Multifamily units, tallest residential tower in city planned
by: TRIBUNE PHOTO: JONATHAN HOUSE - Christopher Thoms lifts his son Asher onto netting at The Fields park playground. Thoms is a former neighbor whom moved to Tigard, but brings his son back because of the quality of the park.
Developers are working on at least six multifamily projects totaling more than 1,300 units, all north of Lovejoy Street in what’s known as the North Pearl. The new apartments and condos could fill out most of the undeveloped property in the bustling Northwest Portland district, and bring more then 2,000 residents to the central city.
“After the last five years, it sure is nice to see some activity and a couple of cranes,” says Tiffany Sweitzer, president of Hoyt Street Properties, whose company is involved in three of the projects.
The Pearl District continued to attract new residents throughout the Great Recession and the tepid recovery that followed. But new development “stalled out” when the recession hit, especially in the relatively quiet area north of Lovejoy, says Ed McNamara, a former developer who owns two Pearl projects and now works as a policy director for Mayor Charlie Hales.
Now lenders are beginning to open up their checkbooks, taking note of Portland’s low vacancy rate and high demand in the Pearl District. More tenants and condo shoppers are expected as Portland’s software and related technology sector continues to surge.
“The demand is there for it, so they’re trying to play catch up to get demand met,” says Bob Ball, who is building the 177-unit Parker apartments, the first multifamily project in the Pearl of that size since the recession.
Ball says he lucked out by selling his last project, The Wyatt, for $111.5 million in 2008, before the stock and financial markets plunged.
“So I was in a very good position to be out of the marketplace before the crash,” Ball says. When he noticed unsold condos kept selling and apartment vacancies were filling up, he bought land between Northwest 12th and 13th and between Pettygrove and Quimby, and broke ground on the Parker in December 2012.
Hoyt Street Properties, the most prolific developer in the Pearl, wasn’t so fortunate. It started building its 177-unit Encore condos right before the recession hit.
“We were underway so there was no going back,” Sweitzer says. But the company decided not to slash prices, convert the condos to apartments or seek to sell out at a loss. “We stuck it out in the building, and it was painful,” Sweitzer says.
It didn’t help when the city delayed construction of The Fields Park, a family-friendly amenity expected to lure condo buyers and tenants north of Lovejoy.
The first wave
Hoyt Street had sold all the condos at its Metropolitan project within a month after completion in 2007, but it took more than four years to sell most of the units at Encore, Sweitzer says. That left the company gun-shy about proceeding with developments on its still sizable vacant land holdings in the Pearl.
But now there are only three units left at the Encore, and the completion of The Fields Park has turned the vicinity into an attractive residential area.
Sweitzer and two partners are now preparing the foundation for a still-unnamed 280-unit apartment project across the street from The Fields, between Northwest 11th and 12th avenues and Overton and Pettygrove streets.
Hoyt Street is selling another parcel in the area to Bridge Housing, which is building the 155-unit low-income Abigail apartments between 12th and 13th and Pettygrove and Savier.
And Hoyt hopes to start construction in July on the $108 million, 150-unit Park Central condos sandwiched between The Fields and Tanner Springs parks. At 28 stories, it figures to be Portland’s tallest purely residential tower, Sweitzer says. “You’ve got five acres of parks right outside your door,” she says of the project.
It’s also another sign that Portland’s pummeled central city condo market is on the mend.
Downtown Portland, including the Pearl and Northwest Portland, has a 2.8 percent vacancy rate, according to the fall 2013 issue of The Apartment Report by Multifamily NW.
The Barry Apartment Report projects 10,000 to 14,000 new apartment units in the Portland metro area this year and next — half of them in Multnomah County.
The first wave of projects coming out of the recession were mostly smaller, but now there’s a new wave of of larger projects, according to the report, put out by Barry & Associates apartment appraisers.
The high rents fetched in the Pearl, combined with demographic trends showing a continuing influx of people looking for more urban residential settings, has brought some out-of-town developers to the market, says Patrick Barry, appraiser and part of the father-and-son duo that puts out the Barry report.
That includes Mill Creek Residential of Dallas, Texas, which is building a 280-unit apartment in the Pearl now in design review.
Unico, a Seattle builder, is working on a 26-story, 285-unit apartment project.
Some Pearl projects are fetching upward of $3 a square foot for rent, Barry says. That’s well above the average rent in the downtown and Northwest markets of $1.82 a square foot, according to The Apartment Report.
The North Pearl also happens to have the best land for apartment projects in the area right now, Ball says.
But like all past booms, there’s a question if the market can handle such a rapid development of new apartments in such a small area and short time frame.
“My personal thought is it’s going to be a race to get out of the ground and get built,” Barry says.
The North Pearl isn’t the only close-in neighborhood where developers are planning big new apartments. Barry’s company is tracking 14 large multifamily projects under construction or planned in the downtown and Northwest areas, including those in the North Pearl. If all were built, that would add more than 2,500 new units to the central city market.
The new residents and other amenities in the North Pearl are likely to spawn an increase in retail developments and other projects in that area, analysts say.
Construction is underway on a new Marriott Residence Inn on 1150 N.W. Ninth Ave., and Walltopia, a large rock-climbing gym and fitness center on Northwest Pettygrove Street between 14th and 15th avenues.
The prospect of all these developments in the North Pearl leads some to foresee a full buildout of the area first envisioned in the 1990s, when it was largely little-used rail yards.
“I think it’s just going to finish it out,” McNamara says. In about three years, he predicts, the area will go from about 10 vacant acres to only one or two.
McNamara says the buildout of the Pearl could shift multifamily development west to the Conway redevelopment site in Northwest Portland.
Sweitzer also sees ample redevelopment opportunities among the warehouses between 12th Avenue and the I-405 freeway.
Hales is urging the Portland Development Commission to shift its attention from the Pearl District to the Old Town/Chinatown areas to the south, which are part of the same urban renewal area.
PDC also has some unfinished business in connecting the Pearl to the waterfront, including redevelopment of the Centennial Mills riverfront site, says Lisa Abuaf, PDC’s central city manager.