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After developing 150 condominium units at The Cosmopolitan on the Park in the Pearl District, Hoyt Street Properties didn’t hesitate before making plans for 148 units on Block 20, also in the Pearl.

The as-yet-unnamed Block 20 project builds on the success of The Cosmopolitan, the first major condo building constructed in Portland since the Great Recession ended.

The Cosmopolitan is nearly sold out, and commanding prices not seen for condos since the previous boom. The units, ranging from 700 to 3,400 square feet, have sold for $700 per square foot on average, Hoyt Street Properties President Tiffany Sweitzer said.

Block 20, meanwhile, went before the Portland Design Commission last week and will return for a second review June 30.

Hoyt Street Properties is developing condos at a time when few others are. Litigation fears and tough lending standards are influencing developers’ decisions.

But the success of The Cosmopolitan, where less than 5 percent of units remain unsold, has raised eyebrows in the industry. Unit sales have demonstrated demand for condos at a time when developers are heavily favoring multifamily rental projects.

鈥淭hey’re to be commended,鈥� Killian Pacific Vice President Noel Johnson said. 鈥淭hey’re achieving pricing when they’re selling condos that are higher than a lot of people thought possible.鈥�

For now, Hoyt Street has the luxury condo market essentially to itself. Others such as Portland Development Group have projects in the pipeline, but nothing like the scale of Hoyt Street’s projects.

Portland may start to see more condo projects, Sweitzer said. After a years-long apartment construction boom in the metro area, selling condos is one way for a developer to carve out a niche.

鈥淲e’re feeling like it’s starting to get saturated with rentals,鈥� she said. 鈥淣ot that Portland’s not strong 鈥� I think it will be for a while 鈥� but I think condos will set us apart.鈥�

At a time when some city officials and housing advocates are lobbying for greater density in Portland’s neighborhoods, the lack of condo development stands out. While many new condos come at luxury price points, some condos can be had for less than comparably sized single-family homes.

鈥淚n theory, you could build a duplex or triplex as condos and sell them, but we’re not seeing a lot of those,鈥� said Mike Westling, who authored a recent City Club of Portland report that called for greater density and more varied housing types. 鈥淚’d like to see more of it.鈥�

Everett Custom Homes is targeting that market. The firm plans to build 15 to 20 workforce-priced condo units this year in close-in neighborhoods of East Portland. It’s also considering building condos on lots off of North Interstate Avenue and North Williams Avenue.

The aim for those condos is for a lower price point that is in high demand. Plans for the condos call for units of approximately 900 to 1,200 square feet, and prices around $300,000.

鈥淭here’s a need for a price point out there,鈥� Everett Custom Homes owner Vic Remmers said. 鈥淲ith all of the fees and the price of land for a single-family home, it’s near impossible to hit a workforce housing price point.鈥�

Remmers said he’s pursuing permits and that his firm intends to break ground on the first condo units in about two months.

Portland’s market for single-family homes is under strong pressure from extremely low inventory. In May, Portland again had the highest price jump (12.3 percent) from May 2015 among major cities tracked by the Standard & Poor’s/Case-Shiller Home Price Index.

More condos could help relieve pressure on the housing market, Johnson said. As buyers trade up to luxury condos, they typically leave behind rentals or homes that are more affordable. But Johnson said he has no plans to build condos because of the threat of litigation and other obstacles.

Bob Ball, owner of Robert Ball Companies, developed during the boom in the early 2000s several condominium projects, including the Avenue Lofts and the Marshall-Wells Lofts in the Pearl District. Now he’s developing multifamily projects, and doesn’t expect that to change.

Combative homeowners associations and overstretched management companies make developing condos unappealing, he said.

鈥淚f you can build and achieve the same profit level for apartments, you’re more likely to do that, because you own it and control it and make sure the building is well-managed,鈥� he said.

Ball is awaiting permits to break ground on 21 Astor, a mixed-use project at Northwest 21st Avenue and Kearney Street. Plans call for 27 multifamily units on top of 4,500 square feet of ground-floor retail space, but no condominiums.

Like many developers, Ball will continue to own 21 Astor after it’s built, and collect a steady stream of rental revenue that condo projects can’t match.

Johnson decried a long line of construction-defects litigation that he and other developers say has hobbled condo construction.

鈥淚t’s more costly to build a condo than normally it would be,鈥� he said. 鈥淎dd to that, it’s just really unpleasant to be sued. At Killian Pacific, our brand is really important to us, and we try to do projects people will really like.鈥�

Johnson said that if Killian Pacific were to develop condos, legal costs would be incorporated into unit prices because of the near-inevitability of litigation. In essence, condo buyers would fund the developer’s legal defense in advance.

鈥淎s a developer, if you have to plan on getting sued whether the suit is justified or not, then you build that future cost of defending yourself into the budget up front, because it’s virtually a known cost,鈥� he said.

There appears to be little prospect of change to the litigation environment, because the Oregon Legislature has stalled legislation that would guard against such lawsuits.

鈥淎nything that looks, smells or tastes like tort reform makes one side of the political aisle nervous,鈥� Oregon Home Builders Association CEO Jon Chandler said, in reference to Democrats who control the Legislature.

It’s unclear if condo litigation reform will stand any better chance when the Legislature reconvenes in February 2017, he said.

鈥淲e need to talk about it because the presence of those claims does tend to skew the market away from condos and towards apartments,鈥� Chandler said. 鈥淭hat may be the way the market is going anyway, but it should not be nudged that way by nonmarket forces.鈥�

Despite the downsides, some developers are beginning to revisit condos as a viable option. Portland Development Group has six condo units under development. The furthest along is a two-unit building at 4511 S.E. Madison St., off of Hawthorne Boulevard. It is the firm’s first condo project.

鈥淢y staff had been coming to me for the last year and saying, 鈥榃hy don’t we develop condos?’ 鈥� Portland Development Group managing partner Mike Hubbell said.

It took a while for Hubbell to be persuaded.

鈥淧art of it was an apprehension: Is there a stigma attached to condos?鈥� he said. 鈥淲e made a decision to jump out and see how it works out for us.鈥�

After green-lighting the first project, Portland Development Group has begun developing two more. The units are planned to be about 2,300 square feet each and cost $650,000 to $750,000.

鈥淪ometimes you have to be willing to take a chance where no one else will,鈥� Hubbell said.

Obtaining financing can be the greatest hurdle for big condo projects. Even for Hoyt Street Properties, securing a loan from Wells Fargo for The Cosmopolitan wasn’t easy.

鈥淲e were able to do that with The Cosmopolitan, not that it wasn’t difficult,鈥� Sweitzer said. 鈥淲e were able to do that because we’d built 12 projects prior and had a track record.鈥�

It also helps to have access to deep pockets. Longtime developer Joe Weston is providing some of the financing for Block 20, Sweitzer said in an email.

鈥淲ithout his financial strength, we would not have been able to develop either project as a condominium,鈥� she said.