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Canvas at Press Blocks, a nine-story building, is bringing 132,500 square feet of office space to market in Portland’s Goose Hollow neighborhood amid rapidly changing economic conditions.

The project from Seattle-based developer and property manager Urban Renaissance Group adds inventory to an urban office market weakened by a glut of supply, the COVID-19 pandemic and widely publicized destructive protests.

鈥淚t is a very competitive market right now, and tenants are considering all options,鈥� URG CEO Patrick Callahan stated via email. 鈥淥ur location will appeal to tenants looking at both urban and suburban locations, with plenty of parking and great transit access. For the right tenant, we’re willing to get creative.鈥�

Canvas is the first of two phases for the Press Blocks. The second will be headlined by the Plaza Building, a 23-story residential tower with 342 units. A smaller, 30,000-square-foot commercial building will have office space, ground-floor retail suites and an outdoor public plaza.

The Press Blocks buildings were planned during the longest economic expansion on record that stretched for more than 10 years following the Great Recession. URG invested heavily in Portland. Other developers were investing, too: More than 1 million square feet of office space is expected to be delivered in Portland this year. Through the third quarter, 869,067 square feet had come online, according to JLL.

鈥淭here’s a lot of space coming online,鈥� said Tim Harrison, research manager at JLL in Portland. 鈥淎ny tenant looking for space is going to have the pick of the bunch. They’re going to have all of the options they need.鈥�

Like other new projects, Canvas at Press Blocks faces economic headwinds that were hardly foreseeable when they broke ground. Total vacancies in Portland’s Central Business District rose to 15.9 percent during the third quarter, and rents fell 0.7 percent to $37.41 per square foot on average, according to JLL. .

in a recent report from PWC and the Economic Lands Institute, placing it significantly below average of the markets studied. Downtown rents have not dived yet, Harrison said. Instead, landlords are getting creative with concessions such as free-rent periods or ample tenant improvement budgets.

鈥淚nvestors are pretty reluctant to decrease that face rate,鈥� Harrison said. Nevertheless, he added, 鈥渓andlords are getting creative where they need to be.鈥�

Jordan Menashe, CEO of Menashe Properties, said the office market is already showing signs of a turnaround, and more tenants are asking about lease extensions. The family firm owns and manages more than 1.5 million square feet in the Portland area.

鈥淚 can say with confidence that we’ve hit the trough,鈥� he said. 鈥淭his will be the sharpest and quickest recession to date in American history.鈥�

As downtown faces a glut of new office projects, the suburbs are seeing an uptick in leasing activity. 鈥淏eaverton is having its time in the limelight for sure,鈥� Harrison said. He said he expects the fortunes of suburban and downtown office space to widen in 2021.

鈥淭he suburbs are healthy,鈥� he said. 鈥淚 wouldn’t say they’re booming, but they’re healthy, whereas the urban core will not be for at least the next 12 months.鈥�

The move to the suburbs upends developers’ strategies during the recent expansion. Conventional wisdom held that young, talented workers preferred to live and work in urban cores close to amenities. That thinking drove projects such as Block 216, Eleven West and 250 Taylor.

Those projects balance office space with other uses. That may benefit Portland’s downtown core during the downturn, as relatively small chunks of office space are more readily absorbed, Harrison said. 鈥�150,000 square feet of office is not that big of an office building in the grand scheme of things,鈥� he said.

Meanwhile, the suburbs have seen little to no speculative office development, resulting in tighter inventories, Harrison said.

Canvas at Press Blocks is part of a burst of development in Goose Hollow, which sits just west of downtown. As in the Pearl District, new higher building heights allowed by the Central City 2035 zoning plan contributed to increasing densification in what had been low-slung neighborhoods.

In addition to Press Blocks, the Providence Park expansion, Wood Partners’ 21-story ART Tower and Greystar Real Estate Partner’s eight-story building at 1715 S.W. Salmon St. have remade the neighborhood.

Canvas at Press Blocks is attracting interest, Callahan stated. Migration Brewing has taken a rooftop taproom. For office tenants, the building offers 19,000-square-foot floor plates.

鈥淲e’ve had several potential anchor tenants look at the building and would welcome the opportunity to do a deal with any of them,鈥� Callahan stated. 鈥淲e have one full floor built out in move-in ready condition and we’re ready to do a deal there, even on a short-term basis. We also have great retail space on the ground floor and are excited about activating the streetscape around Providence Park.鈥�

The new project will also have to deal with changing perceptions of Portland’s urban core. Protests that have often resulted in shattered windows and graffiti have been shown on TV news channels around the world.

The months of protests 鈥渃ertainly has鈥� had an impact, Harrison said. 鈥淟ong term, I don’t think it has an effect. Companies are going to keep coming downtown.鈥�

Callahan is among those who think it’s time for the downtown streetscape to return to a sense of normalcy. He noted that Goose Hollow hasn’t seen the level of protests that the downtown core has had.

鈥淎ll the boarded-up windows have hurt the perception of downtown Portland,鈥� he stated. 鈥淲ith the protests abating, it’s time for tenants and property聽owners to take down the plywood.鈥�