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Seattle-based First Western Development Services searched the Portland market far and wide on behalf of a client for about a year before settling on the Industrial Home building.

“This retailer looked at (Northwest) 23rd (Avenue) and the Pearl District, and feels the eastside industrial area, with the changes that are happening there, is really where they want to be,” said Scott Shanks, a partner at First Western. “We’re very optimistic that this will be a catalyst.”

First Western recently purchased the 26,000-square-foot Industrial Home building, at 200 S.E. Martin Luther King Jr. Blvd, from Venerable Properties; an approximately $3.5 million renovation is planned to suit an unnamed outdoor/active lifestyle retail tenant. More retailers could follow suit in the longtime industrial area that has become a creative office hot spot.

Shanks said the retail tenant plans to occupy the Industrial Home building’s first and second floors; the third will be converted into creative offices. He’s already talking to prospective tenants, and said there is a good chance that a restaurant will move in. Shanks is seeking a broker to represent the unfilled space.

“This retailer has the ability to pull in other retailers as well,” he said. “They like to kind of co-locate with other retailers, and they’re actually in the process of talking to another retailer that would come into this project as well.”

The 120-year-old building was constructed as a hay and feed facility. It was later converted by the Salvation Army into a shelter for unemployed men – hence, it received the name “Industrial Home.”

Shanks said the plan is to preserve the building’s architectural character. He recently received a letter from the Oregon Parks and Recreation Department confirming the building’s inclusion in the Grand Avenue Historic District, and said the team would soon apply to the National Register of Historic Places.

Redevelopment almost didn’t happen. In 2011, Venerable Properties purchased it with plans for a $7 million renovation. When former president Art DeMuro died in 2012, those plans fell apart and Venerable put the property up for sale.

Many of the building’s openings have been bricked up and painted over. Eric Wilcox, an associate at FFA Architecture and Interiors Inc., the project’s architect, said the renovation will restore those openings and recreate the period canopies that once donned the facade. Work also will include a substantial seismic upgrade, new stairwells and elevators, and an upgraded mechanical, electrical and plumbing system.

FAA originally contracted with Venerable for its renovation, but was hired by First Western when it revived the project. DeMuro is missed, Wilcox said.

“He was a real valuable member of the community that we lost,” he said. “That was painful. That was a bit of a challenge – losing him and regrouping after that … So we’re looking forward to finishing it … Right now it’s kind of boarded up and painted over, and we have to chase the street people out on occasion, but it will be a beautiful building when it’s done.”

The Industrial Home building is zoned for retail use, but much of the surrounding property in the Central Eastside Industrial District is zoned for industrial use. Developers, foreseeing higher and better uses, are capitalizing. Numerous projects are on tap near the Burnside Bridge’s east end – including a 21-story proposal with 276 residential units – but kitty-corner to Industrial Home another developer is planning a 12-story building with more than 300 units. That property is zoned for general industrial use in a central employment area, which means residential components are allowed but it’s not intended to predominate development in the area, according to city code.

Peter Dunn, a partner at Capital Pacific, which brokered the sale of Industrial Home to First Western, said those kinds of projects are slowly changing the area’s makeup. He added, however, that significant change won’t happen without a city-led discussion about the area’s zoning. Portland has a well-documented shortage of industrial land; nevertheless, industrial gentrification remains a concern for longtime businesses in the Central Eastside Industrial District as smaller office users and residents increasingly move in.

“I think it could be an awesome part of Portland, I really do,” Dunn said. “But we’ll see. With this latest retail deal it’s just another example of the demand and the opportunity that presents itself down there.”

Officials representing Seattle businesses REI, Feathered Friends and Outdoor Research said they had no information to provide about the identity of the Industrial Home building tenant; also, calls placed to Eddie Bauer were not returned.

The stretch of road along Southeast Martin Luther King Jr. Boulevard already has outdoorsy retailers. Jesse Fairbank, the floor manager for River City Bicycles at 706 S.E. Martin Luther King Jr. Blvd., said business has increased slowly and steadily since it opened in the mid-1990s.

Fairbank attributes much of that to the mainstream adoption of bicycling, and to the extension of light rail through the neighborhood, but he also has seen a lot of streetscape changes. He remembers when Corno’s Market, with its oversized fruit artwork facade, sat across the street. It was demolished to accommodate Portland’s Big Pipe project.

“I certainly think it’s exciting to see this part of the city slowly changing and being reborn in a slightly different light,” he said. “It certainly won’t hurt us to have a few more folks living in the immediate neighborhood.”

First Western officials see a similar opportunity. They plan to apply for a building permit on Friday, and hope to begin construction in mid-January, Shanks said.

“(The retailer) just felt strongly that with what’s going into that east side industrial area that this is the market they wanted to be in,” he said, “and that this is an up-and-coming market.”