logical a design element in the new build- wave is office construction which has ing…great idea. This well researched Killian’s LOCA Leasing Up..Mostly Local: been building for the past couple of and thought out design was rewarded Did you know there are multiple years in the core with several build- before the building was done when underground streams flowing under ings under construction in the Pearl Simple, a Portland created online the Central Eastside? This has pro- and now many on the drawing boards. banking company basically leased the vided some interesting challenges and Killian Pacific which arguably has the whole office space of 62,000 sf which creative engineering for new develop- most development chips on the table is two thirds larger than their current ment including the goat blocks project in the Central Eastside, was ahead of west side space. While a great deal, by Killian at 10th/11th/Belmont but the the curve with an “industrial office” it has some real symbolic value in it hard part seems to be behind them as project at 3rd and Clay for several shows a few things: that the contin- the project is now topped out. With years. I think it is the first pure new ued demand for flexible office space 247 units and 90,000 sf of retail, people construction building in the Central on the part of mostly tech companies don’t understand the size and scope of Eastside to take advantage of the in- both from locally based companies the project and how it will change the dustrial office (EOS) overlay that came and ones migrating out of state is real neighborhood. With the apartments into being in 2006 where offices are and growing; it also gives an endorse- looming five stories over the retail, being built on industrially zoned land. ment for the Central Eastside often the design and materials softens the Called Clay Creative the whole con- considered an industrial location of scope and is a layout that is inviting cept and feel was to create an open, older traditional uses but also in the and accessible to the surrounding area flexible, industrially looking building last decade, smaller entrepreneurs, and gives it a village feel. Anchored by that looks though new that it has makers/craftsman and nascent office high end grocer Market of Choice and been there for years. The Mackenzie users as a desirable location for a the urban hardware store Orchards designed building started construction substantial larger technology company. Hardware, the project has multiple in May 2015, and is being constructed As a spokesman for Simple said “It’s an other retail spots on the outer edges with “steel moment frames and ex- industrial area and while Simple may of the project. “Response has been posed glu-lam beams with the second be a technology company, we are a phenomenal, but Killian also wanted floor being post tension concrete technology company of makers and we to keep true to the project’s name and deck while the upper floors are being really identify with the culture of the really find great local complimentary constructed of 2 x 6 timber on edge” craft that exists in the Central Eastside” uses and companies” says leasing agent The idea is to make an industrial build- Bingo..let the parade begin I believe Mert Meeker. He would only reveal that ing on many levels but with all the you will see more and bigger industrial Pharmaca, a Boulder Colorado “integra- elements and technology of a modern office users from tech, design, market- tive pharmacy” (think New Seasons ex- office building. This is the way espe- ing, advertising, engineering, green cept as a pharmacy) is signed up, after cially technology companies operate industries and more be attracted to that Meeker is coy about other names with very few if any offices and open the energy, grit, daring and spirit of since leases have not been inked. He type spaces for meeting; conferences; the close in eastside. does say the mix should include at least “break outs” or places to just talk two food uses with one being casual and another being a bit more upscale; a coffee purveyor; financial institution; Urgent Care and more. “We are going to be careful about the mix of uses but also want to be open to interesting, different uses with local flavor” Meeker adds. This project will change the Cen- tral Eastside in a big way….all positive.

PAGE 7 PROJECT UPDATES

Iconic Towne Storage Building Getting Much Needed Structural and Cosmetic Surgery: It was a bit slovenly, but we will kind of miss it’s shabby and seamy charm. It was cold in the winter and hot in the summer. The pervasive smell of urine along several sides of the building was ever present especially in the sum- mer. Along with the life threatening old freight elevators, there was the omni-present homeless campers and school skipping X-gamer skateboarders milling about. Man I am going to miss those days! The five storage brick 100 year old Towne Storage building really hit a vein and for all its dodgy aspects Towne Storage was loved and enjoyed by its varied inventory of tenants consisting of everything Portland and beyond: printers, artists, designers, film makers, craftsman, musicians and other vocations and businesses that we probably could never conceive. That is all gone as the building was bought last October by real estate pri- vate equity firm Westport Capital who is far along in what will be a huge re- development of the building into Class A creative office. The close to 100 ten- ants in its 98,000 sf have scattered to the wind where finding cheap quaint space like they enjoyed at Towne Stor- in other parts of the city that are more huge deck to soak in some pretty awe- age will be difficult. It will be really conducive to their expectations.” Since some views of Mt Hood and Portland’s difficult to replace the rich and coop- Towne Storage is basically unrein- changing downtown skyline. “The new erative environment at Towne Storage forced brick and would be a pile of addition on the roof will really be spec- and let alone at an affordable cost. rumble in a decent size earthquake, tacular with lots of glass and light and I get that the building has a higher seismic work will be a major part of will be a great place for events”, he and better use, but Portland needs to the rehab. “We are going to upgrade says. I could see myself up there on a keep and create affordable spaces for the whole building mostly from the nice warm breezy summer night, IPA in smaller companies and artists, musi- inside out so what you see on the hand looking out on the city. Another cians and talented craftspeople who outside will remain much like it is but thing, with some thought, effort, really add to the culture, diversity and much more cleaned- up and fresh. The engineering and of course dough, they vitality of the city” said one tenant. It building will really maintain its histori- have been able to save the old water would be interesting to track where all cal character but have all the charac- tower on the roof that was in danger of the tenants went. teristics and amenities of a new build- of collapsing. “We really wanted to ing” Clapp volunteers. They have hired figure out a way to save the water I had an omelet with Westport the go to renovation of older buildings tower as that is a great symbol of the Capital’s project manager, Eric Clapp, contractor, Bremik as maestro of this past and testament to the history of earlier this year and he understood the project. Good choice. The first floor the building. Looks like we can make sensitivity to displacing some of the will mostly have an expansive lobby that happen” Clapp says. He thinks tenants. “We tried to give all the ten- and hang out areas, huge bike park- they will be ready for occupancy by ants enough warning and time to find ing with showers and then potentially end of 2016. Because of how they are new spaces and understand if might be two retail spots on the corners where taking old building and making it new difficult or impossible to replace what they hope to have a great restaurant and better this will be in my top three they had at Towne Storage but these option. There will then be 4 floors of development projects in the city for type of resourceful tenants have a way offices and a new 8000 sf penthouse 2016. Projected rents are at or around of finding and establishing themselves office area and communal space with a a healthy $30.00 psf plus.

PAGE 8 in the occupancy world. It For instance, an industrial building Know Occupancy basically comes down to will often have a F1 (Factory Group) the premise that the more where operations such as “assembling, and Seismic Issues people that will be in a fabricating, finishing, manufacturing, building at any given time, packaging, repair or processing op- the more safety features erations” or an S occupancy (Storage) are needed in order to which covers distribution of various One of the more confusing and least protect those people in a structure in types of (non-hazardous) products. understood concepts in commercial the event of a catastrophic event (fire, A church, performing arts venue or real estate is Building Occupancy. It earthquake, etc.). A church or day restaurant will have a higher A (As- often gets confused and lumped into care center will need much more pro- sembly) occupancy that reflects the zoning, which while somewhat related, tective building features than a manu- ability to accommodate larger amounts is very different than occupancy. I facturing facility. The higher occupancy of people in the building. Obviously often get “The zoning allows my use, (occupants per square foot) will require going from a higher to a lower oc- why cannot I not occupy this building” amenities or building features to cupancy presents few if any issues, but or from landlords “Why do I have to protect those people in the building in when you go from a lower to a higher spend tens (sometimes hundreds of the case of something bad happening. occupancy is where the hornet’s nest thousands) of thousands of dollars on What features are we talking about? It can occur. There are many instances my building for this tenant when his could be many types of safety ameni- out there where zoning and occupancy use is allowed by the zoning?” When ties but mainly, regarding fire, it would don’t always line up and when the I represent landlords, tenants, buyers most likely entail sprinklers, (location, building is sold, or a tenant leaves and and sellers, their knowledge of occu- size and volume) proper and number a new tenant comes in or a larger im- pancy and how it affects their property of exits, smoke detectors, alarms, ac- provement is contemplated on a build- or their potential tenancy is not always cess into and around the building, inte- ing it can really be confusing and an understood fully, or addressed, or ana- rior separation and more. The big ugly expensive proposition. That is where lyzed. This can often kill, or complicate elephant in the room is the dreaded the conflicts and confusion can occur deals that initially look promising and “seismic upgrade” as this issue is by often resulting in transactions (leases or many times much time is spent negoti- far the most expensive and sometimes sales) that can be kiboshed, or take on ating a lease or sale only to have it fall in larger buildings (especially older some rather serious monetary ramifica- apart when they find addressing oc- multi-story) can run into millions of tions. Let me give you some of the more cupancy issues is very expensive and is dollars. This is a very sensitive subject common examples: something neither the landlord cannot in every city especially here on the or will pay for and the tenant or buyer West Coast as we are overdue for the Cities and jurisdictions in order to ac- won’t undertake in a building they are “big one” and continued projections commodate growth, change, develop- leasing. This is especially disconcerting of damage and loss of life in a strong ment and investment to what is to be on sales when a given price is agreed earthquake seem to always be going determined more appropriate areas to only to understand much later there up and can be eye-popping. Especially will go through zoning and land use are multiple and serious occupancy older buildings (30 + years old) are the changes from time to time, which often costs and both sides dig in their heels. most prone to require seismic (fire too) can result in certain areas of a city To put it bluntly, it can really screw up upgrades as construction techniques receiving usually higher or more dense a landlord’s ability and desire to lease and quality can vary and the require- uses that what existed before. This is or sell a building and a tenant’s desire ments have increased in Portland when occurring in many core areas of many to occupy a given building. seismic standards and requirements cities across America where traditional were upgraded in 1995. Basically the industrial type of uses that were located What is Occupancy? Here we go: city or any jurisdiction is trying to en- many years ago near city centers are “The occupancy of a building refers courage and enforce much researched now with growth and gentrification are to categorizing structures based upon and vetted construction standards and being rezoned for higher and more their intensity of use (amount of people) improvements to reduce or eliminate intensive uses (retail, residential, office, and are used by cities and jurisdictions loss of life in the event of the substan- entertainment). A good example in in determining fire, life and safety im- tial forces associated with earthquakes. Portland is the Pearl district, which for provements. These classifications have Mostly we are talking about existing good reasons at the time, when Port- state, national and international stan- buildings here as new construction will land was smaller had a high degree dards and consist of categories (and have the newest and highest seis- of manufacturing and distribution uses sub-categories) that are applied at the mic standards built into design and and buildings in close in Northwest time of the building’s construction but construction. There are several types of Portland near downtown. But during can be altered over time.” The highest seismic upgrades and it all depends on the 1980’s (or maybe a bit earlier) occupancy classification will represent the construction and condition of the this area was “discovered and started a use that will have the most people building and what occupancy will be evolving into more varied and intensive in a given space or structure and thus occurring and what type of improve- uses as its location close to downtown will have (or require) the most fire, life, ments are anticipated. and cool older building stock started safety characteristics to protect those attracting residents, restaurants, art occupants.” Occupancy does relate to a large galleries, office users, retailers (and of degree to zoning as most times the course developers/investors) and much Easy right? Not so fast, as there are zoning a building will have will cor- more. lots of derivations and shades of gray relate directly with the occupancy. (continues on page 10) PAGE 9 Know Occupancy and Seismic Issues (cont.)

As cities see these cultural and economic the gentrification of the neighborhood. Understand the current shifts they seek through often laborious The landlord in this case does not want occupancy of the building. Many planning processes and zoning efforts to pour hundreds of thousands into what property owners especially if they have to encourage and accommodate these he perceives to be an older somewhat owned a building for a long time, often changes which results in many of the obsolete building so a neat old building do not know what the current occupancy properties over time being redeveloped on a great corner stays vacant, or under- classification of their building and many to higher uses (higher occupancies too) utilized. potential tenants, or businesses are in the where obviously most of these proper- same boat where they don’t check on the ties had historically lower occupancy Also sometimes a use would occupy a occupancy of the building or know what classifications and thus almost always property that would not be permitted in occupancy their business is as they are resulting in significant fire and seismic a certain building often years ago when trying to buy or lease a property, which improvements. cities were not as strict, or had the desire obviously can present some significant or resources to enforce their codes and problems later if occupancies are out of Another common conflict arises again occupancy. Now when that property is whack. This is not as easy as it sounds when an area or neighborhood, often sold or a new tenant comes in that has a especially with older buildings as you because of growth and investment, similar use finds that their use has a dif- cannot go to some sort of online data- changes over time to a different type of ferent occupancy from what was estab- base to find this out. If you have plans uses but the zoning stays the same. The lished years ago, or when the building of the building those will almost always Central Eastside of Portland is a good was built but never changed when one have what occupancy the structure has example of this where a traditional or more tenants “illegally” occupied the but you need to have the most recent industrial area is now attracting retail- property (the dreaded Change of Oc- plans if improvements have been done ers, office users, technology, and higher cupancy) which most likely will trigger periodically. Many building owners industrial uses as its close proximity all sorts of expensive improvements. especially of older buildings don’t have to downtown, freeways and desirable plans so you can sometimes look online residential neighborhoods have turned Is your head spinning a bit? Welcome on Portland Maps under the permit sec- once sleepy freight streets and industrial to the club. I talked with Josh McDowell, tion to find out but often times that will buildings into vibrant mixed uses. An a structural engineer that specializes not tell you either. So you need to do example I ran into is an older build- seismic issues at Mackenzie, the vaunted some research, which usually requires ing (1930’s) located on SE Hawthorne engineering, design and land use firm, going down to the crowded Permit and 7th street that had for decades been about this convoluted arrangement. Center at the City of Portland and go to home to auto and industrial uses and “Occupancies and all its nuances with the research department and make like has an industrial occupancy (F1) and in- any given city can be difficult to under- you were in college in the 1970’s and dustrial zoning (IG1) but its location and stand and navigate for many property get the antiquated microfiche that will neighborhood has significantly changed and business owners. While the inten- have all the plans of when the building to a high traffic area burgeoning with tions are good which is to protect those was built and improvements (permitted) breweries, distilleries, restaurants, retail- people and businesses that operate in since where the occupancy code will be ers, etc. The tenant recently vacated and buildings, it can be frustrating and often tucked into a corner of the plans. Make because of the buildings location and ex- times expensive to move a certain use sure you have the most recent plan as posure, every interested use or company into buildings especially older structures. occupancy, as we have discussed, can that wants such a desirable location has You really have to get knowledgeable change. A planner can guide you if a higher occupancy use which means and experienced experts involved early there is some confusion. If you are a this much older building will need sig- on to analyze the circumstances and building owner this will give you some nificant upgrades to accommodate most come up with what the city will require great guidance on some of the important tenants that will want to pay the higher and the costs associated to see if it can issues when you go to sell the property, rents wanted by the landlord to reflect make economic sense” or more importantly when you entertain interest from an eager potential tenant. Cascadia Subduction Zone With Josh’s input there are some basics that a business If you are a tenant, or buying a build- or property owner (commer- ing understand your occupancy cial brokers too) should need use classification so that you can to know, or establish when line that up with the occupancy of the contemplating buying or structure of the building you are trying selling a building, leasing to occupy. This will tell you up front that a new or expanded space, looking at certain spaces or buildings trying to lease to a new with different and mostly lower occu- tenant, or contemplating a pancy classifications (especially older or major improvement. less structurally sound structures) may not be worth contemplating. As our economy has diversified and uses that were not anticipated or easily catego-

Source: Shoreland Solutions. Chronic Coastal Natural Hazards Model Overlay Zone. Salem, rized have come into being, which may Ore.: Oregon Department of Land Conservation and Development (1998) Technical Guide-3. PAGE 10 occupancy is more than 35% of the MAXIMUM total building then it will almost always trigger seismic or other improvements. But sometimes it is not quite that simple CAPACITY and there are some “creative” ways uses can be classified and denoted in a given not fit easily into the occupancy clas- building that can help you avoid some sifications, that have not quite kept up costly upgrades. with our changing world. Therefore, if there is some confusion here, you will Understand the size and cost Consult an expert. Because moving need to get verification from a building of an improvement that will a business; buying or selling a building; code specialist at the city. If your use is a be necessary to buy or lease a redeveloping a property, or leasing to a higher occupancy than what the structure building. If a tenant or buyer of build- tenant can be one of the biggest deci- has you know right away that you may ing will have to significantly improve a sions made by a property owner, or a be headed to some potential improve- space such as building out offices, add- business, and with the city’s codes and ments to the building in order to move ing production capabilities, or replace a requirements often feeling so opaque in. Additionally many businesses have roof where the cost exceeds $175,000 and complicated you really need to varying components or uses that may (a fairly random number and a low bar) spend the dough to hire an architect, also have bearing on potential upgrades certain safety upgrades often times will an engineer, or both, to give you input to a building. For instance a manufac- be required even if the occupancy is the on what sorts of potential improvements turing company may have a significant same or less intensive. This will also help that may be necessary to make the deal. retail component where they sell their landlords who may be asked to contrib- They can also come up with a plan and goods to a company which would be ute to these improvement costs to obtain costs that works within the code to avoid, considered a higher occupancy classifi- a tenant make the call, whether it may lessen or phase in required upgrades to cation (M-Mercantile) than the industrial be worth the investment, or adjust the help lessen the financial impact. classification (F-Factory). If the higher rent accordingly.

New Food and Beverage Options in the District The The “Food and Beverage Scene” in the Central Eastside continues to grow as the strong base of food companies that have accumulated over the last half dozen years seems to Corner be building on itself as other food and beverages entrepreneurs seem to like to congre- gate together. Our dining options in the Central Eastside are vast and diverse and it just keeps going. Kitchen There is a hole in the wall space located on the second floor on S.E. 11th in a 100 year old that was home to Fenir a cozy place that served a Portland take on Scandinavian food (what is this Minnesota). They shut down last fall and more interesting concept by a couple of guys with great culinary chops is now up and running. With the whimsical name of Willow, they will be serving up “Cascadian Cuisine”, whatever that means. With only 12 seats, it will be beyond intimate and a place to take your honey.

Cider Riot Gets Back in New Space

Being close to some of the best fruit growing regions in the world of Hood River and Eastern Washington, combined with some of the best brewing and experimental food talents in the galaxy, no wonder cider is hot, hot, hot in Portland, and nationally. Cider making goes back to Greek and Roman times and the French and English took it to new levels several hundred years ago. It has been around America mostly in rural areas since colonial times but it’s hey- day may be traced to the last decade or so as mad scientists of fermentation seeing craft beer maybe a bit “done” turned their Einstein talents to apples and all sort of fruit to make ciders spanning the whole gamut of the taste and alcohol spectrum. Portland is one of the epicenter’s of course now with over 20 cider makers inhabiting the city. We will have one of the bigger operations in the Central Eastside when garage oriented (isn’t that where they always start) Cider Riot goes huge into a 7300 sf space in the former @Large Films space on 8th and Couch. The engine behind Cider Riot has the cool name of Abram Heldman-Armstrong, who has been pressing and experi- menting with apples from his days on his family’s orchard in Yamhill County, is cider crazy (beer too!) This larger facility is a dream come true. Besides huge capacity there will be homey large tasting room. It should be squeezing and serving up all sorts of fruity derivations by late summer. The Corner Kitchen continues on next page PAGE 11 open and homey with seating for over The Corner Wayfinder Beer.. 100 in the tap hall and also will be sporting a huge patio out front with Kitchen finding its Way a fire pit that in the summer will be the place to be. They want to attack Continued into the Central more deeply the lighter side of the Eastside beer spectrum exploring the lager and pilsner category with a 10 barrel We have Burnside Brewing, Base- system, but there will be darker brews camp, Commons and Baerlic in the too in the mix. Food will be higher Morrison Hotel Central Eastside and now another end than most pub fare, but heavy on venture is opening this summer in the dead animals and a full bar for the Gone…Bar called parking deficient but active Produce cocktail crowd will be in the works “Home” Slips In Row area. Led by Charlie Devereux, too. This place will put this SE 2nd area from loved Double Mountain Brewery on the map and will be another brick For about a year, Brett Burmeister says in Hood River, he is hooking up with a in the nascent night life starting to oc- he and his business partner, Scott Smith, couple of food guys; Matthew Jacob- cur around Produce Row, especially as have been scheming to open the kind of sen of Sizzle Pie and Rodney Muir- the bridgehead apartments start filling bar that was “the kind of place that we’d head of Swine centric Podnah’s Pit to up, the retail under these projects gets leased, and the big Towne Storage wanna hang out at, the kind of place create Wayfinder Beer. Located in the creative office building finishes its ma- you wanna take your friends from out older former City Signed building on jor makeover. The area will only get of town”. When they recently learned SE 3rd owned by Craig Sweitzer of more active towards a 24-7 feel. the folks at the funky Morrison Bar Hotel Urban Works, the place will be airy, were closing their doors, they knew they had found the right location right on Mor- rison and SE 8th in a turn of the century It’s a New Ramen World! building with character and history. Two famous Japanese Ramen guys set up shop! Welcome a place appropriately enough called “Home”. Joining new hot places Portland loves to grab on to certain foods running or coming soon. The Central like Loyal Legion, Bit House Saloon, high and trends, or old favorites, and take it Eastside was at the forefront with BIWA end Renata (Oregonian’s restaurant of the to the nth degree with all sorts of deriva- having established roots for years and tions and wacky combinations. There has then Noranenko opening a year ago on year), Oso Market, Katchka and many been the sandwich revolution and with SE Water. Now the big guys are here, more. Home has hearty eats, lots of local it seems dozens of places (led by Bunk meaning several of the most revered beers, full bar and some special quaffs, Sandwiches) doing all sorts of interest- ramen chains of Japan are establish- Burmeister says “that your dad drank, ing takes on an age old favorite that is ing outposts in River City. Afuri, whose and your grandfather drank and that still going strong. The burger thing was original ramen shop in the Ebisu district your aunt June drank”, which in his mind big for awhile and still hanging in there. of Tokyo is still broadly considered one of means Rainier Tall Boys, PBR’s and other Dumplings caught fire a year or so ago the greatest ramen shops in Japan with cheap classics…I hope they bring back and still is strong but now the food wave lines out the door, is open and serving Olympia, Blitz, Heidelberg and some ass is coming from across the pond..RAMEN! on SE 921 7th. The vibe is warm and a whomping Old English 800.. Then I will It seems like you cannot swing a dead bit Spartan, but the noodles are mind really feel at “Home”. cat without hitting a ramen shop up and blowing which makes the sake taste even better. Several other Japanese chains are opening outposts throughout Portland so seasoned noodle freaks and wannabe New English Soccer Pub Opens... will be smiling. Replaces Scuzzy Strip Bar Oops not done yet…Murukin is another The Hawthorne Strip, a scary looking peeler joint around 10th and revered Japanese outpost finding Portland Hawthorne is gone. No tears there, especially when a family friendly fertile ground with a new shop at 609 English pub with a soccer theme has severely upgraded this dingy building. SE Ankeny, next to one of Portland’s best cart to bricks story, Nong’s Khao Man Called the Toffee Club, which is the nickname of the English soccer club Gai. I stopped by, and though I know Everton and the owner’s favorite club. This is a beautiful and much needed very little of the ramen religion, it should upgrade for soccer crazy Portland. English comfort food like savory pies, be on everyone’s Asian noodle radar, steak, chicken and of course fish and chips, along with both some classic twas yummy! English ales and local suds will be served. Like the 442 soccer pub up the road on Hawthorne, this will be more English than Big Name Seattle Chefs Come to the Central Eastside American where they will open early on weekends at 7 AM for a full slate of Our big brothers up north are sending us two of their culinary Svengalis with a English premier games… A frothy ale new restaurant opening this summer at 200 SE MLK next to another Seattle based with bangers and mash with your soccer company, ski and snowboard shop EVO. Chefs Rachel Yang and Seif Chirchi (pretty for breakfast anyone? Count me in. cool name) repeat James Beard finalists and authors of three restaurants up north I am sure it will be packed for Timbers are throwing down the food gauntlet with a Korean themed restaurant that still is limited on details but promises to add further to what is becoming the bullseye for games too. innovative and rebellious culinary explorations. PAGE 12 Right 2 Dream Too MoveS to holders to vehemently oppose a homeless camp hap. This last characteristic brings us to the next to hundreds of millions of dollars in new recent 3 hour meeting in front of the Plan- Central Eastside Passes City development and a burgeoning mostly wealthy ning and Sustainability Commission (PSC) in population in the Pearl District. After lots of early December. In order for the site to accom- Council… Appeal Filed wrangling and the city stepping in, an agree- modate Right 2 Dream Too, the city needs to ment where a “contribution” of close to a million vacate an old right of way of Southeast Har- A lot of us thought it was a done deal. Given the dollars was made to a fund to help R2D2 find rison on the site which is under the prevue of city was behind the action and there was, how another location was cemented. Some called it the PSC. On the night of the hearing, there should we say, some “gentle pressure” to accom- a “payoff”. Since then the city has been search- was numerous people testifying on both sides plish what looked to be a very mundane street va- ing for an alternative site somewhere in the city with supporters and residents of R2D2 asking cation in the Central Eastside. It did not quite go core where its residents can access city services for approval for their inevitable move as well as as intended at the Planning Commission turned while also trying to minimize the impact on the many nearby businesses (including OMSI) and down the street vacation which is necessary for neighboring residents, businesses and property residents offering statements on the numerous a homeless camp to move from Northwest Port- owners: a next to impossible task. A year ago deficiencies and flaws related to the property land to the Central Eastside. It has all of us, who they came up with a small slice of land crammed and the use. But it was the testimony of Gary are in the know realize that it was only symbolic up against the McLoughlin viaduct at SE 3rd and Rehnberg, East Side’s president and others at as the City Council after two days of testimony Harrison owned by the Oregon Department his firm that seemed to resonate most. They in late February approved both the street vaca- of Transportation as their less than thoughtful outlined the considerable long term investment tion and zoning confirmation of moving a home- alternative. Most of the surrounding businesses (they have been in operation there for over 60 less camp to a property in an industrial sanctuary. and property owners had to find out about this years) that they have made in their adjacent move from the press as reporters started calling heavy industrial operation:, the hazardous na- Right 2 Dream Too Background: R2DToo to ask how they felt about being next door to ture of their processes and how the proxim- as it is often referred has generated more than a homeless camp which obviously ratcheted up ity of over 100 people living next door jeop- its fair share of publicity and exposure but the alarm and reaction. The Central Eastside In- ardizes their operations and could threaten the probably best it has really be able to shine a dustrial Council, nearby businesses, OMSI and hard fought and expensive permits they have bright light on Portland and our nation’s treat- others rightly felt ‘ignored” in the process thus received from the city and fire department to ment and decades old efforts to find long term adding to the anxiety and resistance. In limited operate there. PBOT also gave some compel- solutions to what has become a growing part subsequent communications, the city explained ling testimony regarding “potential problems” of our population living and existing on our “R2D2 had to go somewhere” and that they that could occur by housing numerous people streets. It was established on World Homeless were moving ahead with buying the property on the site. Members of the PSC asked lots of Action Day, October 10, 2011 as a “non-profit with the intention of moving the camp there. questions, debated among each other and really organization operating a space that provides “We cannot be strong enough in saying we are gave the whole situation some rather seri- refuge and a safe place to rest or sleep undis- against the homeless camp moving to a plot of ous thought. In the end, in a close vote which turbed for Portland’s unhoused community land on Southeast Third and Harrison. We are surprised many, they decided against the who cannot access affordable housing or shel- not in favor of outdoor camping in our neigh- street vacation action initiated by the city. ter”. Started and guided by an articulate and borhood and this just adds to the problem not As one of the members of the PSC opined impassioned leader, Ibrahim Mubark, R2D- solves it”, said Central Eastside Industrial Coun- “This is very difficult as we understand R2D2 Too initially had a short term lease with long cil President Debbie Kitchin said at the time. needs to move, but given the condition and term property owner Mike Wright, on west size of the site and location in a heavy indus- Burnside but as the years have gone by this Throughout last summer into fall, the city trial neighborhood, it is the wrong site for arrangement has become strained as a short analyzed the site and negotiated with ODOT this use. We as a city can do better than this.” term camp now is moving into it’s fifth year. and played coy about their ultimate intentions Wright has an agreement to sell the property for the site though it was very obvious mov- to the city (PDC) for $1.2 million and is be- ing R2D2 there was always the goal. Mayor City Council coming increasingly impatient as the need to Hales even said at the time “No decision has complete the sale ratchets up. His agreement been made about the use of the property” The Planning Commission vote, though not with the city requires him to move R2DToo which felt to many to be quite disingenuous often, can be overruled by city council and off the property to achieve a sale but obviously and if not downright dishonest. This lack of all those involved believed was inevitable needs the city to help in the relocation. I had engagement, communication and obstinate as moss is on roofs in Portland. That is what the opportunity to get a tour of R2DToo and attitude on the part of the city only added to happened on not one by two afternoons in was I have to say impressed with the organiza- the resistance as property owners, businesses, late February after almost 6 hours of tes- tion, rules and general cleanliness of the site. stakeholders or others galvanized under the timony and questions. It was a bit painful Made up of temporarily constructed shelters, leadership of the CEIC to write letters and strat- to watch the twisting of the city zoning code there are kitchen and sleeping areas; places to egize on how best to head off this “crazy idea”. and mostly Mayor Hales and Amanda Fritz access the internet; fix bikes and more. The plow their way through any logical argument whole operation is self-governed and done or pleas for a better, longer term and more hu- quite well. There is a check in station at the mane solution to their ultimate goal of approv- front and strict policies that prohibits violence, ing R2DToo’s move to the Central Eastside. alcohol, drugs and bad behavior (subjective). Planning Commission Denies R2DToo The vote was 4-1 with Commissioner Nick There is usually a line to get in every evening. Move (Street Vacation) Fish, an attorney voting against, as he felt the Mubarak who also cofounded the 15 year old city’s convoluted legal reasoning allowing the Dignity Village is a relentless activist who has There are lots of issues related to this property homeless camp use into an industrial sanctuary amassed volunteers, organized rallies and dem- and the potential move there of Right to Dream was suspect and not plausible. The battle is not onstrations, been threatened and arrested for Too. It is an industrially zoned property (IG1) quite over as an appeal to the Land Use Board his work and continues to be the vocal and which has some rigid restrictions for any sort of of Appeals (LUBA) has been filed by the Cen- undisputed leader and spokesman for what he residential uses but the city has cagily termed tral Eastside Industrial Council with the sup- calls the “Unheard Community”. He feels tra- the homeless camp use a “Community Service” port of multiple adjacent property owners and ditional shelters are outdated, and demoralize which is a conditional use and somewhat re- businesses. The strongest case of the appeal is a the homeless community as they are totally in- stricted in the IG zone. The site has been found challenge to the city’s interpretation of the use sensitive to gender preference, people’s pets, to have some low levels of contamination in the being allowed as a Community Service in an hygiene, families, children, mental health issues soil which was termed to be “manageable”. Ad- industrial zone Since an appeal to LUBA could and the overall unique and varied challenges ditionally the site is small at only 9000 sf and is take up to 8 months and the city has a tight time of the homeless which R2DToo addresses. located next to a plating plant (East Side Plating frame to move R2D2 by next fall. The appeal Company) which handles numerous hazardous may have the effect of “running out the clock” A bungled attempt to move nearby to a location and volatile chemicals and has numerous strict on the process or maybe force the city to the under the Lovejoy ramp three years ago resulted regulations and permits regarding its operations table to find alternate solutions. Let’s hope so. in some heavy hitter property owners and stake- and access to the building in the event of a mis- PAGE 13 were lots of size and use conversations. They Digital Agency PROJECT UPDATES 2 have come out with a preliminary 17 story mixed use project with somewhere in the UnCorked Studios range of 200 apartments and 100,000 sf of offices. No glitzy renderings are available at Takes Full Floor Key Fishels Furniture this point, but a high rise on this south side Site Under Contract of the bridge will provide a bit of balance to As mentioned above, the 811 Stark project the several higher structures to the north. is located on a 9000 sf fairly skinny parcel As activity at the Burnside Bridgehead has and will feature a 4 story building of 24,000 popped big time over the last couple of 811 SE Stark Building sf with 2600 sf of retail and some token years with cranes in the sky and construc- parking. You can tell when looking at the tion trailers littering the neighborhood, the May be the Prototype renderings that Works partnership is the last large key site in this development nexus architect with the “cubist” feel that they may be headed towards a sale and develop- of Future Develop- have employed in several other projects in ment this year. The block housing Fishels the district. There will be limited parking Furniture occupies a hugely attractive site on ment in the Central and a cool small plaza at the corner and the the south side of the Burnside Bridgehead go to feel lately of high exposed ceilings Eastside with glu-lam beams and concrete floors will on SE MLK. This tasty 30,000 sf site has it all; Flexible EX zoning: 9:1 FAR; 250’ potential pervade the project and probably a roof heights and probably one of the best loca- top area that everyone is employing. This tions on the eastside and now recently the project is a joint venture of the Malsin clan best part a willing seller. The Fishel family (Beam Development) principles of Works had operated a furniture store on site for Partnership, the architect and Mike Quinn over 50 years but with the current genera- who is the stealthy concert promoter of tion now not too interested in continuing many years with Monqui Productions who with the business, it was sold to their long will move his operations into the building. term manager close to 15 years ago but Beam is also moving one of their growing

wisely they kept the real estate. With the tenants Uncorked Studios from the Eastbank

market red hot in the close in eastside and Commerce Center into the entire third floor.

especially at the Bridgehead and the current Uncorked started at less than 1000 sf and is Are we seeing the future? There are lots of business owner wanting to go sit on a beach, now will be taking 7800 sf with a headcount new developments occurring throughout timing is optimum for a sale. Brad Fishel, the of 25 employees. Their story is very typical the Central Eastside; lots of apartments from owner and admitted real estate neophyte of what is happening in the Central Eastside, a few stories to a 21 story tower; a big inte- but fast learner was very methodical in his small home grown creative companies start- grated mixed use development at the Goat process, first looking to see if the buildings ing small years ago in small spaces and then Blocks (LOCA); a larger full block creative could be redeveloped, then investigating a just keep growing and taking more space office building atrd 3 and Clay; a couple of structure to maintain ownership in a new but want to stay in the area. “This is our hotel projects but there is a building going development. Coming to the conclusion that neighborhood for sure” says Uncorked CEO up at SE 8th/Clay/Sandy that I think might be big commercial real estate development is a Marcelino Alvarez who will also be a part a large part of the future of development in long term risky and expensive biz and seeing owner in the building. the Central Eastside. I have to say it is not pricing for land going up and up, an outright the first in this trend with Urban Develop- sale quickly rose to the top of the list. Every ment Partners small office building at 6th and OOPS… City Skips development and real estate investment Davis being very similar, but this project is a company in the city and many outside Port- bit more visible and bolder example. What a Step on the 21 land sat down with Brad to pitch their inter- is that? In my opinion I think there will be a est over the last year. Gerding Edlen won Story Yard Project strong movement towards smaller (15,000- the beauty contest at a rumored price in the 30,000 sf), well-designed creative office proj- $300 psf range even though there were of- at Bridgehead ects with many finding their way on or near fers at a higher number but Brad upted to go some of the main corridors in the Central I now know why Key Development’s looming with a local known entity with a high degree Eastside. There are few reasons for this: It is tower at the Bridgehead seems to have a of certainty the sale will make it to clos- difficult to find larger full or even half block real lack of glass giving it a “closed” look as ing. In comes Gerding Edlen whose green sites; The Central Eastside is not downtown between design commission approval and credentials appealed to the owners and had or the Pearl, over here “small is beautiful”, permits there was a not so small change that been looking for a project of “substance” where there are smaller entrepreneurial should have triggered further review but the in the close in eastside for years now. With firms that are better fits for these type of city did not catch it. The result is that the a crucial piece of property under contract projects and can often take a full floor say project has about 10% less glazing (win- as far back as late last year, I am sure there in the 5000-10,000 sf range; These niche dows) thus giving it that darker feel. It took a projects are less risky, easier to finance and design commissioner or two noticing this as don’t require a “bet on the farm” for a larger the tower reaches skyward. “In watching the project; The creative office overlay (EOS) is building going up, I quickly wondered, is that coming to the whole district thus freeing the project we approved” says David Wark up a much larger inventory of sites for this on the design commission. “It is one of the type of project where pricing for land will be largest scale changes I have seen on a proj- closer to $100 psf rather than $200 psf plus ect. We probably would not have approved for EX Land. Look for these “small ball” type the building being built seeing this change. of projects to start proliferating throughout It’s unfortunate for the Burnside Bridge- the Central Eastside in the next few years. head” The architect Jeff Kovel responded. “We removed the windows to make the project more energy efficient and it was approved by the city so in our mind we

PAGE 14 options. The larger ones have gone over- is Beams proposed 18 story development board to create their own little campuses on a constrained 10,000 sf parcel referred to keep everyone together and cohesive to as this early stage as Block 75 Phase II. within the established company’s corporate Employing Works Partnership’s very familiar culture. But there is a huge counter wave to modern design, early details reveal 85-90 this thinking with many companies sending apartment units with some commercial teams of their workers out of the “corpo- space at ground floor and an aspirational 80 rate crib” to collaborative spaces away from parking spaces. A tight site, which of course, their larger operational spaces to potentially means using those new- fangled mechanical spur more creativity and increase produc- parking systems. Brad Malsin the godfather tivity. Combine that desire with the long of Beam Development first thought he could term corporate guy who has quit his job pull off Portland’s first all timber framed high did everything we should have and we are to work on the “next big thing” and huge rise (CLT-Cross laminated timber) which is excited about the building and it is going to global corporations that need people on the the exciting flavor du-jour in the sustainable look great”. Well, the cacophony grew fairly ground in given cities but don’t want to rent construction world. CLT is being touted given loud about “missing” this major structural a branch office or have their people on their Oregon’s huge timber resources as a very element which has resulted in the city basi- screens at their kitchen table and you have a green, innovative and potentially less costly cally paying Key Development to put in over very compelling business niche. As technol- way to building high rises which are usually 70 additional windows through refunding of ogy has leaped forward where information steel and concrete. But it is too early and the larger SDC charges on the project. Doubt is now available anywhere any time, the banks and insurance companies are not on this will “liven up” the morose exterior, but shared office need and mobile working has board yet, so maybe next time as CLT gains it might help a bit. been building for years and there are some more traction and other builders establish huge players trying to provide these opera- the technique as feasible. Beam and Works tions in many cities nationally and even just finished their Design Advice pow-wow Portland Compressor internationally. Check this out: in 2004 there so more specifics should be coming with a was 3 shared working companies operating, predicted ground breaking later this year. ….Out of here! in 2015 there was over 1000! Given the small site and skyscraper type of building, being creative and efficient in Evolution (definition)…”the gradual progres- Started by local investors with a space in the design and layout will be paramount. This sion, change or development of an entity Pearl that has been wildly successful, Centrl, is density manifested. UDP is again their usually from a simpler to more complex a local, now older start-up, is aiming right at partner on the project. form”. As it relates to the Central Eastside, it this target and coming from their incred- means some businesses will stay, some with ibly successful launch in the Pearl is leasing move out, and many more will come in. It 22,000 sf in Beam’s soon to be completed is evitable and not necessarily a bad thing. 10 story Block 75 (Now called the Slate) at Bob Wilson who owns Portland Compres- the Bridgehead. Centrl Office aims to create sor and has been in the Central Eastside for an environment that is hip, flexible and many years is “evolving” outside of Portland comfortable and always changing to meet to Tualatin where in his mind he is going the needs of the desires of a much more the other way from complex to more simple free-flowing, non-traditional employees and as he is trading in two smaller buildings young companies. Portland’s smaller less across the street from each other for one traditional milieu is perfect for this. You can larger building. “It was time for us. We are rent a desk for a day, or for months for one in several buildings, values are high for real person, or up to 10 people. In the sleek, Long Term Family estate and it is just tough to park and move modern, but high energy oriented space, around in the district and we are getting workers have access to high speed internet, Properties Hit the surrounded by apartments. Plus we can get a coffee bar, café, kitchen, meeting rooms, a 50,000 sf building in one location for less showers, bike parking, lockers and more. Market than our two smaller buildings are selling for Knowing Portland, a meditation room and in the Central Eastside.” I would do the same free yoga maybe combined with a micro With pricing for buildings and land in the thing. By the time you read this he will have distillery may be next. “Centrl Office is the Central Eastside leaping forward every th. sold his two buildings on SE 12 One to an perfect compliment to the collaborative year (how about every month!) and certain th investor, and his main building at 310 SE 12 nature and uses in the Slate and fits with companies and families going through gen- to you guessed it….an apartment developer the growing entrepreneurial culture of the erational change and businesses changing in for $150 psf for his 20,000 sf CG zoned site. Central Eastside” says Beam Development’s size and ownership, several larger key build- Bob was smart and had accumulated other Jonathan Malsin. This makes a ton of sense ings and development opportunities have buildings over the years in Central Eastside and another shared office operation show- been offered up for sale. that he will keep as investments. ing up in the Central Eastside in the next year or two may be a given. A Great Car Story Growing Trend of Dick Martin was a total car guy, and a bit of Co-Working Spaces Beam Finishes rebel, but a true American kind of success Burnside Bridgehead story and a fixture in the Central Eastside. Comes to Bridgehead Loving cars almost from the crib, he was with last parcel creating hot rods and drag racing around Lots of companies, especially in what has be- Portland in the WWII years. He took this pas- come with a lowering unemployment rate, with 18 story Tower sion and made a great business, creating a a much more of an employee’s market, are chain of exhaust shops along with a thriving luring needed workers with updated offices In a few years the Burnside Bridgehead wholesale car parts business. It gets even to create cool, attractive spaces with tons might be its own little high rise village with more interesting. He continued to fuel his of amenities from allowing your dog to go 3, maybe 4, 15 story plus buildings in close work, to massages, and lots of healthy food proximity. The latest to maybe join the mix Project Updates 2 continued on next page PAGE 15 wild side with racing hot rods, and one looking to building a 60,000 sf plus office all the rage along with the ability to do some day in 1958, he was ripping it up racing a building on the site, won the sweepstakes. It small to midsize creative office deals, all the stripped down 1936 Ford Coupe with a huge is still early, but more plans and renderings while maintaining some of the retro, older V-8 screaming under the hood, and as he should be out this summer. industrial infrastructure to show the build- calmly explained in an article years ago, “It ings roots and history. was a strip run, after I had just set a new Custom Stamping Campus record, then all hell broke loose. The Buick’s Dyna-flow transmission exploded and tore On the Market Trimet Puts 2 Key off my right leg” He was 32, but it only made him more determined, as he became over It has been happening and will continue Parcels on the Market the ensuing years, a legendary amputee to be a trend.. I am not talking about the When Trimet finally started chugging ahead skier who eventually taught all sorts of increase in tent camping in the city (that is with the Milwaukie Light Rail project, they veterans and others how to enjoy a sport for another story) but rather older, heavier sent their property people throughout the he loved on one leg. He even competed in and larger traditional industrial users moving Central Eastside and down to Milwaukie to races and often skied 60 days year most at out of the Central City, (or some just selling, acquire what would end up being over 60 his beloved Mt. Bachelor. This quote sums downsizing or shutting down) as these core parcels. Not an easy job as companies had to up the guy “You’ve got to have confidence in areas like the Central Eastside (it is happen- be relocated, pricing to be agreed upon and yourself, that is the most important thing a ing in cities nationwide) change character generally lots of back and forth and logisti- man can have”. He did much more than any from mostly larger industrial uses to smaller, cal challenges. The right of way process for two legged fellow, skiing all over the world, lighter and often more techy uses along with this project took almost 4 years and many water-skied until he was 81, climbed trees, a growing mix of residential, retail and office times Trimet had to buy more property than ladders and danced and walked almost every which makes older industries feel like the 60 what was needed due to not being able to day and was known to often pull over and year old at the Fraternity Keg Party. Don’t split ownership of a larger parcel along the help people in distress change their tires... cry, this is a natural movement that has been alignment. This is pretty standard practice. Man! Wish I could have had a few beers with occurring for hundreds of years, which often Now with the line up and running, Trimet this dude. He passed in 2008. brings new investment, energy, diversity and finds itself in a very good position regarding job creation (and oh yes parking problems). looking at a sale of these surplus properties I know, many lament the loss of these they now have. “It was not our intention, “legacy” businesses, and it is pretty cool to but the market has substantially improved see a foundry next to a guy building bikes value wise for many of the parcels we ac- and a coffee roaster, but the economics usu- quired 5-6 years ago”, says Trimet property ally catch up to make this arrangement less specialist Janni Baugh. Many have said the than feasible. Custom Stamping an industrial key to great real estate decisions is location, stalwart in the Central Eastside since 1963, location, location. But I counter this with is selling their three parcel campus centered th th saying “Timing, Timing, Timing”, which can around SE Main/Madison/9 /10 . A tooling, be often times more important. Though not CNC and engineering company, Custom intentional, Trimet timed this deal perfectly Stamping, touted rightly so that they could Martin ran his business out of a couple key punch, pierce, blank or form any metal part as pricing for some of their surplus parcels buildings in the Central Eastside: a 18,000 for a wide array of companies and uses. The will most likely fetch 3 times or more than sf land parcel with the a 8000 sf building Stoudt Family have been the owners for 53 what they paid. Also add to the fact that the housing one of the branches of his chain of years and they don’t give up much informa- Comprehensive Plan/Southeast Quadrant muffler operations, Exhaust Specialities at tion on their plans, but neighboring property Plan will give these parcels the creative of- 7th and Belmont, and also an older wooden owners tell me they are basically calling it fice overlay (EOS) and that heaps a bit more behemoth 4 story structure a couple blocks quits as well as letting a couple of key man- dough on to the value. There are two sites away on Morrison, which housed his agers take part of the operation to another initially for sale, 40,000 sf of land on the beloved vintage Ford Thunderbird restora- location. The very desirable real estate has corner of Division Place and 8th with IG1 tion and parts operation. These properties been quietly marketed to the known and zoning asking $75 psf up against the light hit the market late last year and there was so called “qualified” buyers and developers rail tracks and a smaller 25,000 sf site down a bidding war for the 7th and Belmont site who have the financial heft and experi- on SE Milwaukie/ McLoughlin with an EG ence to take down these larger properties reaching a price of $3 million which is a zoning (allows residential by condition use ton considering it is zoned industrial and which undoubtedly will be redeveloped into smaller, upgraded spaces and with some of until comp plan comes into being) for over the building most likely will be torn down. $100 psf. Unfortunately, (my opinion) the new owner the vacant land, most likely sporting new looks to build a mini-storage building which creative office and accompanying retail. seems to be a very boring and uninspiring Tevis Finally Getting use for such a key corner. The other 18,000 Flash: Capstone Partners led by Chris Nelson mixed use zone site is taking a bit more time and Jeff Sackett won the Custom Stamping Going on Next Project and thought as the wooden building cannot contest and is working through their due be saved plus there is a subterranean base- diligence on the site. Capstone has been Bay Area refugee, Mike Tevis, has created ment (and it is a bit scary down there) which wanting to get a foothold in the Central East- a successful real estate “village” at the present issues to redevelopment. While I side for years and this seemed to fit. Best intersection of SE 12th and Division. First known for their mixed use projects (Conway thought the apartment guys would be the with the historical, huge, former Ford Motor winner for this site, Trammel Crow, who is in Northwest with Cairn Pacific; Grant Park on NE Broadway) as well as their mega Company building, picking up buildings on industrial projects out by the airport, the almost every corner, and nearby he has over re-use of older buildings in the core areas 100 tenants of all shapes, sizes, uses that has been on their radar for a long time. is a cornucopia of Portland artistry, entre- Their plan will hit both the higher and small- preneurship, ingenuity and creativity. Many er “maker space” concept that is becoming firms grow within his buildings and a real

PAGE 16 supportive community has blossomed in the Mackenzie’s Building Sold. spaces. “We seldom lose a tenant as they Looks to Move… love the spaces, the people, the other firms and companies in the buildings. Many of our Stay within the Central Eastside tenants sell, buy, or work with other firms across the street, or even down the hall. If you took a few hours, drove around Portland and all the major suburbs, your arm would get tired There is lots of cooperation and energy” from pointing out buildings, developments or projects that the integrated construction services firm Mackenzie has been involved with. Started by Tom Mackenzie, in 1960 who was a former plans exam- says Tevis. Three years ago he approached iner with the city of Portland, Mackenzie/Saito Associates then Group Mackenzie (I like this moniker long time Central Eastside property owner, best) and now just simply Mackenzie, has grown into the largest and most capable locally owned firm Stu Lindquist, who bought a beat up older that provides soups to nuts services such as design, architecture, civil, structural and transportation engi- building from Land’O’Lakes down next to neering, planning, landscape architecture and probably a few more I am forgetting. They probably could Darigold. Stu hardly ever sells and felt the find you a good financial planner, or help with that rattle in your car, because they do it all when it 40,000 sf building was not his type of proj- comes to development and construction. From hotels to offices; fire stations to health care; education to ect, so Tevis cemented a long term lease and industrial; infrastructure to retail; tenant improvements to entitlements; community projects to protect- ing the environment; energy efficiency to cutting edge design…there is nothing that Mackenzie cannot has been plotting full renovation to continue provide to a developer, city, county, business owner, hospital, school or land owner when considering is successful streak of developing smaller, construction or development. flexible and open spaces. He ran into our good old city’s somewhat illogical and They are also one of the stalwarts of the Central Eastside having been part of one of the earlier and expensive requirements and has been trying largest creative office redevelopments in the district. An old bomb shell neglected building on SE to move and shake his way around these Water right at the base of the Hawthorne Bridge was a decrepit mess that only innovative firms and its necessary improvements and the financing principles could love and understand its potential. Armed with an idea, some help from the PDC who owned the property, and who wanted to kick start development in the Central Eastside, Group Mack- to accomplish it. It has been a tough long enzie and its prez Jeff Reaves with Coaxis Software (now Viewpoint Software) founder Jay Haliday slog especially when he has been writing started the process of “reimagining” this orphan building. It took almost three years but what appeared rent checks for all this time with no income was something industrial, edgy, and what Rich Mitchell their current leader said “a living laboratory” to show. He finally is moving ahead this for Mackenzie’s capabilities. They left the huge concrete pillars and brought in enough office feel but summer with his Dairy Building project that not too much to really pioneer what is now considered industrial office. It helped also that they had a will add another great option for all sorts of co-conspirator in the development when growing construction enterprise software firm Co-Axis (now firms and uses that seem to be an inexhaust- Viewpoint) came on as large tenant and coinvestor. What came to be known as the River East Building, the renovation of this 83,000 sf old art-deco warehouse hit a lot of the green buttons now that are ible entity in the Central Eastside. common but not so much back then:

• Clay Street was turned into a public plaza featuring Portland’s first example of shared facilities for treating public and private water. Rain water from the roof, Water Avenue, and the parking lot travels through artistic downspouts, storm water basins with native plantings and recycled building concrete into privately maintained water quality facility before reaching the river.

• Energy Efficiency: The entire south side of the building is a dynamic solar wall which uses a system of glass panels, baffles and shelves to alternatively capture and divert solar heat throughout the season. This along with wide us of light, reflective white roof, special window glazing, energy efficient fixtures reduces the energy consumption to 50% less than code requires.

• Over 95% of the concrete waste has been reclaimed many times artistically on the site. Other sustainable materials and re-use of the buildings original components rounded out the project.

THE DEAL!

Here are some interesting deal factoids and history about the development and recent sale of the Rivers East building. The PDC bought the old food distri- bution warehouse for $2.45 million in 2002. Known as the Holman property it was an old bombshell of a building built in the late 40’s but fortunately had thick poured in place concrete walls in its four levels that helped lessen the need for full seismic upgrades. Nevertheless, the PDC a few years after the purchase contemplated a renovation or potential sale but received a negative appraisal on the building of over $2.76 million meaning the costs to retrofit the building and rents received and then what they could sell the building for would be potentially a big loser. Boy only if they could see what was coming to the Central Eastside market back then. So after lots of thinking about how do we get rid of this real estate anchor, they sold the structure for a mere $200,000 to Reaves and Hali- day (River East LLC)and retained the ground (which included much valuable parking) on a long term very favorable lease. So began the process of turning an ugly duckling into a princess. After pumping $15,000,000 into a green and cool industrial feel renovation and moving their firms Mackenzie and Coaxis into the building on long term leases, the owners who have both faded out of their companies in recent years saw the unprecedented development and growth in the Central Eastside, as a time to grab the golden ring. That ring is worth $33,800,000 as huge opportunistic ASB Real Estate Management along with minority partner Lincoln Properties outbid many suitors for the property and just closed on the deal earlier this year. Nice return! Don’t you love capitalism? “We saw it as an opportunistic play given the growth of the area and the ability to re-tenant if necessary the buildings at substantially higher rents in the market that has some strong barriers to entry.” Says ASB’s west coast acquisitions chief, David Quigley. ASB has partnered with local developer Greg Specht on other deals so they know and like Portland as do the large pension funds they manage money for but they say it is hard to find the larger size deals they want in Podunk Port- land. The big number they paid is obviously a play on the future where they see current rents in the building at $16.00 psf to $20.00 psf where as the market now is up over $30.00 psf. It’s a good visionary real estate success story.

With a recent sale of their building to a large out of state investment Company (Lincoln Property) for a big number may mean that Mackenzie will look to find a new and expanded but not less cutting edge building. “We understand that with a low initial lease rate that the rate will inevitably go up with the sale of the building and with a substantial increase in our head count that we may need to be proactive in looking at some relocation options for our company” says Josh McDowell, a principle with Mackenzie who is helping to investigate other space possibilities. With that in mind, Mackenzie with 3 years left in their current lease thought it was a good time to see what is out there and last fall they put out a Request for Interest (RFI) to selected Developers and property owners for proposals for a new digs. Mackenzie prefers to stay in the close in eastside where their employees and entrepreneurial spirit seem to fit best. They are also are real keen on using their need for space to be part of a larger “catalyst” type of project where they can employ their vast amount of sustainable, creative and cutting edge design and experience and capabilities. Now with the industrial office overlay (EOS) being applied throughout the district, opportunities should increase for Mackenzie to find and be the foundation for another innovative and forward thinking project. PAGE 17 OMSI Campus…An Exciting New Chapter

The Oregon Museum of Science and sically across the parking lot the same the river. For 30 years he was involved Industry (OMSI) seems ensconced in year; 1958. It was a good run at this in multiple businesses and civic proj- the south end of the Central Eastside… location for over 30 years and OMSI ects and was a driving force in develop- fitting perfectly in a wide array of went through some major changes from ment in the close eastside of Portland. interesting and different buildings like being less a collection of interesting Consequently, by 1892, to provide it has been there all along. But OMSI’s scientific and historical items to an reliable and centralized electricity for history and the 18 acres it sits on came organization much more committed to streetcars and a growing population, together in a rather interesting way that education (especially children) with a three Portland businessmen seeing the was bit of a leap of faith and at times decided bent towards technology and coming electrical advances formed the a struggle. Now, the OMSI campus is science. By the mid 1980’s, OMSI Portland General Electric Company poised to potentially become a force of once again became a victim of its and quickly expanded and became a innovation and forward thinking devel- own success as 600,000 people were force when they bought the Willamette opment that could be home to hundreds coming to a facility that was originally Falls Electric Company which generat- of jobs entailing a wide range of skills, designed for 100,000 and the success ed electricity at Willamette Falls. Over expertise, technology and knowledge of their Portland Zoo neighbor further the ensuing years, as electricity became that could have a big impact on the city. crimped their space and parking needs. to prevalent source of power for almost First, a little the history which I really An expansion on their present site was everything, the electric company grew like. considered not feasible plus moving and built thermal power stations at the museum into the city center was various locations in Portland to feed the Beginning in 1903, odd artifacts were preferred. I don’t know the specifics insatiable demand for electrical power. displayed in hallways and alcoves in but I am sure OMSI had some very These stations were labeled A through Portland City Hall which were collect- prominent friends, board members and M, and Station L, which PGE bought ed by one of Portland’s most colorful benefactors who were connected in from Stephen’s decendents, along the and productive early citizens, Colonel government and industry which helped banks of the Willamette was one of LL Hawkins (Google him, he was very with the next move. Plus OMSI really them. Station L was one of the larger interesting guy!). Even after Hawkins became near and dear to many in the electricity generating facilities stretch- death the collection grew, actually a educational and technology realms and ing along a considerable amount of the bit too much and finally all this “stuff” their mission and outreach intertwined eastside bank of the Willamette River. was evicted from City Hall in 1936 throughout Portland society and cul- It was located near the Inman-Poulson and spread throughout the city to ture. Much of the city was canvassed Lumber Company which was a huge disparate locations such as the illustri- for the right spot that was accessible, lumber mill and log pond nearby by ous huge downtown Portland Hotel. A interesting and had the room to grow. (think were Darigold is located but few years later, a house was donated OMSI kept coming back to a huge much larger) which supplied wood on NE Halsey to house the collection abandoned swath of land along the waste for the power plant. The complex (there was so much some of it had to Willamette in the close in eastside with grew to six interconnected buildings be stored) where the Northwest’s first a mishmash of interconnected older housing huge turbines, transformers Planetarium opened in a dome on the buildings owned by the power com- and miles of wire conduit. When the front lawn. Over the ensuing decades, pany, Portland General Electric. It was lumber company went under in 1954 the collection’s popularity slowly grew referred to as Station L. It would prove the plants boilers were converted to oil and grew and after WW II, so many to be both a big challenge but also now and gas but the whole outdated facil- people were finding their way to this in hindsight a most prescient move. ity was finally made obsolete perma- ad-hoc museum, it was finally deter- nently in 1975 by the cheap hydro mined that a larger structure and better Station L was originally part of a larger power of the BPA. There were years of location was necessary. Therefore in property belonging to James B. Ste- decommissioning and cleanup on the 1955 an active group of supporters phens (there is a street in the Central mothballed complex. This idled choice raised money to move the collection Eastside named after him), a barrel property dovetailed nicely with OMSI’s to a new building that was constructed maker who immigrated to Oregon in search for a new location and $32 mil- on the edges of Washington Park (it 1844. He bought the land from the lion campaign to fund a new museum was called Hoyt Park then) right across historical Oregon leader and dashing in the 1980’s. PGE a long supporter from was also the upgraded Portland pioneer, John McLoughlin. Stephens of OMSI completed the donation of Zoo which moved into its new digs ba- built a house and boat dock, started a the 18.5 acres and over 200,000 sf of river ferry and was the structures in 1985 and with much fan- guy who laid out the fare OMSI with lots of work, design, grid for the city of East fund raising and persistence opened at Portland where he helped the new location in 1992 with many of install rails for railroad the power generating structures being service on the eastside of incorporated into their exhibits and educational mission. PAGE 18 Over the next 30 years, OMSI mostly ing housing to create more of a 24-7 thrived and expanded renovating more vibrant neighborhood while also adding of the older power structures, adding to and complementing their science and a OMNI Max theater and large plan- educational mission. As the compre- etarium but there were also significant hensive started moving forward with bumps along the way. OMSI carried a the three quadrant plans of the cen- $15 million loan from the state from tral city moving through the process, their big renovation and relocation OMSI hired vaunted architectural firm and then the 1996 flood added further Zimmer Gunsul Frasca (ZGF) to do costs and impacted attendance to where some Imagineering and develop a very OMSI for over a decade struggled with dense and grandiose masterplan not significant debt that just could not get only of their property but for multiple paid down and was the proverbial stone other properties nearby to encompass a around their necks. Understanding the plan covering over 60 acres! It showed value and much appreciated mission of OMSI expanding; hotels; apartments; OMSI donors, the city and the state all parking garages; entertainment uses; chipped in over multiple years to the office buildings with what could be point in 2007 OMSI had retired most of millions of square feet of space. Whoa! the road. OMSI got the coveted Central the debt and attendance was notching When this very “dreamy” plan got out Employment Zoning (EXd) on all their significant increases every year. Now it really caused concerned with many properties with housing only allowed with the Central Eastside being one that saw it and were a bit shocked as by a conditional use on their South of the most desirable and sought after this was too preliminary and very much Campus properties adjacent to the new areas in the city which is being dem- an “overreach” of uses and size for Tilikum Crossing Bridge. They also onstrated by a recent tidal wave of new the area and greater Central Eastside got some rather strong density with development; rising real estate values in general. Though just a concept, it heights potentially over 200’ and a 5:1 and companies looking to move and in- struck many as massive and over- FAR all of which gets implemented and vest in the area, OMSI is sitting pretty whelming for what has always has refined only after an agreed to master- with considerable developable real es- been and will mostly continue to be an plan of their campus is accomplished. tate in an area with limited developable industrial and low capacity jobs area. “I think what came out of the Southeast land. Two other large occurrences have It didn’t help that there was little if Quadrant Plan was a good compromise also further added to the attractiveness any collaboration or outreach to other for OMSI considering all the different and allure of OMSI’s location and land stakeholders in the Central Eastside be- opinions and strong feelings expressed” resources: The billion dollar investment fore, during or after this plan was con- said Debbie Kitchin past president of in the light rail line from downtown ceived. As the Southeast Quadrant Plan CEIC and on the Stakeholder Advisory south to Milwaukie highlighted with which encompasses the Central East- Committee. So where do we go from the artistic Tilikum Crossing bridge side and OMSI grinded through close here? Well with Portland in one of the landing on OMSI’s south border to 20 meetings from 2013-2015, OMSI strongest development cycles in its his- opened in 2014 and the once every 30 pulled back from its huge plan when re- tory, OMSI’s property and development year city comprehensive process that sistance was consistent and vocal. One sites remain a crown jewel for some- will bring significant changes to land important aspect to OMSI’s plan was thing special and game changing in the use mostly to encourage smart and there adamant desire to see residential Central City. OMSI is pushing ahead dense development with much oc- uses allowed on its properties as a way judiciously to get development forming curring in Portland’s core areas was to both enhance and enliven the area on its main development parcels. “We also cranking up. It also doesn’t hurt plus maybe more importantly as a key are one of four identified large devel- that OHSU is committing hundreds of tool to allow them to better monetize opment sites in the central city that millions dollars in research, education their land holdings as residential uses is further enhanced with millions of and health care facilities right across in the current apartment binge could dollars of public infrastructure adjacent the river. It is a positive intersection of greatly enhance their land values. There to us with the new bridge, light rail and some significant forces. was steady and strong pushback from trolley. This along with the exponential many of the stakeholders (city planners increase in development and invest- The current comprehensive plan up- too) in the Southeast Quadrant planning ment in the Central Eastside’s makes date, which was initiated almost 5 years process with many agreeing that resi- for amazing potential on OMSI’s cam- ago with the Central City Plan, pro- dential uses were out of place; isolated pus. There is really a great foundation vided the impetus and opportunity for and incompatible with the surround- for creating something special that will OMSI to reimagine their campus with ing industrial neighborhood. When complement OMSI’s educational and the possibility of increasing density, the dust settled, no one got everything technology oriented mission and be a development and the accommodation they wanted and in the end OMSI did huge and positive addition to the fabric of a broader range of uses includ- preserve some residential options down of the city” says OMSI’s prescient

PAGE 19 OMSI Campus… uses in buildings come to mind: R & scenarios and feels their current and (continued) D; design; technology; biotechnology future needs can be handled within the (OHSU right across the river) educa- buildings they have currently. director of development, Carol Gossett. tional, entertainment, and also some With a great background in real estate, higher-end craft maker space seems to OMSI has come a long ways from its consulting and public/private partner- fit. One item that is somewhat counter modest beginnings in a small beat up ships while also being a deep and for- to Portland’s planning goals is OMSi’s house in Northeast Portland, then with ward thinker, Gossett has been meeting need to have a significant amount of the migration to the west side by the with multiple developers and interested PARKING. No matter how you look zoo and now to the close in eastside on parties about interest and ideas for what at it, families toting kids and tons of to what has become a key and burgeon- are some of the best development sites stuff almost always have to drive to ing part of the central city to become in the city. “We have had overwhelm- OMSI so with a million visits a year, an integral part of Portland’s economy, ing interest in our sites but it has to the current 600 parking spaces have to educational infrastructure and indepen- be the right fit, timing, use, size and be replaced or potentially enhanced not dent culture. The potential is huge to team” says Gossett. The north campus to mention there needs to be parking create something special to further add area, which comprises approximately for the thousands of square feet of new to OMSI’s mission and legacy in Port- 48,000 sf of land along SE Water with buildings that can be accommodated. land. Pass the popcorn, this is going to a 24,000 sf older warehouse building, That will be one of the biggest chal- be one great movie to watch and I am is targeted first for redevelopment. Two lenges “While we are working on pro- betting on a very happy ending. beautiful sites both over 2 acres next grams and efforts with our operations to the Milwaukie Light Rail station at to take advantage of mass transit and the foot of the new Tilikum Crossing carpool, parking is a threshold issue would come later along with a potential for us.” Says Gossett. One thing is for redevelopment of part of their parking certain is that after thinking long and areas. One’s imagination could really hard about it, OMSI will not expand its go wild on these sites but several initial footprint in any current development

Harsch Going Tall on Quarter Block When Harsch Investment cashed out Dealers Supply a few story building is a bit scary but also very Portland old school years ago and bought their almost 3 block complex in the hip with huge old timbers throughout but of course some- produce row area of the Central Eastside, they got a cor- thing that will fall like toothpicks in any sort of earthquake. nucopia of buildings. But buying the property for basically Bidding their time and watching the quick redevelopment land value gave them some real flexibility as the neighbor- occurring at the Bridgehead and Killian’s creative office suc- hood continues to change and upgrade. They started with cess in the south end of the district with Clay Creative, in a less intensive smart redevelopment of two larger exist- comes Works Partnership and their Central Eastside large re- ing buildings into an award winning design and home for sume in the Central Eastside with their go to “cubey” design the largest micro-distillery in the city; House Spirits. Their for not a four story or even five story building but a freaking 14,000 sf facility used an old three sided metal structure 9 story building with 90,000 sf of space!!!! With a full be- and turned it into a showcase facility and tasting room at SE low ground basement, there will be some (not much) room Water/Stark/Washington. The other building where Deal- for parking with what is now the parking du jour character- ers had their main office and warehouse now houses one istic these days…parking stackers which is a mechanized of Portland’s best homegrown success stories; Steve Smith system to park two cars stacked per space. Just don’t try to Tea. Steve who very sadly passed away before completion take your Suburban down there. Harsch also has a more of their new HQ and tasting room was a world-wide icon in than a half block empty lot a block away that they are con- the tea world. Having started Tazo Tea templating a parking structure to serve and sold it to Starbucks back in the 90’s their growing amount of space in the and also having a hand in Stash Tea too, neighborhood and which would be ap- Steve has “restarted” his tea life a dozen plauded by almost every property and years ago with what is revered by many business owner nearby as parking in the in the know as the best tea brand in Produce Row area is Harsch is putting the world. Their 26,000 sf facility more the pedal to the metal on getting permits than doubles and also consolidates their and hope to break ground on this proj- operations and has become a stop for ect in about 6 months. This development many tea aficionados when visiting Port- will be the first to go so high on just a land. The last piece in the puzzle was quarter block and will be a portent for on very cool but decrepit quarter block other “point” type of development in the building at SE 2nd and Alder. This three district going forward.

PAGE 20 Clinton Triangle Set for Redevelopment Large Fire Bureau facility to relocate During the give and take and back administration, a fire and forth of the recently completed station, an under-used 3 year-long Southeast Quadrant Plan training facility and process, by far the biggest issue among Stacy Witbeck, the many involved and putting their two main contractor for cents in was the potential implementa- Milwaukie Light rail tion of more mixed use zoning (Central who saw an opportunity Employment;EX) into the Central East- and potential higher zoning (wink, side’s industrial sanctuary that already wink to their long time “friend” Charlie “feels” like it would be the best fit into in most people’s minds had plenty of Hales) who bought 3.5 acres several the site. Nagy stresses that this is a start- that type of zoning. This possible higher years ago. “The city believed that this ing point and that it will most likely go mixed use zoning “discussion” was most area is under developed and now with through multiple iterations as they dig poignant around the new Milwaukie the right zoning, this property with its deeper and the market directs them to light rail stations at OMSI and Clinton/ proximity to a light rail station and now the right size and combination. The idea SE 12th, mainly because of a desire by can be eligible for urban renewal dollars, is that this scale of development would the city (Trimet/PDC too) to see more should engage in some planning and occur in multiple buildings and this activated and mixed use development cooperation in order to bring this area napkin math comes from some market near light rail stations. While OMSI, at to its full potential regarding a potential analysis that takes into account parking, Tilikum Crossing, received some mixed template to increase smart development, (they have a low .25 parking per residen- use zoning “lite” (no housing except by to create jobs, housing and activation of tial unit) the capacity of the transporta- conditional use) the area to the south of the neighborhood and light rail station” tion infrastructure and the very unpre- the Clinton Street Station known as the says Amy Nagy of the PDC who is head- dictable ability of the market to absorb Clinton Triangle got the full meal deal ing what is termed the “Clinton Triangle this size and type of space. of EX zoning. Basically located along Development Plan Process”. So since last the dead end of SE Gideon Street but fall, PDC has been holding meetings The idea is to go out to market with a with a long frontage on SE Powell, you with other city bureaus to identify their RFP next spring after the city and the will recall this area was brought into the needs on the site, how access may be im- state approves the final version of the Central Eastside Urban Renewal Area proved due to the fact that getting over Comprehensive Plan in order to find a when this URA was extended a few to Gideon from Powell coming from development partner to work on the city years ago for an additional 5 years to the west is difficult and in general what owned (Fire Bureau) site. This developer 2022 thus potentially creating another would be the most appropriate type, size of course could be a logical partner for $6 million in tax increment for invest- and mix of redevelopment. As part of the other property owners especially the ment in the area. So with this zoning this, PDC worked with some important Stacey Witbeck guys who admit they pretty much in place, there was some consultants dealing with transportation are not developers, or given the size of thinking that since the city, because of and feasibility. So far what has come out site it, could take several development the Fire Bureau owning a big chunk of the process is that the fire department teams; not unlike what occurred at the of the land, should undertake some will need to keep a upgraded station on Burnside Bridgehead. Total develop- planning and “visioning” to make this the site, but the rest of their buildings ment costs would exceed $135 million an active anchor of the south end of the and operations will go: better trans- with it projecting to take 7 plus years Central Eastside. Logically the PDC portation connections especially from for build out depending on how the has taken the lead to take this area to Powell will need to be implemented market behaves and receives what would the “next level” and provide assistance along with a broad understanding of the be a phased project. I am hopeful this in focusing on the potential of this 10 size and type of uses that economically area can be a very active and large scale acre area from the standpoint of density; could be developed on the site. This last anchor to an area on SE Powell which type and scale of uses, how it fits in with item of course is the meatier part of the really is a hodge-podge of use and devel- the surrounding neighborhood and, of equation and what the current economic opment with no real identity or energy. course, transportation infrastructure. analysis reveals is that approximately The south end of the Central Eastside This land is concentrated into two 200,000 sf of offices; 35,000 sf of retail really needs a good book end to counter main ownerships; 3.45 acres owned by and 400 units of housing of which over the incredible development at the Burn- the city where the fire bureau has some 100 units would need to be affordable side Bridgehead. PAGE 21 Parking Solutions ing shortcomings coming that only will be ex- tory. This will only get worse as more and more acerbated as the district grows. Among some apartments come on line and those tenants look Discussed… of those are: parking resources in the Central to garner what are pretty cheap permits in the Eastside are inefficient and mismanaged; the district. This results in people who have permits New Plan Floated district will continue to grow with more resi- not being able to find spaces near their jobs dents and employees, thus further stressing and squeezes out people coming to visit and Parking, and lack thereof, is an age old problem parking space supply and there is a distinct is- patronize firms in the district. Just try to have for cities all over the world and this has been com- sue of mostly downtown users parking in the lunch, or a beverage at the Produce Row Café, pounded as many cities see an in-migration of district and “commuting” elsewhere, and lastly; or Olympia Provisions and you will soon under- companies and residents into much more dense parking on the main commercial corridors does stand the problem. This will even get worse with developments to their central cores and down- not adequately meet retailer’s needs. What came application of the EOS overlay throughout the towns thus often stressing a very finite parking about was the Transportation and Parking Man- district next year which allows industrial office situation. The Central Eastside is no exception agement Plan and the second district wide park- uses with much more intensive employment in and I think has become a model of getting in ing management association (Lloyd District was and on industrial buildings and land. Research front of the situation before it becomes unten- first) in the city in 2012-2013 to help monitor in the Central Eastside Industrial District soon able, and options become few and chaos ensues. and set policies to address parking problems and showed that any attempt to apply management needs. Just as important a committee; the Trans- measures to a single “parking district” was not As the Central Eastside experiences unprec- portation Parking Advisory Committee (TPAC) going to work. It was decided that the com- edented growth and development, parking has was formed to implement the plan, monitor its mon way to determine priority parking is to use been of paramount concern to almost everyone, results and “adjust” as needed how best to man- zoning. There are basically two zonings in the especially existing businesses and property own- age the districts parking resources in the face district with different uses and parking needs; ers that have seen their rather liberal ability to of growing and changing demand. One of the industrial (IG1) which has some small retail al- buy parking permits and park on the street has better aspects of this process was the first good lowances, but mainly is occupied by multitude and will continue to get squeezed. This will only data collection on the districts parking resources of service and manufacturing businesses; and an compound and may reach crisis levels as 800 and how they are used which provides a great employment zoning (EX) which allows a whole apartments, as well as new office buildings come baseline to understand the issues and begin set- host of uses including residential, retail, office as on line in the next year or two, many of which ting policies to how best use these resources. well as industrial uses. It was therefore decided have limited parking for its tenants. Give stake- Multiple actions were taken and contemplated to establish two parking zones (Zone G for in- holders in the Central Eastside some major cred- from the start, such as strategic implementa- dustrial zoning and Zone N for the EX zoning) it for seeing this parking crunch approaching tion of parking meters, streamlining the time to manage on street permits differently in each and taking some fairly prescient steps to address periods for non-permit users; better allocation zone to accommodate priority users. The argu- the parking issue several years ago. When deal- of parking permits; and somewhat later, a look ment behind this was that EX zoned businesses ing with rapidly growing parking demand with at zoning as a way to set policy and with the have more retail customer uses that do not need a finite source of parking spaces and options, Southeast Quadrant plan help property owners permits; residents should be restricted in getting you have to understand no one will SOLVE and with excess parking hopefully make those spac- permits to preserve those spaces for employees fully address parking issues. Remember parking es available to others in the district. All which and customers; plus the city is changing policy issues are almost always due to growth, invest- hopefully will result in a better management that will prohibit permit parking in city center ment and development in a given area, which of the parking supply in the Central Eastside. commercial zones, and generally something had last time I looked were good things. You can to be done to bring down the demand for spaces. only hope to manage the problem in order to Now that we are a few years in, it became quick- Initial ideas to eventually, after a grace period, to reduce the negative impacts and find practi- ly apparent that need and requests for parking not allow EX zoned users to obtain permits got a cal mechanisms to distribute parking resources permits are quickly ratcheting up to the point lot of push back, and rightly so by a whole host fairly and in a way to let businesses, residents that it is far oversubscribed compared to the of EX businesses and property owners. So “lots and property owners plan and adjust for and amount of on street spaces and that measures of back and forth” took place among members live with the new paradigm of limited parking. would need to be implemented to restrict that of the Transportation Parking Advisory Com- demand. With firms able to obtain permits mittee and key stakeholders in the district last Discussions about parking and how best to for up to 85% of the full time employees, and year with important changes to the crucial park- meet future demand began back in the less than more firms with a higher count of employees per ing permit system finally being hammered out. stellar economic times of 2010 as there was a square foot moving in, the amount of permits The results are enumerated below: growing understanding that there were park- allocated far exceeded the on street spaces inven-

IMPORTANT NOTICE PARKING PERMIT CHANGES BEGINNING IN MAY, 2016

The Central Eastside Industrial Council (CEIC) has recommended to the Portland Bureau of Transportation (PBOT) changes to the on-street permit parking system.

The changes to the permit system in the Central Eastside Industrial District (CEID) are outlined below and will start with the next permit renewal, May 1, 2016. If you have questions about these changes please contact Peter Stark [email protected]. Grandfathering • Beginning May 1, 2016, Zone N permits may only be renewed for residents, employers and employees that bought permits the previous year. • If a permit is not renewed, the applicant may not apply for a permit at a later time. • Zone N and Zone G permits may be used to park in either permit zone area.

PAGE 22 Nontransferable All permits will remain nontransferable from one permit holder to another. Since the permit is issued to the tenants and not the building owner, the sale of a building will not impact the building tenant from receiving their grandfathered permits as long as the tenant remains at the same address. Attrition • As permit stalls are replaced with time stay or meters following best practices for managing the permit system both Zone N and G permit areas will experience attrition. PBOT will conduct occupancy counts of the on-street system and determine blocks that will shift from permit to time stay or meters. Although no sunset date has been set for either zone it is anticipated there will be substantially reduced parking available for permits over the next five years. The TPAC, PBOT and CEIC will review the permit system annually to determine what actions will be necessary to address parking needs district-wide including sunsetting the permit system. Reduced permit availability • Both Zone G and N will limit permits to 85% FTE in 2016. Future permits issuance may be reduced based on data and best practices for managing the area. • Similar reductions may apply to residents if future code allows for this. Permit fee increase • Increase annual fee to $140 per permit from $70 per permit for 2016-17. • Followed by additional annual fee increases to $210 and $300 for 2017-18 and 2018-19 respectively.

FAQ My company has Zone N permits and we’re Data and survey information from 2015 for relocating to a new building within Zone Zones N and G, indicate we issued 125% What if I don’t have a permit, but I’d like N. Can I still buy permits next year at a permits based on the number of available to buy one in May? new location? permit stalls. Even at 85% we are still ex- ceeding the number of permits compared to If you are in permit Zone N, in order to No. Permits are issued to a business based available stalls. Reducing permit issuance is purchase a permit May 2016 you must have on address. If you are in Zone N and you the first step to balance the permit system. a permit from the previous permit year. move to another location within Zone N Zone G permits don’t have this requirement. any time after May 1, 2016 you will not be I am a resident, not an employee. How will issued another Zone N permit. The same is the 85% FTE be applied to my residence? I currently don’t have a Zone N permit true for residents that move. However, since – may I purchase one before the current Zone G is not part of the “Grandfathering” It does not apply. Permit reduction through permits expire? process if you move from a Zone N to a FTE only applies to employee permits. Zone G location you can be issued a Zone However, similar reductions may apply to Yes, you may purchase one before April 1, G permit. resident permits if future code allows for 2016 at a prorated rate of $35 each or you this. may purchase a permit for next year before I am a tenant in Zone N and my building April 30, 2016 for $140 each. No NEW was sold. Can I still buy permits next year Why have you doubled the permit fee from permits will be issued after April 30, 2016 in if I’m at the same address? $70 to $140 annually? Zone N unless you previously had a Zone N with the same address. Yes. Permits are issued to a businesses and Increasing the permit fee, reducing the residents based on address. If you are in number of permits issued and “Grandfather- I currently have a Zone N permit – what Zone N, at the same address and have a ing” Zone N are all intended to balance the happens if I don’t buy one during the next permit from the previous year; you may demand for permit parking with availability. permit cycle? purchase a Zone N permit. Even at $140 per year the cost is relatively minor compared to a transit pass, or paid If you currently have a Zone N permit, and How many years will Zone N and Zone G private parking. you don’t purchase a permit during the next be available for purchase? permit cycle, you forfeit the ability to pur- Early feedback especially from many smaller chase Zone N permits in the future. Although there is no sunset date for either businesses that received notifications of this zone it is anticipated there will be substan- new plan have been swift and testy. The hot Who can buy a permit? tially reduced parking available for permits under the collar responses is geared to both beyond five years. The TPAC, PBOT and Employees or residents with supporting CEIC will review the permit system an- the aggressive fee increases which many documentation, that work or live in the nually to determine what actions will be think are unwarranted and too quick and is district. necessary to address parking needs district just another cost the city is unduly extract- wide including the possibility of sunsetting ing from local business. Peter Stark, the Will I continue to be able to park in either the permit system. point person has a tough job as no one will zone N or G regardless of the permit I be happy with almost any approach unless hold? In the past I could purchase a permit for parking is free and unrestricted which we every employee, why are you only issuing all know is not an option and create more Yes permits for Zones N and G may park in 85% FTE (Full Time Employees) with the hardship and pissed off people than logically either zone N or G signed permit parking. next permit cycle in May 2016? restricting permits and raising pricing.

PAGE 23 ODOT Blocks Update use part of the puzzle is in place with riences in shepherding key properties Mills and others), but I would rather This has been going on for a few years ingthe downindustrial to, like office it usually overlay does (EOS) on being any through development (think Centennial now and I have covered it several times implemented on the site. Now it is com- trating the process than ODOT going out in previous newsletters in that time tohave market the PDC on thethere site. in Ifthe these mix twoorches agen- frame. There was considerable joy aboutdevelopment pricing deal,with andODOT that that is MONEY.will really cies can come to agreement in the next years ago when ODOT, after many years dictate“We are what having we some can do strong with discussionsthe prop month or two, the idea is to go out to - (decades) and some regular pestering market in some sort of RFQ process in by various public and private entities project manager Geraldene Moyle at the- the fall. I would think every developer in erty” says long time and very patient the city and many from outside would and said that a large three block swatch is trying to get a premium for the 2.1 be very interested in the site which to do something, finally said “UNCLE” acresPDC. What of land that they is codewant for to sellis that and ODOT the freeway would be surplus and would remaining 2 plus acres for parking on. beof propertyfor sale and along development. SE Water and That I-5 was The three parcels based on the coming didmost mention likely will that be there home might to a multi-be some over three years ago and there has story creative office uses. Geraldene property which will allow higher uses other stakeholders in the district to gain as would be anticipated as two govern willEOS translate(industrial into office) potentially overlay a to higher the inputsort of by process the community of engaging on thewhat CEIC they or beenment someagencies really try big to come“fits and together starts” on value than a price for straight industrial want to see on the site so as to include a somewhat complex piece of property.- (IG1) which it is zoned right now. So those concepts in the outreach to the The process has been a bit glacial but right now it is about ODOT wanting a development community and ultimately we are now at a tipping point because value based upon the future with the the major issues have been addressed. would not commit to looking for several price geared more towards the indus developers,who they “pick” or one to developfor the whole the sites. site, She have been solved; the partition plat highertrial zoning use overlay right now. and This PDC couldwanting mean a but most in the know think the prefer hasNamely: been the completed environmental that delineates questions several million dollars in value differ- ence would be more towards more than the amount of land that can be sold ence, which will potentially eat up any - and what ODOT has to retain for future - one can see the greater good and can help in getting the site redeveloped and onemake buyer/developer. this happen as this Hopefully site other every than- veloper could lease for parking; some of PDC’s “cushion” and resources to importantmaintenance easements of I-5, but have a buyer/de been consol- no one hopes will happen. Though the important development sites in the idated; and most importantly the land could potentially quash the deal which closeOMSI’s in campus eastside. is one of the single most - PDC has had their less than stellar expe-

Todd DeNeffe Cascade Commercial Real Estate 2323 N Williams Ave Portland, OR 97227 503-228-0734

[email protected] www.cascadecommercialnw.com