The Past is the Future: The Continued Evolution of the Central Eastside

The mayor is his state of the city unveiled, prematurely apparently, a new moniker for the Central Eastside Industrial Are: Produce Row. The name is supposed to both harken back to the districts past as a hub for vegetable distribution and evoke the future as a place where the economy of tomorrow will sprout and grow. Unfortunately it was launched a bit prematurely and has provoked a backlash from some of the member of the Central Eastside Industrial Council. The rational behind the mayor’s decision was clear: to create a brand for a part of the city that is doing a successful job cultivating the type of small startups that the mayor’s administration is trying to cultivate. There is no doubt the area has evolved past its origins as a place for manufacturing and distribution. The neighborhood is now just as much about creative services and artesian foods.

Central Eastside Industrial District boundaries. Image from CEIC Facebook page.

The development of the neighborhood as an entrepreneurial hub for the city is taking a few more steps forward with the recent announcements of several new projects. The most high profile of this latest crop of development is Stumptown Coffee’s move to consolidate its headquarters and roaster in the Venerable Properties’ MacForce building at 100 S.E. Salmon St. and the adjacent 30,000 square-foot building on SE Main Street. This high profile coffee roaster will be joining other notable food producers including the the collection of artisinal liquor makers at Distillers’ Row, charcuterie pioneers Olympic Provisions and fellow roasters Water Avenue and Coava Coffee roasters.

American Brush Building at 116 NE 6th Avenue. Image from the DJC.

The next project of not is Urban Development Partners plans to rehab the American Brush building at 116 NE 6th Avenue for their new headquarters. If you don’t know UDP they are a small developer that has done some good infill projects around town over the last several years including Move the House Apartments and the Reliable Apartments on Division, both of which were delivered in the depths of the great recession yet seemed to do well. I believe they are also working on another Division Street project at the moment, but more about that in another post. They will be undertaking a full upgrade of the 19,000 square-foot building and using one of its four floors for their office and leasing out the other three.

Salvation Army Industrial Home Building at 200 SE Martin Luther King. Rendering from Venerable Properties.

The last project is Venerable’s plan to spend $7 million rehabilitating the Salvation Army building at 200 SE Martin Luther King.  Working with Fletcher Farr Ayotte Architects and Bremick Construction they plan to turn what is now a rather unremarkable building that does its best to ignore the street into a updated retail and office complex oriented towards creative professionals. The project will add 10,000 square feet of retail and 32,000 square feet of office to the area’s inventory providing a boost to the growing vibrancy.

6th and Couch Apartments. Image from Vallaster Corl Architects.

In addition to the projects above, a six story apartment building designed by Vallaster Corl continues to rise at N.E. 6 th and Couch and Beam should be starting on the rehab of the Convention Plaza Building any day now. Collectively these project just represent a few more step in the neighborhood’s path from downtown’s industrial backyard to its entrepreneurial doorstep. As mentioned in previous post, the gradual recovery of the economy has driven up demand for class B creative space by creative firms, tech startups and light industry such as micro food processors is high and growing. The Central Eastside is a perfect place to fill that need. Business like those can fit into the neighborhood’s existing mix, adding vibrancy while not threatening the presence of industry. The area’s history and industrial character provide an feel that no other part of town has and that many people, myself included, find very appealing. The coming of both streetcar and light rail are going to make the Central Eastside that much more of a hot spot in town, linking it even more tightly with downtown and the residential neighborhood to the east. We can look forward to hearing a lot more from this part of town in the future, especially if anything ever starts to happen at the Burnside Bridgehead site.

Portland’s Low Vacancy Rate Points Towards More Development to Come

Portland Unemployment and Vacancy by Year. From the PSU Center for Real Estate Quarterly-2011

According to an article in Friday’s Oregonian Portland is tied with Minneapolis for the second lowest apartment vacancy in the nation, behind only New York. This data comes from a National Association of Realtors Survey that puts the vacancy in Portland at a shockingly low 2.5%, well below the national average of 4.7%. This is backed up by similar, if slightly differing numbers from other real estate reports from groups such as the PSU Center for Real Estate or Norris, Beggs, and Simpson’s market reports. This is clear to anyone who has looked for an apartment lately as the competition is noticeable. An example of this is the Move the House Apartment in Southeast Portland. Completed in July 2011 by the Urban Development Partners it was fully leased almost immediately while asking Northwest/Pearl rents for its humble Division Street location.

Move The House at 3810 SE Division by Urban Development Partners. Image from UDP website

The Portland unemployment rate has fallen to 8.7%, which while too high is the lowest it has been in three year. The economy both nationally and locally seem to be heading in a positive direction but the area has seen low levels for new apartment construction. According to the Barry Apartment Report permits where issues for only 1,559 units for the year ending in October 2011, up from 1,000 units for the same period a year earlier. For comparison, 4,700 permits were issued per year on average between 2004 and 2009. The Barry report estimates permits wil be issued for 2,000 to 2,500 units next year, substantially more than we have seen since the onset of the great recession, if a lot fewer than before.

This all lead to the prospects of many of the projects we have seen proposed recently actually materializing and being joined by others. More development, especially housing, could help invigorate parts of the city in need of life. Portland as a whole is still relatively un-dense. In 2010 the city had a density of 4,346.8 people/square mile which puts us just ahead of Las Vegas (4,298.6) and well behind such cities as Seattle (7,254.6), Minneapolis (7,084.8) and Los Angeles (8,091.8). This would not be bad in and of itself, but when I look around the city I see numerous neighborhood that could benefit greatly from increased residential density. Areas such as Lloyd Center/Rose Quarter, parts of Downtown, Gateway, and many of the neighborhood commercial strips such as Interstate, East Burnside, Broadway and Sandy could be aided in their revitalization by having more residents. This in addition to part of the city that are on-going development projects such as South Waterfront, the North Pearl and Conway that have yet to be fully built out. In addition, the city has already laid the foundation for long term growth by spending billions on transit and other infrastructure to support more residents and has plans to spend billions more.

Portland Streetcar System Concept Plan. From The City of Portland.

But what about the potential for over-building? The issue was recently raised in the DJC by Creston Homes project manager David Mullens. The article points out that many of the new projects are relatively small and that demand is high. So while the risk always exists, and past real estate practice has been to always over build, the trend now seems sustainable. It is also worth reiterating the current permit trend versus past permit trends discussed above in light of population growth. According to the US Census, from 2000 to 2010 the population of Portland proper grew by 10.3 % or about 54,000 (the equivalent of adding all of Corvalis, Sherwood of Tigard to the city). All of those people need places to live. Presumably the city with its growing national prominence and reputation, west coast location and affordability will continue to experience growth in the next ten years like we have in the previous ten. Barring the unexpected, I don’t see Portland loosing its appeal to migrants any time soon.

The Pied Piper of Portland?

What do you think about the future of development in Portland? Comment with any thoughts about where we have been and where we are going.

Change Comes to the Corner of Sandy and 24th

Tres Shannon’s Portland P Palace. From the website.

Change is coming to the quiet corner of NE Sandy Boulevard and 24th starting with a new concept from Portland’s donut King, Tres Shannon. This will soon be joined by Portland’s developer/rockstar Kevin Cavenaugh’s latest project, the Ocean, and the Glee Apartments from developer Mark Madden and Young Design Studio. This leads me to speculate as to whether this will be enough to start changing people’s perception of Sandy from simple an arterial to drive on to street worthy of driving to.

A recent profile of Tres Shannon in the Willamette Week discussed his new venture, Portland P Palace. In the shell of a former auto service center Tres is creating a fun house of all things P: putt-putt, ping-pong, pool, pizza, perogies, etc. His Voodoo donuts has turned a humble and economical pastry into a thing worthy of a pilgrimage to Portland. I go to school near the original and every day there are people lined up to buy donuts. In a way it can be credited with helping to put Ankeny Alley on Portland’s map. He seems to have a knack for creating excitement and hype going back to the X-Ray Cafe. I expect his latest venture to be nothing less due to the fact that like Voodoo it promises to be truly unique.

The Ocean. Plan from permit application.

Kevin Cavenaugh’s project on the same block, The Ocean, was detailed in a recent article by the DCJ. He is transforming a former auto dealership into space for several micro-restaurants, a bakery and a residence that I believe is for him and his family. The permit application to the city can be found here. In the book, Cartopia: Portland’s Foodcart Revolution, Kevin discusses with the authors the “ocean” of space that exists between conventional restaurants and foodcarts and how that is where he wants to swim.  I am glad to see he is making that vision a reality. In Portland commercial development the concept of micro-retail has not been explored. With the economy what it is and the explosion of food carts it is not surprising that someone is seeking to exploit this niche. He also seems to be doing what many successful place-making developers, such as Adaptive on Williams  Avenue and Project^ in the Black Box Building have done and been very intentional in the selection of tenants. According to eaterpdx.com the project will feature a burger only concept from the people behind Slow Bar, a storefront version of the food cart Pie Spot, and a meat ball based concept from the owner of Tabla on NE 28th. All restaurants worth a special trip to check out.

Glee Apartment. From the permit application.

The other project taking shape is the Glee apartment as covered in the DJC’s Daily Blog. The project is slated for the southwest corner of NE 24th and Glisan. It is a 3 story 32 unit apartment building with one 500 square foot commercial space and no automobile parking. The permit application can be viewed here. The project is designed by Young Design Studio. The developer is Mark Madden, a rather prolific actor in Portland as of late being behind projects in various stages throughout the city including Overton Building (completed) and Freedom Center apartments (under construction) in the Pearl and the new Miss apartment proposed for Mississippi, all by Fosler Architects.

The interesting thing about these project and what makes them worth writing about is that they all seem to share a similar independent spirit and collectively could create a node of activity from which urban life can grow. New destination restaurants, a bar/spectacle and new residents can alter the perception of an area. As we saw on Alberta, Williams and other evolving areas in Portland, all it took was two or three buildings in close proximity being adaptively reused by thoughtful developers and carefully stocked with a good mix tenants to create a place worthy of visiting. From this small node growth can spread in multiple directions creating a larger mass of activity and spurring a virtuous cycle of redevelopment. Sandy, like Interstate should be a great street due to its role as a key connector in the city, linking the central city to many of the neighborhoods in Northeast. Like other areas in the city, inner Sandy has geography as an advantage: it is close to downtown, it is close to numerous thriving neighborhood and areas such as 28th and lower Burnside that have already been experiencing a renaissance. I have also notice a lot of under the radar activity in the industrial zone north of Sandy in the form of warehouses like the Bison Building that once house machine shops and now house media and design firms. All this could add together to create a Sandy that is very different form the one we know today.

What next for Sandy?

UPDATE: Sadly Portland P Palace is not to be due to unanticipated complications. Too bad.

New Ideas From Old Buildings: The Rise of Class B Office Space

Olympic Mills Commerce Center by Beam Development/Works Partnership Architecture

In the new normal in which we find ourselves the old ways of real estate development might not work and new approaches are needed. In the housing market this is seen in the switch from high end ownership housing to mid-range rental housing. This can also be seen in other sectors such as the office space. In the Kidder Mathews 2011 4th Quarter Real Estate Market Review there was an interesting note about the Portland office market:

“Tech companies are booming with venture capital gobbling up any creative space left in the Northwest or close-in Eastside submarkets. Rental rates for well-located Class “B” space can meet or exceed levels obtained by higher quality, less well located Class “A” suites. Creative workspace is highly desirable in close-in Portland, and space is limited.”

This is reiterated in the Portland State University’s Center for Real Estate Quarterly Report:

“Creative and historic office spaces, often the result of industrial renovation, have seen high levels of demand. Characterized by large windows, exposed structures and high ceilings, these creative spaces are seen as more casual, collaborative environments. Industries most prevalent in these spaces are creative class firms in architecture, software development and consulting. Particularly in a time when
Class A space is under pressure in the central business district with little new delivery, creative spaces have become a refuge for some firms. Grubb & Ellis report that some Class B creative spaces have been able to draw higher rents than older Class A space.”

Kidder Mathews’ and PSU’s analysis of the desirability of Class B creative space in inner Portland just confirms what we see going on all around us. Over the last several years I have watched quiet old warehouses transform into hives of economic activity as developer rehab them into creative workspace. This represents the convergence of the new development reality and the new economy. In tough economic times firms do not have the money to lease expensive new class A space and developers cannot get the loans to build it anyway. Rehabs offer an affordable and safe alternative to new construction. New creative economy firms are as a an aesthetic and financial choice opting to locate in relatively affordable space in buildings of character in the inner city instead of newer, draber buildings in the suburbs. This trend seems most prominent on the periphery of downtown in areas such as the Central East Side including north as far as Broadway, Oldtown/Chinatown, the industrial lands north of between the Pearl and NW Nicolai Street (known to some as the Squish.)

This type of redevelopment is perhaps best exemplified by the work of Brad Malsin and his firm, Beam Development in the Central Eastside. Beam has rehabbed several buildings into bustling commerce centers that provide affordable space for a diversity of scrappy firms that don’t need a marble clad lobby and an acre of parking. They are currently working with Works Partnership Architects on converting the 97,000 square foot Convention Plaza near the corner of East Burnside and Martin Luther King Boulevard into yet another affordable commerce center.  The Convention Plaza rehab is supposed to be just the catalytic first project in the new Burnside Bridgehead redevelopment. This development is occurring under a new plan developed by noted Arizona based architect Will Bruder along with Beam Development and Works Partnership Architects that seek to match the scale and grain of the existing neighborhood as well as build on the existing culture rather than supplant it. Other projects in the area in this same vein include the Ford Building rehab on SE Division at 12th by Intrinsic Ventures and the Left Bank Project on North Broadway by Alora Development. In each case a beautiful old building was brought back to life giving it a viable future, affordable space was created for businesses, and life was added to the adjacent street.

Olympic Mills Commerce Center Directory

Closer to Downtown there is a growing collection of young growing software and mobile application firms like Puppet Labs (The General Automotive Building on the North Park Blocks), Urban Airship (Pearl), Jive (The Federal Reserve Building in the West End) and others that are occupying space in rehabbed buildings and warehouses. The city has shown a growing strength in attracting venture capital. As reported in the Oregonian 2010 saw $173 million in V.C. flow into the city only to have that number increase by 25% in 2011 to $238 million. The 2011 number is the highest since 2007 and the second highest since 2001. This capital is fueling hiring by firms and thus necessitating more space. This desire for new creative space downtown has recently lead a team to begin the renovation of the 48,000 square foot Commerce Building at 225 SW Broadway into the newly named Broadway Commons. In a reflection of the new reality it will have such creative economy friendly features as operable windows, exposed ducts, 75 bike parking stalls and showers. Another recent project mentioned in a previous post is the Black Box by Project Development and Skylab Architects in the West End. They did a beautiful remodel of a sad old warehouse into a hub of creative firms (their own) and indie retailing.

Broadway Commerce Building Before and After Rendering. From the DJC

Farther north Brian Libby at Portland Architecture recently wrote about the conversion of an 100,000 square foot old steel warehouse at 2181 NW Nicolai into the home of businesses such as School House Electric, Ristretto Coffee Roasters and Egg press among many. Also in the Squish I have notices several other similar, if less hefty projects quietly repopulating old buildings and enlivening quiet streets. Included among the tenants of a low slung converted warehouse were the headquarters of Keen and Icebreaker, two small outdoor clothing design firms that are key parts of Portlands activewear economic cluster. While not Nike or Addias they are two small stars on Portland’s team.

2181 NW Nicolai. Image from the DJC

In many way this trend is just as much a reflection of Portland’s underlying strengths as it is the larger economy’s weakness. Perhaps the growth of creative businesses is due to all the talent that Portland has managed to attract over the last decade with its nationally lauded quality of life and indie culture. The city is full of smart, inspired people with a strong entrepreneurial drive and a D.I.Y. spirit. This includes people making pickles the old way and people designing the way we will interact online in the future. In the last few years many people have wrote about the rising importance in attracting and retaining the “creative class” – educated young people who will be the ones to build the next economy. People who have expressed this idea clearly include Richard Florida nationally and Joe Cartwright from Impresa Consulting here in town. It has in many ways been an underlying principle of Portland’s vision: create a culture that allows creativity to flourish and we’ll reap the rewards down the road when all the young, educated kids who came for the biking and music decide to start businesses and want to be near that amenities that make this town special.  The adaptive reuse of old warehouses into space for these businesses is not just an outgrowth of the a poor economy that cannot support new class A space, but also a conscious decision on the part of Portland’s new entrepreneurial class on the kind of space they in which they want to work: high ceiling and natural light over drop ceilings and fluorescents, good biking and access to transit over acres of free parking, Bunk Sandwiches over Quiznos.

The redevelopment of old warehouses for new businesses has begun to transform neighborhoods. When I first moved to Portland the only thing in the Central Eastside was Le Bistro Montage and a punk show or two. I just read the other day about the opening of Abonnay, a champagne bar at SE 1st and Washington. It is hard to imagine that working ten years ago. The Olmpic Mill Commerce Center was once a vacant hulk and now is filled with people at all hours and the same can be said about many of these projects. As I walk around the central city I look up and can see so many empty upstairs just crying out to be filled with activity. I think about how the life of the street would change with the addition of those new employees, what business could be supported at the street level, and what a virtuous cycle or neighborhood revitalization projects like this can create.

When will this building get its' chance to shine? Corner of NW 4th and Hoyt.

Workforce Housing is the New Luxury Condo

Milan Apartments. Image courtesy of the Oregonian

According to the OregonianThis friday Civitas Development will break ground on the Milano, a new 60 unit apartment building, at the corner of NE 1st and Multnomah. This is notable for the fact that it is the first new housing in the Lloyd/Rose Quarter area (a part of the city that could definitely benefit from new development of any sort) in quite some time. That is not why I am writing about it. Rather, it is because it is a work force housing project with very little parking. For its 60 units it will have only 12 parking spaces for cars and 50 for bikes. It has smaller units, it is located with good transit access and is aiming at an affordable price point.  Recently there have been a number of projects that have either broken ground or are proposed that could be described the same way. It seems that the in this nether world between recession and full recovery striped down workforce housing is the new luxury condo.

Looking around the city at the development underway and the trend seems clear. In the North Pearl/Squish neighborhood between 14th and 15th on Pettygrove Street Fosler architects‘ Freedom Center 1 (horrible name by the way) is well underway. It might be the most extreme. It is a complex of three 50’x100’ building containing 150 studio apartment. The units will be 300 square feet and no parking is proposed. With such small units it is no surprise that the target market is students and other young people who do not have much money and who use the city as their living room.

Image from Fosler Architects

These two projects are not alone. Creston Homes has a number of project either underway or proposed in the same vein. Most notable they have just broke ground on a project that has generated quite a bit of controversy due to its proximity to the Hollywood Theater. That project is a 47 unit building of one and two bedroom apartments over 3,500 square feet of retail with no parking provided. The architects is the Myhre Group. They are also close to starting another apartment building in the Buckman neighborhood at the corner of SE 20th and Morrison. It is to have  71 small units ranging from 371 to 900 square feet and no on site parking. According to the Hollywood Star News back in the Hollywood neighborhood another project is being proposed at the corner of NE 41st and Tillamook possible also by Creston Homes. The proposal is for a 4 story + basement building with 58 units and no parking. Developer Mark Madden also has a project at NE 24th and Glisan that would fall into this same category. It call for 32 live/work units in a three stroy building with no parking.

Buckman Apartments. Image courtesy Myhre Group/DJC

In articles in both the DJC and the Oregonian people from Creston Homes talk about the niche they are filling for small affordable apartments. The units cater to young people who can afford to/desire to live alone but really can’t pay that much. Location is crucial both in terms of proximity to amenities and transit. They also mention the niche of small affordable infill buildings, mainly of the eastside, that are able to pencil out and seem to be fairly recession proof. They occupy small parcels, they use economical construction systems, the market they are aimed at is broad and deep, and like the Hollywood Apartments they often are small enough to slip through the permitting process without too much trouble.  I imagine that if the current economic malaise continues then we can look forward to a lot more project like these and lot fewer new South Waterfront towers.

My friend in Seattle recently started his own architecture firm and one of their first projects is congregate housing on Capitol Hill. It is 56, 200 to 300 square foor units each with its own bathroom but with kitchens shared by 7 or 8 unts. One developer up there who has been building these projects for a while copy-wrote the term “Apodments” to describe this type of building. He has done a number of project on Capitol Hill and the U District, both neighborhoods with high densities of young people with lots of things to do that do not involve sitting around the house or cooking. They rent for $500 to $600 a month and apparently he cannot build them fast enough due to their popularity. In economically constrained times is this our new reality? Or, regardless of the economy is this housing for the non-domestic and economically constrained people just a niche that needs filling and will be with us regardless of what the economy does? What do you think?

Apodments are our future?