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It’s hard to say exactly what makes a neighborhood ripe for development.

Planners in Hollywood have been trying to encourage vertical construction for more than a decade. But as infill development has taken off in neighborhoods like Richmond, Belmont and Albina, the northeast Portland community has gone largely untouched.

Now, with a couple projects under its belt and two more on tap, the neighborhood appears to be picking up steam, though whether it’s slated to be Portland’s next hot neighborhood is still open to debate.

“I definitely think so,” said Doug Whyte, executive director of Film Action Oregon, when asked if activity in the Hollywood neighborhood was picking up. “Not only from the density now of the apartment buildings that have gone up, but places like Velo Cult and Popina (Swimwear) and some other places coming in here … It definitely feels like more of a bustling neighborhood that’s on the edge of getting bigger.”

Whyte, whose group runs the Hollywood Theatre, referred to a popular bicycle shop and a bathing suit company on Northeast 42^nd Avenue, about two blocks north of the theater and a stone’s throw from two new apartment buildings totaling 94 units in the neighborhood’s center. Developer Dennis Sackhoff opened those both in the past year, and plans to break ground on another 75 units in the same area early next year.

Additionally, Capstone Partners recently broke ground on its $60 million Grant Park Village project at Northeast 33^rd Avenue and Broadway. That will include 211 apartment units and a New Seasons Market.

Will Levenson, who owns Popina with his wife Pam, said Sackhoff’s apartments have already added another 150 bodies to the area, which has been a boon for his business. The couple relocated their shop closer to the neighborhood center in March because they wanted to be closer to Velo Cult.

“From an aspirational sense, from the way it was zoned, (Hollywood) has the potential to look more like a Pearl District than it does a Mississippi,” Levenson said of the area’s wide layout. “There’s just a cluster of commercially zoned buildings, so it’s really ripe for redevelopments. It has two transit lines, you have the busses … all the fundamentals are in place that say Hollywood should be really successful.”

That’s thanks in part to a planning effort that started in 1997. Debbie Bischoff, senior planner for BPS, and the district manager for the Hollywood and Sandy Plan, said residents at the time wanted more of a vibrant, 24-hour community.

Hollywood, she said, once had a thriving commercial center and was considered the first downtown area outside of downtown Portland. Fred G. Meyer opened his second store there after realizing many of his customers were coming from that neck of the woods. But then in the 1970s, the Lloyd Center mall was built and businesses left.

“At one point in Hollywood there were four grocery stores,” Bischoff said. “At the time of the planning there was zero. There was a real desire to get that back.”

The city changed the zoning to encourage high-density housing in the core. The idea was that with more people, the neighborhood could sustain more businesses. Development bonuses were introduced to promote vertical construction — up to 120 feet in some areas. It’s been slow to catch on, but timing played a big part.

In 2008, a private investor contracted Gerding Edlen to build a 53-unit condominium project called the Beverly, at Northeast 44^th Avenue and Sandy Boulevard. Whole Foods signed on as the anchor tenant. But when the project opened in 2009 the nation was in the midst of a housing crisis. The condos weren’t selling and the building was ultimately repossessed by the bank, converted to apartments and sold to an investment group in Des Moines, Iowa.

Developing multifamily projects in the years leading up to the housing crisis also didn’t make much sense in the Hollywood area.

“There were a lot of renters that were moving out of apartments because they could buy houses,” said David Mullens, a project manager for Sackhoff’s company, Urban Development Group. “We took a lot of people out of rentals and put them into homes. You’ve got to remember what it was like in 2004 and 2005; it was easy to get a mortgage.”

In the past few years, that situation has changed, with the demand for apartments increasing to the point that Portland – and some of its neighborhoods — have among the lowest vacancy rates in the country. The first opportunity for Urban Development Group to enter the multifamily market in Hollywood came in 2011 when it picked up the lot next to the Hollywood Theatre for $425,000. Later that year it grabbed a lot on Northeast 41^st Avenue, across from the street from the Hollywood Library, for $799,000.

Once completed, both projects leased up within months, so the company took advantage of an opportunity this year to buy the vacant lot west of the public library for $1.1 million. The 75 units planned for that site will be predominantly one- and two-bedroom apartments to cater to a more affluent tenant base.

In many ways, that affluent base is already in the Hollywood area, according to Jenelle Isaacson, the owner of Living Room Realty. Her company represented more than 10 percent of the homes sold in the 97212 zip code this year. The median sales price of all homes sold was $500,000, indicating it’s a relatively healthy market; it’s just the commercial sector that needs to catch up, she said.

“I don’t know that I would call that a hot area, because I think commercially there’s a lot of room for it to develop,” Isaacson said. “… I think we’re all looking at an old story that’s getting a new narrative. It certainly has the economic and housing stock to support a vibrant business district.”

One of the newer businesses in Hollywood is Kim Boyce’s Bakeshop at 5351 Northeast Sandy Boulevard. She and her husband moved to Portland from Los Angeles in 2010 and opened the shop a year later. The Bakeshop is somewhat representative of other businesses in Hollywood in that Boyce didn’t choose its location for its visibility, but rather its convenience.

“We just couldn’t afford it on more popular streets like Alberta,” Boyce said. “I wanted to remain a bakery, and I didn’t want to become a café with coffee and food service. In order to do that we had to really pay attention to how much rent we were paying.

“It was (also) close to where we were living, and I can walk to work. That was part of the reason we moved to Portland … I really wanted a small community, a school I could walk to and being able to walk to work is amazing.”

Mike De Kalb, the owner of Laurelwood Public House & Brewery, and Popina’s Levenson said they also chose their business locations in part because they were close to their homes. The name “Laurelwood” is actually a merger of “Hollywood” and “Laurelhurst”.

Boyce said business has been steady, and foot traffic along the street seems to have picked up in recent months. Revenue for the Hollywood Theatre has increased 50 percent in the past two years, and there’s a project under way to replace the theater’s aging marquee.

Wayne Stoll, the owner of Century Associates LLC, has also noticed the new activity. He grew up in the neighborhood, and his company owns several apartment, office and retail properties in Hollywood. Stoll says he isn’t convinced the increased activity means Hollywood has been “discovered,” but it’s certainly encouraging.

“Businesses like that have been moving in, and now the streets are full of people that are working, driving, riding their bikes,” he said. “It’s just amazing to see the difference in activity and traffic.”