91ÊÓƵ

Use of industrial buildings has changed in Portland. Now, a new project might change how those buildings are developed.

Many developers have successfully renovated former warehouses into creative spaces for high-tech startups, small manufacturers and distributors. But in Northwest Portland, Andersen Construction is building a five-story industrial office structure from the ground up.

The 101,550-square-foot “New York” Building, at Northwest York Street and 21st Avenue, will be the first multistory industrial building constructed from the ground up in Portland in 60 years, according to the development team.

“To me, it’s the leading edge of industrial development because it reflects the changes in our economy to more of a service-oriented economy,” said John Bowman, owner of John L. Bowman Real Estate in Portland. He and Todd Collins, a principal broker at Macadam Forbes, are handling leases for spaces in the building.

The New York Building is expected to attract high-tech startups, which in recent years have occupied ex-warehouses. The Oregon Employment Department has forecast that the state’s high-tech industry will grow by 20 percent between 2010 and 2020 – 2 percent more than all other industries.

Amy Vander Vliet, a regional economist for the Oregon Employment Department, said the high-tech industry also tends to build synergy as more companies add to the mix.

“It’s a small industry, but it’s really dynamic and it has been growing, and I don’t see that slowing down,” she said. “I think there’s a compound effect and multiplier effect when you have success in a few firms. It’s an environment that attracts more people.”

One looming challenge, Vander Vliet said, is that companies are struggling to find highly skilled and talented workers locally. Many of those who come to Portland are young, college-educated entrepreneurs who in turn gravitate to funky creative environments – what the New York Building project team hopes to emulate.

Vander Vliet said the rate of self-employment among that Portland demographic grew from 7.9 percent in 2000 to 9 percent in 2010 – the third-highest rate among the nation’s 50 largest metro areas. Additionally, she said the rate of self-employment in Portland overall in 2012 was 7.5 percent – the fifth-highest rate among the nation’s 50 largest metros.

Collins said the New York Building will be similar in scope to the Olympic Mills Commerce Center – a former mill that was renovated in 2005 and now caters to entrepreneurial firms in Southeast Portland. The 172,000-square-foot building is 95 percent occupied; its tenants range from software developers to handmade goods businesses.

“What we’ve seen is that a lot of service-related companies, and/or small entrepreneurial companies, have graduated out of their incubator space and … into their first commercial space,” Collins said. “A lot of companies might be a stationary shop, or someone that does ceramics, or someone that works on repairing items … They want to be close in. They want to be in a place where they can ride their bike and take advantage of not commuting. They like the vibe and the support of these communities.”

The New York Building site is about six blocks north of Con-way Commons, where a New Seasons Market store and a 114-unit apartment building are in the works. Mill Creek Residential Trust‘s Savier Street Flats is nearby, as are numerous multifamily developments planned along Northwest Front Avenue.

The ownership group of the New York Building project – Rosan Inc. – is managed by Stephen Andersen, president of SM Andersen Co., and Bill Eckhardt, chief financial officer at Andersen Construction. The development, entirely speculative, is expected to cost approximately $11.4 million, according to an Andersen Construction official.

In the Portland market, where little development-ready industrial land is available and absorption of existing product is improving – especially in business parks, which accounted for 62 percent of net positive absorption in 2013 – opportunities for speculative development have increased. According to CBRE, PacTrust in 2013 completed two speculative projects in the Sunset Corridor and one in Tualatin. Also, Capstone Partners is constructing the first phase of its 833,360-square-foot PDX Logistics Center near Portland International Airport.

Bowman said another motivator for the multistory development is rising land prices. Historically, industrial land in the area cost just $5 to $7 per square foot. Now it’s as much as $20, so single-story construction is no longer financially feasible.

The design calls for large, glass-faced window openings characteristic of old industrial buildings. The structure will have 20,000-square-foot floor plates that can be divided into spaces as small as 1,000 square feet. Also, 128 surface parking spaces will be included underneath the second floor.

Andersen Construction began the permitting process in September. The New York Building is slated to open in August 2014. Collins said that if the leasing effort goes well, a second building of equal size and scope will follow.