The U.S. Bancorp Tower, a 1.2-million-square-foot monument to capitalist dynamism, stands eerily quiet in downtown Portland. Nearly all of the thousands of office workers who give the building purpose are at home.

On the ground-floor plaza, custodians wearing masks and gloves clean again and again, outnumbering the few office workers striding briskly through the lobby.

Furniture has been removed. Signs urge visitors and tenants to “KEEP CALM AND MOVE ALONG,” lest they create a plume of disease.

For office tenants and property managers in Portland and around the nation, the COVID-19 pandemic has raised fundamental questions about the modern workplace: Should we be together, or apart? If we can work effectively from home, should we? Is there still meaning and value in meeting face to face?

As Oregon, in fits and starts, slowly revives its stunned economy, office tenants are reconsidering the basics. They’re coming to different conclusions and watching their competitors, government authorities and news of the virus’ rise and fall for cues.

It’s an open question of whether the pandemic will subside quickly and the workplace will snap back to what, before March, was considered normal. It’s also unclear whether, like disasters and wars throughout American history, change will be good.

In interviews, property managers, tenants and architects expressed a new and humble sentiment: They don’t know.

“This is unprecedented times,” said John Wix, managing director of Gensler‘s office in Portland.

At the U.S. Bancorp Tower, better known as Big Pink, offices are operating at about 10 percent capacity, Unico Properties‘ representatives said. On a typical weekday before the pandemic, 4,000 to 5,000 workers filled the 42-story building.

“When the tenants are ready to come back, the building will be ready for them,” said Keren Eichen, Unico Properties’ director of real estate services.

Unico, the real estate giant that owns and manages the downtown tower, is preparing for tenants’ returns. The company has placed a hand sanitizer station in the lobby. Elevators are restricted to four people at a time, with their standing places marked on the floor. The parking garage has been reprogrammed for contactless entry. An app will call an elevator, as another measure to avoid touching buttons.

Big Pink entered the pandemic with 94 percent occupancy, and Unico has had no unplanned tenant exits, said Brian Pearce, Unico’s executive vice president.

Clackamas and Washington counties are reopening, and Multnomah County is likely to do so at some point in June, if certain benchmarks can be reached.

As offices prepare to reopen, managers are considering measures to ensure distancing. They include installing physical barriers between desks, staggering employees’ start times and asking only a quarter to half of office workers to return at first.

“The new normal is highly individualized by each business and what they can do to protect people,” said Stuart Colby, a principal at SERA Architects and director of its workplace studio.

It may make more sense to keep office density low, and have some employees continue to work from home, rather than undergo costly tenant improvement projects, some experts said.

“Tenants are not looking to spend a whole bunch of money right now, especially with the economy so poor,” Pearce said. “They’re looking at what they can do for little or no cost.”

In Unico’s conversations with tenants, Pearce said, the “vast majority of tenants said, ‘Look, we’re going to take it slow.’”

In other states, employers have reopened offices slowly. In Unico’s markets that have already reopened, including Salt Lake City, Denver, Nashville, Tennessee, and Austin, Texas, office use has grown gradually to about 50 percent, Pearce said.

“I don’t expect to see a line out the door the day the (Oregon) governor loosens restrictions,” Pearce said.

In early May, CBRE conducted an international survey of office tenants. Of 203 respondents, 59 percent said they would provide masks, but only 28 percent said employees would be required to wear them at all times at work.

Only 20 percent of companies plan to reopen as soon as government restrictions are lifted, according to the CBRE survey. More than twice as many – 42 percent – plan to reopen after their internal standards are met.

Most companies plan a phased reopening, with 72 percent taking that approach, according to CBRE.

Wade Lange, vice president and regional manager of American Assets Trust, said the company is preparing to welcome back in the Lloyd District workers with employers including WeWork, Genentech and PacifiCorp. AAT employees will have their temperature taken when they return to work, he said.

Tenants’ employees will be asked to wear masks.

“We ask that they please wear face masks from their cars or buses up to their suites,” Lange said.

Building owners will need to prepare the physical systems as well. The Portland Water Bureau and Bureau of Development Services issued a bulletin May 1 cautioning that deadly bacteria can grow in stagnant water pipes while buildings are vacant. The agencies advised running fresh water through commercial buildings at least weekly.

Commercial real-estate professionals are watching closely to see whether tenants’ needs change emerging from the pandemic. Office space could face competing imperatives, with the need for social distance prompting desire for more space, but a greater number of employees working from home on some or most days leading to a need for less space.

“It’s also possible once there’s a vaccine that everybody will go back to the way things were,” Pearce said.

Gensler’s Wix said that with more employees working remotely, offices could have more conference rooms and fewer desks.

“We’re seeing the workplace becoming this place where the office possibly is more geared toward the community and cultural activities – the collaborative activities,” he said. “Individuals don’t need to be there to do their work.”

Most office tenants have signed yearslong leases, which has cushioned the commercial real estate market from shock and given tenants and building owners time to adjust. Still, more than $1 billion in transaction volume disappeared because of the pandemic, Jones Lang LaSalle Managing Director Eric Turner said during a recent 91��Ƶ Builder Breakfast event.

The modern office environment did not materialize by accident, but is a highly evolved, specific model that works for many tenants, SERA’s Colby said.

“Business leaders have been making this very conscious choice for housing their workers for decades,” he said. “It seems like unwinding it to deal with one potential resilience model is highly unlikely.”

Colby said he’s cautioning clients not to lose sight of the workplace’s function as an employee recruitment and retention asset.

“Do we really want to go backwards?” he said. “(With) a command and control mindset, you’re going to lose a competitive advantage with the workforce. Maybe not today, but tomorrow.”

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American Assets Trust has filed a proposal to construct two new mid-rise office buildings totaling 370,000 square feet at the Oregon Square property in the Lloyd District.

The early plans submitted to the Portland Bureau of Development Services show the San Diego-based real estate investment trust is looking to move ahead despite economic uncertainty related to the coronavirus pandemic.

A phased approach would be used to develop the buildings, which are being designed by GBD Architects. Construction would take place on Block 90, at 729 N.E. Oregon St., and Block 103, at 827 N.E. Oregon St. The two blocks make up the southern half of Oregon Square, and are currently occupied by two-story office buildings constructed in the 1940s.

The Block 90 building would be five stories, while the Block 103 building would be six. They would be linked by one level of underground parking.

GBD Architects has entered the BDS’ early assistance process for design review on behalf of American Assets Trust. The project team recently held a virtual meeting to introduce the project to the Lloyd District Community Association.

“What we’re hearing in the community right now is there’s still a lot of potential for office, especially large-floor-plate office,” said Wade Lange, an American Assets Trust vice president and regional manager of its Portland properties.

During the first quarter, the Lloyd District commanded average asking rents of $36.69 per square foot, compared to $34.08 across the Portland-metro area; also, Lloyd’s 7 percent vacancy rate was lower than the 12.1 percent rate around the region, according to Jones Lang LaSalle.

Portland has remained a strong market for American Assets Trust, Steve Center, vice president of office properties, said during an April 29 earnings call. The company’s existing buildings in Portland were 100 percent leased, he said.

American Assets Trust is “in the early stages of design development of two new office buildings on the two remaining blocks at Oregon Square, which we will continue to evaluate pending market conditions,” Center said.

The company will not build the structures on speculation, Lange said.

“We’d like to find tenants before we begin any construction,” he said.

The Oregon Square project team has been working to meet in person rather than via video, Lange said.

“It’s harder,” he said. “It’s just a slower process than getting in a room and working through everything.”

The new commercial buildings’ ground floors will be adjustable, Michelle Schulz, a GBD Architects principal, stated in an email.

“That’s likely office in the current market environment, but we are keeping the possibility for all commercial uses at the ground floor to be flexible for the future,” she stated.

Portland design guidelines encourage active ground-floor use, often meaning retail. The project is not yet scheduled on the Portland Design Commission‘s agenda.

While the new buildings are being planned, work is about to begin on a remodel of the northwest building at Oregon Square. The project is in the final stages of permitting, Lange said. Turner Construction is the general contractor.

The renovation of the 33,276-square-property is expected to be delivered in early 2021, Center said.

The other building at Oregon Square, at 830 N.E. Holladay St., on the northeast corner of the parcel, is leased to WeWork.

Closures related to the coronavirus pandemic have hit the Lloyd District hard. The neighborhood relies on big venues for events and shopping, including the Oregon Convention Center and Lloyd Center mall.

“It’s a little concerning that the convention center, the Moda Center, (Veterans Memorial Coliseum) and the mall are very important to the neighborhood, and it looks like those types of venues will be the last thing to reopen because of the coronavirus crisis,” Lange said. “So we’ve got a long road ahead of us.”

American Assets Trust is beginning to consider how to reopen office buildings it owns, said Lange, who expressed confidence the Lloyd District will emerge from the pandemic in a strong position.

“I don’t think long term it will have any impact,” he said.

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Hassalo on Eighth, a superblock development in Lloyd designed by GBD Architects and completed by general contractor Turner Construction in 2015, has received a . The project is the first multi-block development to receive such a rating via U.S. Green Building Council standards that were updated in 2018 as part of LEED version 4.

For Hassalo on Eighth, an asphalt parking lot was transformed into a new community of three mixed-use buildings. These include Velomor, Aster Tower and The Elwood Building, which have a combined total of 657 housing units and approximately 50,000 square feet of retail and commercial space.

The project, for San Diego-based American Assets Trust, was recognized for its community connectivity, resource efficiency, green infrastructure and three buildings that each earned separate LEED platinum ratings.

Some of the updates to the LEED Neighborhood Development category in 2018 include a change to require bicycle facilities (such as parking and showers) to provide connectivity to a bicycle network, as well as higher thresholds for rainwater management on-site.

Green elements of Hassalo on Eighth include a pedestrian path lined with vegetation and water features, vegetated roofs, and rooftop gardens and terraces. Together, they improve air quality and reduce cooling loads.

Also, Hassalo on Eighth is one of the first urban neighborhoods in the U.S. to treat and recycle 100 percent of wastewater generated on-site using a Natural Organic Recycling Machine.

“The architecture and landscape design are intended to create a sense of community that is focused on eco-district strategies,” GBD Architects design principal Kyle Andersen stated in a press release. “The project serves to help diversify the existing commercial real estate, and be a catalyst to other development to help stitch the Lloyd neighborhood into the urban fabric.”

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Rents in Portland have fallen for consecutive months, suggesting new supply is making a dent in meeting the city’s housing needs.

In October, rents here were 0.4 percent lower than a year earlier, and 0.8 percent lower than September, according to Apartment List. The new data indicate rental housing costs have crested after strong increases in recent years.

The median rent was $1,140 for a one-bedroom apartment, and $1,350 for a two-bedroom apartment, according to the rental website. October was the second month in a row rents declined in Portland. The city’s decline was steeper than the nation’s, where rents slipped 0.1 percent.

“Demand is weak, relative to the supply,” said Sam Rodriguez, senior managing director of Mill Creek Residential Trust, a major multifamily developer in Portland. “That’s why you’re seeing this very anemic growth compared to the growth we had before.”

Other data also indicates rents are retreating. At Hassalo on Eighth, a Lloyd District development with 657 apartments, rents were $1,671 as of Sept. 30, down 4 percent from $1,735 a year earlier. (Hassalo on Eighth is owned by American Assets Trust, a publicly traded company).

Managers of some rental properties are offering concessions, particularly in the luxury market. At Yard, for example, prospective renters are being offered a month free and a free gym membership. A month free is being offered for some units at Slate. Up to six weeks free is being offered at NV in the north Pearl District.

But the decrease in rents for luxury units has not trickled down for middle-income renters, said Jamey Duhamel, policy director for city Commissioner Chloe Eudaly.

“It’s softening at the high end,” Duhamel said. “That has not in any way translated to lower rents for folks who are stretched thin, or even the average renter.

“We definitely don’t see any slowdown in the need,” she added.

Nevertheless, supply in certain markets, including the Pearl District and Central Eastside, has surged as major apartment projects have opened.

“As developers, this is what we normally do – we overbuild,” Rodriguez said. “That puts a lid on rents for a while.”

Construction has continued apace. Portland’s crane count stood at 32 in July – more than New York, which had 18, according to Rider Levett Bucknall, a firm that tracks the data. Seattle had the most cranes, with 58.

The city of Portland has responded to a tight rental market with a slew of housing regulations. Inclusionary housing rules took effect Feb. 1, requiring developers of projects with 20 units or more to provide a portion of affordable units, or pay a hefty fee. Portland also instituted relocation assistance, requiring landlords to compensate tenants when issuing no-cause evictions or raising rent by 10 percent or more.

Developers responded to inclusionary housing by rushing to apply for projects before the rules took effect. Some of those projects are now under construction, while others are stalled.

“We’ve got a very, very large pipeline,” Rodriguez said. “I’m not sure how much of that is going to get done. A lot of it is in design review.”

Rodriguez is a member of the Portland Design Commission, which performs design review. Multifamily developers are grappling with inclusionary housing, which dents their revenue, he said.

“Everybody’s trying to figure out inclusionary housing,” he said. “We’re struggling to make deals work.”

Rodriguez predicted rents will again grow in about a year as the current supply is absorbed and few additional apartments get built.

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The team behind the water-management system at Hassalo on Eighth will deliver a presentation on their experience at a national green-building conference.

The system at Hassalo on Eighth is the largest of its type in the United States, said Vanessa Keitges, president and CEO of Columbia Green Technologies. The Portland company is responsible for the development‘s green roofs.

Keitges will join Wade Lange, vice president and regional manager for developer American Assets Trust; Kyle Andersen, principal at GBD Architects; and Thomas Puttman, president and CEO of Puttman Infrastructure Inc. in Portland, to discuss the project. The group will be featured speakers at Greenbuild, the world’s largest green-building conference, on Nov. 7 in Boston.

Hassalo on Eighth, a massive mixed-use development in Portland’s Lloyd District, in September was named the national LEED Homes project of the year by the U.S. Green Building Council. The development features green roofs, stormwater planters, green streets, rainwater harvesting and on-site wastewater recycling.

Developers and planners are looking for ways to mitigate flooding, Keitges said.

“The movement across the country is how can cities and developers manage the flooding, because the flooding is causing all the problems,” she said.

Columbia Green Technologies rooftop systems can absorb 80 percent of the stormwater that hits a rooftop, Keitges said. The systems cost $15 to $20 per square foot to install, she said.

American Assets Trust earned a significant reduction in its system development charges – from an estimated $3 million to just $1.4 million – for not using the city’s wastewater infrastructure, Keitges said.

Columbia Green Technologies recently installed green roofs at Nike’s campus in Washington County, Portland State University’s business school and a downtown hotel, among other locations.

Hassalo on Eighth, completed in 2015, has 657 apartments in three buildings. As of Sept. 30, units were 93 percent leased with an average monthly rent of $1,671, according to a federal securities filing.

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Hassalo on Eighth, a mixed-use project in the Lloyd District that was developed by American Assets Trust, was named the LEED Homes project of the year by the U.S. Green Building Council.

The development, completed in 2015, has 657 apartments in three buildings centered on an outdoor plaza. It was designed by GBD Architects. Turner Construction served as general contractor.

The USGBC, in an announcement Tuesday, said the building features that separated Hassalo on Eighth from the competition include rainwater harvesting and treatment, on-site wastewater treatment and reuse with infiltration, district energy, use of natural light and access to public transportation.

LEED, or Leadership in Energy and Environmental Design, is the most popular green-building certification program in the U.S.

Each of Hassalo on Eighth’s three buildings individually has a LEED platinum rating. The developer is also pursuing platinum status as a neighborhood development, said Wade Lange, American Assets Trust’s vice president and regional manager.

Building to LEED standards was no more expensive than otherwise, Lange said.

“It worked out cost-effective for us to do it,” he said. “But more than that, in Portland LEED platinum makes you competitive in the market. LEED certification of some kind is almost necessary, and with LEED platinum, we wanted to differentiate ourselves in the market.”

Hassalo on Eighth was approximately 90 percent leased with average rents of unit of $1,665 as of June 30, according to a securities filing. American Assets Trust, based in San Diego, is traded publicly.

Hassalo on Eighth was the only project in Oregon to be honored. Portland-based developers Gerding Edlen and Urban Development + Partners were named LEED Homes Power Builders; the designation is given to developers that have consistently produced LEED-rated buildings.

American Assets Trust is working to finalize a design for Oregon Square, a large office development in Northeast Portland.

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The developer of Oregon Square, the four-block mixed-use development in the Lloyd District, is weighing a major change that illustrates how developers consider the best use for their properties.

American Assets Trust last month quietly proposed changing schemes in Oregon Square’s second phase in a design advice request submitted to the city of Portland. Block 103 would become a speculative office building, instead of one with apartments.

Wade Lange, vice president and regional manager at AAT, said office use is just one option the developer is considering.

“We have no direction yet,” he said. “We’re just looking at options.”

The project description submitted to the Bureau of Development Services isn’t binding. It is meant to give the developer and city staff a framework to discuss an upcoming project.

Yet the indication that AAT is considering a change to offices just months after the Design Commission issued approval bolsters an evident trend among developers toward offices and away from multifamily.

It’s not uncommon for developers to change schemes during the development process, but doing so can be costly.

“It’s a big lift,” said Chris Nelson, co-founder of Portland-based developer Capstone Partners. “To make that change, it’s a pretty big change. You’re going to completely rethink how that property is going to be used and utilized.”

Changing the proposed use of a building in development can easily set a project back a year for redesign and a return to the Design Commission for re-approval, Nelson said. Project teams that change schemes also must go back for different financing because the cost and revenue structures change.

Oregon Square was approved by the Design Commission on Oct. 6, 2016. It was the second trip through design review for Oregon Square, this time with a phased approach and more apartments. The development was first approved by the Design Commission in November 2015.

As approved last year, the building on Block 103 was to be a 30-floor mixed-use building with 347 apartments over ground-floor retail space.

The new proposal would do away with the apartments, replacing them with office space, and adding below-grade parking for prospective office tenants.

Lange met with architects from GBD Architects on Monday to discuss the options for Oregon Square’s second phase. Lange said no decisions have been made, and AAT will take a long view toward the likely market dynamics.

“We’re really looking down the road because we’re quite a ways from putting a shovel in the dirt,” he said. “We just want to examine all the different options and arrive at the highest and best use from an investment standpoint.”

The San Diego-based company acquired more than 16 acres in the Lloyd District in 2011. The four-block development is seen as a keystone property for the district.

AAT was earning an average $24.95 per leased square foot on its Lloyd District office properties, according to an April securities filing. The 581,670 square feet was 75.8 percent leased as of March 31.

Lange said the possible switch to office space is not driven by softening in the luxury apartment market.

“No, it really is just kind of keeping all of our options open as we start working through the details,” he said.

AAT’s Lloyd District apartments were performing well as of March 31, when the company most recently reported public investor data. Hassalo on Eighth‘s apartments have largely filled up after opening for leasing last year. The Velomor building’s 177 units were 92.7 percent leased at average monthly base rents of $1,638. The Aster Tower’s 337 units were 91.4 percent leased at $1,626 average rents. And the Elwood building’s 143 units were 94.4 percent leased at $1,497 average rents.

There was no change in scheme for Hassalo on Eighth, which was AAT’s first development in Portland and was completed in 2015.

“It was always going to be residential,” Lange said. “It was what the market needed; it was what Lloyd needed.”

Nelson said it makes sense for AAT to explore office uses for future phases, particularly in the Lloyd District, where an office submarket is already established.

“To switch some portion of the business plan to office seems like the natural thing to do,” he said. “It’s an established area for office and if you see the supply-demand fundamentals changing, it makes sense to make a shift depending on the property and the market.”

The pace of submissions for new multifamily proposals has slowed dramatically since the city of Portland adopted an inclusionary zoning program that went into effect Feb. 1. Oregon Square is not subject to those regulations because it went through the entitlement process before then.

Making multifamily projects profitable has become challenging, Nelson said.

“The economics of ground-up multifamily right now are really difficult,” he said. “They were before the inclusionary zoning regulations, and they were before the relatively new construction excise tax. The economics are really challenging.

“It’s not a rent-growth market anymore – there’s more choice,” he added.

Developers constantly attempt to forecast the likely market for when they develop a given product. In both the office and multifamily sectors, significant new inventory is expected to come to market this year and in 2018.

Office developments by their nature depend on fewer tenants than multifamily ones, making it imperative to score tenants who will take significant space.

“The speculative nature of office has a higher risk,” Nelson said.

Developers in general are trending away from designs that are tied to specific uses. That’s part of the reason for the renewed popularity of historic warehouse structures, which can be used for residential, office, retail or even hospitality purposes, said Noel Johnson, principal at Portland developer Cairn Pacific.

“A good building’s a good building,” he said.

Johnson said Portland’s design review process should be agnostic to how a building is used. More employers are offering the “comforts of home” at work, blurring the tidy definitions of residential and office. Additional trips through the design review process because of a change in use add costs with little benefit, Johnson said.

“It’s an interesting illustration of how our land use and development codes are broken,” he said. “Why is design review concerned with use?”

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The Portland Design Commission narrowly approved Oregon Square on Thursday after commissioners criticized the Lloyd District superblock design as unwelcoming to the public and inadequate to create a lively outdoor space.

The design passed 4-0, with two commissioners abstaining. Chairman David Wark had indicated he could not support the project, but after informally polling other commissioners, changed his vote to “aye.”

Wark said he voted in favor of the project “under protest.” Besides Wark, commissioners Don Vallaster, Julie Livingston and Jessica Molinar also cast “aye” votes; Tad Savinar and Andrew Clarke abstained.

If the Design Commission rejected the design, commissioners faced the prospect of a potential reversal by the City Council on appeal. The commission’s approval means Oregon Square can move forward toward obtaining a building permit.

“I think that was a great decision,” said Ernest Rady, president and chief executive of American Assets Trust, the San Diego-based developer behind Oregon Square. “The alternative is eight old office buildings that you can’t be proud of.”

The design seemed to fall short for commissioners, who said the developer missed an opportunity to create a public space in the center of Oregon Square on par with Pioneer Courthouse Square or Director Park.

Oregon Square could add more than 1,000 multifamily units to Portland’s eastside. The developer’s investment for both phases could total $500 million to $600 million, with half of that spending coming in phase one, Rady said.

Oregon Square is a major move by American Assets Trust to expand its footprint in Portland’s apartment market. Plans for the first phase call for two buildings: on block 90, a 24-story mixed-use podium and tower building with 429 residential units; and on block 91, an 11-floor mixed-use building with 190 residential units.

A second phase, if American Assets Trust moves ahead with it, would bring a 30-story mixed-use building with 347 residential units on block 103 and an 11-story building with 163 residential units on block 102.

The superblock is bounded by Northeast Seventh and Ninth avenues and Holladay and Oregon streets. The project would be near the Lloyd Center and Oregon Convention Center in Portland’s fast-growing, close-in eastside.

Oregon Square was initially approved by the Design Commission in November 2015. But in May, American Assets Trust unveiled revised plans to break Oregon Square into two phases, necessitating a return trip through the city’s design review process. The developer cited concerns about bringing a large number of units to market all at once.

For American Assets Trust, a publicly traded company, the project comes on the heels of Hassalo on Eighth, which brought 657 multifamily units in three Lloyd District buildings. That project has stabilized, and is now 98 percent leased, said Kyle Andersen of GBD Architects.

“We’re definitely amidst a renaissance in the Lloyd District,” Andersen said.

Hassalo on Eighth units were fetching an average leased monthly rent of $1,488 as of June 30, American Assets Trust reported to federal securities regulators. At the time, Hassalo on Eighth units were 86 percent leased.

Design commissioners were sharply critical of American Assets Trust’s plans for Oregon Square’s central plaza. The developer’s revised proposal eliminated plans for a large water feature in the plaza, and proposed installing public art off to one side instead of making it a central element.

“I just find it to be a place without meaning, a place without richness, a place without a reason to go there,” Savinar said.

The project will return for a type II design review before Bureau of Development Services staff, led by planner Staci Monroe. Conditions include installing art during the first phase, softening a corner of one building and building ground-floor “live-work” units facing the plaza to commercial standards.

Wark unsuccessfully pushed for punching a narrow road or lane through the project from Northeast Seventh to Northeast Ninth avenues. He said an east-west lane would help “activate” the square at the center of the project.

“What a lane or street does more than anything, I think, it communicates the impression that it’s public,” Wark said. “I don’t know if this does. It becomes a compound, a cloistered element. Also, what’s the draw?”

Andersen protested that building a road through the site would require dramatic design modifications and could prove unworkable.

Rady, who had sat silently through most of the three-hour hearing, pleaded with commissioners to give American Assets Trust the flexibility to design an economically viable project.

“We want to do what’s right for Portland, but we also have to do what’s right for our shareholders,” Rady said.

American Assets Trust has a market capitalization of $1.85 billion, and investments from major players such as Vanguard. The development team appeared frustrated by the commission’s design criticisms. Before the final vote in favor, the developers were whispering in the audience about appealing to City Council.

At one point, Rady said the development team would do its best to make the plaza an active, attractive public space. Wark replied, “Before you get your building permit, we’re going to help you do that.”

Savinar warned in the future that the Design Commission must do a better job upon initial review of superblock projects.

“These superblock projects are always problematic because there is so much to get your arms around,” he said. “We have to be really careful on the first go-round. We have to really be tough first out of the box.”

Vallaster said he could not enthusiastically support the project. “The project has some strengths, and it has some weaknesses,” he said.

Rady sought to reassure commissioners that the project would be a plus for East Portland. “It’s going to be something that you’ll be proud of,” he said.

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The design team for Oregon Square, a two-phase superblock development in the works due south of Hassalo on Eighth in Northeast Portland, still has a lot of work to do.

City planner Staci Monroe told the Portland Design Commission at a hearing last week that staff did not recommend approval for the project planned on property bounded by Northeast Holladay and Oregon streets and Seventh and Ninth avenues.

Submitted plans for phase 1 of Oregon Square call for two mixed-use buildings on the property’s west side and a portion of a central plaza. An 11-story building would have 189 residential units, ground-floor retail space and a loading bay on the northwest corner of Seventh Avenue. A 24-story building would have 438 residential units, ground-floor retail space and a loading bay on Oregon Street.

Plans for phase 2 call for two mixed-use buildings on the property’s east side, the remainder of the plaza and underground parking for 170 motor vehicles. An 11-story building would have 163 apartments, ground-floor retail space and a loading bay and garage entrance on Ninth Avenue. A 30-story building would have 347 apartments, ground-floor retail space and a loading bay and garage entrance on Ninth Avenue.

A previous iteration of the project was approved by the Design Commission in November 2015. Then the developer, American Assets Trust, earlier this year shifted to a phased approach. Design changes triggered a new review process.

Kyle Andersen, principal at project designer GBD Architects, said he had hoped that the effort to gain the commission’s approval would be further along following “slight changes” to the central courtyard that will unite the entire development.

However, commissioners on Thursday expressed concerns about a lack of active use because residential units had been added to the ground floor and courtyard-facing retail space had been eliminated.

“It’s too homogeneous, and the same attention needs to appear in this scheme as it did in the last scheme,” Commissioner Julie Livingston said. “There needs to be a bit more differentiation in those outdoor rooms.”

Livingston was also concerned about activation of the courtyard. She referred to small waterways in front of residential units on the courtyard as “moats” that would cut down on activity.

“When a pedestrian comes into this property there’s nothing that says to come in,” she said. “So put a road through or get rid of those moats. There are a whole bunch of things going on that have privatized the feeling (of the courtyard).”

Landscape architect Mauricio Villarreal, a member of the design team and a principal at PLACE Studio, said he agreed that the “character and quality” of the plaza needs more development, but added that building a road would be a mistake.

“If you’re expecting us to come in with a road or it’s a no go, that’s a very big deal for us,” he said.

Commissioner Tad Savinar also agreed that there is nothing to invite pedestrians into the plaza and it needs more active use.

“You take the residential away and I might see it differently, but what you have is privatized space,” he said. “You don’t see it that way, but I do.”

Savinar said changes to the courtyard created “an extremely different environment” and seemed to him more like a privatized garden.

Anderson assured commissioners that the courtyard would be active, noting that American Assets Trust will sponsor farmers markets and street fairs in the courtyard as it has for its adjoining property, Hassalo on Eighth.

“It’s a much smaller plaza but has a richness of different uses,” he said. “All the buildings have lobbies that are open on both sides, and you have a public elevator to parking.”

Near the end of the meeting, Livingston said she wouldn’t push for a road through the property if the design team were to return with a different solution.

“If you come back with a really strong resolution on the courtyard and the residential space, you may not need the automobiles,” she said. “What it comes down to is that you will have to solve the design problem very well.”

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American Assets Trust is downshifting as it plans for Oregon Square, the massive superblock development expected to serve as an anchor for the Lloyd District.

The revised plan to split the project into two phases comes amid efforts to attract tenants to American Assets Trust’s most recent multifamily project, Hassalo on Eighth.

Wade Lange, vice president and regional manager for American Assets Trust, confirmed that the developer now prefers to build Oregon Square in two phases.

“We’re looking at that as an awful big piece to add right now,” he said Tuesday. “We’re looking at a phased approach.”

Early assistance from the city of Portland’s Bureau of Development Services has again been requested for the project. Oregon Square previously won approval from the Design Commission in November.

New plans call for a western phase fronting Seventh Avenue with two buildings, one 11 stories and another 24 stories, with an eastern phase to follow.

The first phase would encompass approximately 560 residential units, depending upon the mix of apartment sizes (still under review), and about 14,000 square feet of retail space.

“We’ve asked our architects to keep it as close to the previously approved design (as possible),” Lange said.

American Assets Trust is working with GBD Architects of Portland. GBD’s Kyle Andersen is listed as the applicant.

American Assets Trust still intends to move forward, Lange said, even though more developers are openly worrying that supply of multifamily units is outpacing demand.

“We’re still excited about the potential, particularly in the Lloyd District, close in, eastside,” he said. “The options with transit and such make this an ideal location. Even if the market slows, we’ll have a location and a product that appeals.”

The retail space’s design is still being developed by GBD and American Assets Trust.

“Our meeting with the city is going to be very helpful in that,” Lange said.

A contractor has not yet been selected for Oregon Square.

“That’s a ways down the road,” Lange said.

Hassalo on Eighth was completed in 2015. Lange said the aim is for the 657-unit complex to be 95 percent leased by the end of the year.

“We’re really tickled with where we are right now, but ideally if we could be stabilized on the project before we phase the next phase (at Oregon Square), if you will, that’d be great,” he said.

Overall, 364 units, or 55.4 percent, at Hassalo on Eighth were leased by March 31, according to American Assets Trust’s first-quarter financial results. The Velomor building was the most fully leased at 85.3 percent, up from 81.9 percent at the end of 2015. But Aster Tower was only 44.8 percent leased, up from 29.1 percent, while Elwood was 43.4 percent leased, up from 24.5 percent.

At the same time, rents declined. The average monthly base rent per leased unit fell from $1,584 to $1,500 at Velomor, from $1,447 to $1,353 at Aster Tower and from $1,309 to $1,302 at Elwood.

Portland’s apartment market has been among the hottest in the nation, but there are some signs of cooling at the top. Park Avenue West‘s luxury apartments are only 15 to 20 percent full. And six weeks’ free rent reportedly is being offered to attract new tenants to Block 17 Apartments in the Pearl District.

A pre-application conference for Oregon Square is scheduled for June 14.

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