Portland developer Walter Bowen and his company, Bowen Property Management  Co., have sued a former executive, claiming Barclay Grayson failed to pay subcontractors on the Block 216 Ritz-Carlton tower and wrongly signed Bowen’s name to documents.

The suit, filed Aug. 15, is the latest fallout from the construction of the luxury 35-story tower in downtown Portland.

Grayson served as senior vice president and principal broker for Bowen Property Management and its affiliates from August 2003 to July 2025, when he was terminated, according to the lawsuit.

Bowen, age 83, alleges that Grayson used Bowen’s signature stamp to sign personal guarantees without Bowen’s permission. The lawsuit states Bowen, given his advanced age, is a “vulnerable person” under state law.

Grayson’s lawyer rejected the accusations. “We strongly deny the allegations,” said Thomas R. Rask III, an attorney with Kell Alterman & Runstein LLP.

The lawsuit, filed in Multnomah County Circuit Court, also centers on a dispute involving a penthouse condo at the Ritz-Carlton. Grayson agreed to purchase the penthouse and two parking spaces for $3.2 million, according to the complaint. The sale agreement also provides for Grayson to have an improvement allowance of $1.13 million, or $350 per square foot.

Bowen alleges Grayson ordered construction on the condo unit before he had closed on it, and that Grayson intended to flip it rather than use it as his primary residence. Bowen also charges that his company, BDC Construction, was never compensated for the condo improvements, which totaled “at least” $3 million, according to the lawsuit.

At least one subcontractor has filed for arbitration against BDC Construction, claiming it was never paid, according to the complaint.

The lawsuit, which was first reported by The Oregonian/OregonLive, also charges that Grayson used some of the improvements allowance on personal spending, including a wedding ring.

The legal tangle adds to a heap of trouble for Bowen’s landmark mixed-use tower. Lender Ready Capital Corp. of New York took possession of the property in July. Construction on the project began before the pandemic rocked commercial real estate, and demand for office and condo units in the tower has been modest.

Bowen is represented by Stoll Stoll Berne Lokting & Shlachter P.C.

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Two businesses have signed leases for office space in the 35-story Block 216 mixed-use tower, BPM Real Estate Group announced on Thursday.

Davis Wright Tremaine LLP, a national law firm with a century-long presence in Portland, has signed on as the anchor tenant by agreeing to terms for slightly more than 19,100 square feet on the seventh floor. San Francisco-based private equity firm Banneker Partners has leased 4,545 square feet of space on the fourth floor.

Davis Wright Tremaine was advised by JLL‘s Portland office and by Century Pacific in Seattle. Banneker Partners was represented by Kevin Joshi of Kidder Matthews. JLL is the leasing agent for the office space in Block 216.

The building offers office space on floors three through seven. Floors five and six can be configured as contiguous space for companies seeking up to 67,256 square feet. The fourth floor is a multi-tenant floor for smaller footprint needs.

The nearly complete Block 216, now the fourth-tallest building in Portland, will open the city’s first five-star hotel, The Ritz-Carlton, in August. It features 251 guest rooms and world-class dining, a spa, a pool, a ballroom, meeting rooms and fitness facilities.

Available for sale are 132 Ritz-Carlton luxury homes on floors 21 through 35. Amenities include an exclusive owner’s lounge on the eighth floor, an infinity pool and fitness facility on the 19th floor, and secured underground parking with access to valet service.

All ground-floor retail space in the building has been leased. A food hall called The Flock, set to open in the fall, will feature Queen Mama’s Kitchen, Prime Tap House, Kim Jong Grillin, Artly Coffee, and others. The other retail space will be occupied by Packouz Jewelers.

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O’Bryant Square has languished for nearly four years, as the city of Portland has struggled to devise a workable, funded plan to redevelop the half-block plaza in downtown.

Now the city has put forward a proposal to redevelop the square that would rely in part on a $5 million federal grant. The city would contribute an additional $4.44 million to revitalize the park space between Southwest Park and Ninth avenues, and Washington and Harvey Milk streets.

The Portland Office of Management and Finance submitted a grant application to the U.S. Economic Development Administration (EDA) on Jan. 28, requesting $5 million in funding from the American Rescue Plan Act. The plan was forged by three city bureaus: Parks and Recreation, Transportation, and Planning and Sustainability.

The city would use the funding, if awarded, to demolish the structurally unsound 21,000-square-foot parking garage. Public engagement, design and construction to rebuild the half-acre park would follow, according to a copy of the , which was obtained through a public records request.

The $9.44 million project budget also calls for construction of Green Loop street improvements in the area; the Green Loop is set to connect to the Ankeny West food cart pod a couple of blocks north of O’Bryant Square. Portions of the Green Loop would wrap around the square on Southwest Ninth Avenue and on Southwest Harvey Milk Street, providing pedestrian and bicycle routes as well as public space.

The city also wants to use some of the federal funding to improve and make permanent Pride Plaza – an LGBTQ-friendly area in the West End. Pride Plaza sprang up during closures resulting from the COVID-19 pandemic. Portions of Southwest Harvey Milk Street were closed to vehicle traffic as the pandemic took hold in 2020, and nearby businesses erected outdoor seating.

City officials abruptly fenced off O’Bryant Square on March 5, 2018, citing structural deficiencies related to the underground SmartPark garage. The public plaza has since continued to deteriorate. It’s increasingly incongruous as more than a billion dollars in new development rises nearby, including the $600 million, 35-story Ritz-Carlton tower under construction diagonally across Washington Street, and the 25-story Eleven West building two blocks west.

Downtown business interests are eager to see the city move forward after years of inter-bureau wrangling and inaction.

“Obviously, O’Bryant Square itself, it’s very important that gets reopened,” said Matthew Goodman, vice president of Downtown Development Group, the developer of Eleven West. “It’s been far too long.”

Walt Bowen, CEO of BPM Real Estate, the developer of the Ritz-Carlton tower on Block 216, declined to answer questions. A spokesman, Pat Walsh, stated in an email: “A new park will greatly benefit the Green Loop.”

Development of O’Bryant Square would leave residual floor-area-ratio development rights that could be sold to a private developer, according to the city’s application. The city would dedicate any revenue from the sale of FAR to the project’s matching funds. The city estimates the project would create 205 jobs and help retain 84 jobs.

The grant process is competitive, an EDA spokesman said. Portland’s application will be evaluated by an investment review committee, and if successful, will advance to the agency’s assistant secretary for final approval.

Portland’s Hennebery Eddy Architects has done pro-bono design work to show what O’Bryant Square could become. The firm’s office in the Pittock Block overlooks the plaza.

“Hennebery Eddy is strongly in favor of moving the demolition and redesign of O’Bryant Square forward as soon as humanly possible,” Tim Eddy, president of the firm, stated in an email. “The square has been in a steady state of decline for more than three decades and is in a critical location in downtown relative to surrounding historic buildings, new development and the Green Loop.”

Design and development would begin this year, with construction scheduled to wrap up in July 2027, according to the grant proposal.

Some observers said they were frustrated by the lengthy delays.

“By the time O’Bryant Square is completely redeveloped, it will have probably been close to a decade at that point,” said Iain MacKenzie, who runs the Next Portland architecture and development blog. “Nonetheless, I think there’s a great vision there.”

Mark Ross, spokesman for Portland Parks and Recreation, stated that the lack of funding for garage demolition has held up the project.

“The proposed schedule reflects the complexity of the project and the remaining due diligence, design, resource development, engineering and engagement work required to support construction,” Ross stated. “Once funded, PP&R will work with city partners to expedite project delivery.”

Commissioner Carmen Rubio has allocated $3 million in parks system development charges to expand capacity at O’Bryant Square.

Portland should carefully consider engaging a landscape architect to turn the temporary improvements at Pride Plaza into a lasting public space, MacKenzie said.

“We very rarely do very high-quality public realm projects in Portland,” he said. “I’d love to see something that really did redevelop Harvey Milk and make those two, potentially three, blocks really a pedestrian-focused and inviting public realm that people would specifically go to, to visit.”

Food-cart advocate Keith Jones has been working to relocate carts to the area between O’Bryant Square and East Burnside Street. He sees the Green Loop improvements as part of the Cart Blocks concept, formerly known as the Culinary Corridor, connecting the Ankeny West pod to O’Bryant Square. The concept originated when more than 50 food carts were evicted from Block 216 to make way for the tower.

Jones is looking to possibly install shipping containers on Ankeny Street between Southeast Eighth and Park avenues that would host retail businesses. Another idea he’s floated is to station a double-decker bus at Burnside Street with service of coffee in the morning and alcohol at night.

“I’m looking at it as an opportunity to continue to extend resilient outdoor businesses toward O’Bryant Square and connecting it to Ankeny West,” he said.

The block has some flaws. Architects who have studied O’Bryant Square point to dead zones to the north and east: the blank walls of the Union Bank Building and a CenturyLink telecommunications building, and a small parking lot.

“If the grant’s successful, it’s an opportunity to start over with an urban park that has had a difficult, troubled history, and it’s an opportunity to enliven a part of downtown that is extremely challenging,” said Randy Gragg, executive director of the Portland Parks Foundation.

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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.

“It is a very competitive market right now, and tenants are considering all options,” URG CEO Patrick Callahan stated via email. “Our 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.”

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.

“There’s a lot of space coming online,” said Tim Harrison, research manager at JLL in Portland. “Any tenant looking for space is going to have the pick of the bunch. They’re going to have all of the options they need.”

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.

“Investors are pretty reluctant to decrease that face rate,” Harrison said. Nevertheless, he added, “landlords are getting creative where they need to be.”

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.

“I can say with confidence that we’ve hit the trough,” he said. “This will be the sharpest and quickest recession to date in American history.”

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

“The suburbs are healthy,” he said. “I wouldn’t say they’re booming, but they’re healthy, whereas the urban core will not be for at least the next 12 months.”

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. “150,000 square feet of office is not that big of an office building in the grand scheme of things,” 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.

“We’ve had several potential anchor tenants look at the building and would welcome the opportunity to do a deal with any of them,” Callahan stated. “We 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.”

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 “certainly has” had an impact, Harrison said. “Long term, I don’t think it has an effect. Companies are going to keep coming downtown.”

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.

“All the boarded-up windows have hurt the perception of downtown Portland,” he stated. “With the protests abating, it’s time for tenants and property owners to take down the plywood.”

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How about an affordable condo in the same building as a Ritz-Carlton hotel?

The developers of the 35-story being built in downtown Portland have indicated to city officials that they will offer price-restricted units within the $600 million building to meet inclusionary housing requirements. That’s a reversal from earlier plans to instead pay the Portland Housing Bureau a fee in lieu estimated at $7 million to $8 million.

The units are proposed as for-sale condos, not rental apartments. The only previous Portland project to bring to market for-sale condo units with inclusionary housing restrictions was a Habitat for Humanity project, stated Martha Calhoon, a spokeswoman for the Housing Bureau.

BPM Real Estate Group has indicated it will allot 20 percent of the Block 216 units to be affordable at 80 percent of area median income. With 138 units in the massive mixed-use tower, 28 would be designated as affordable, according to the Housing Bureau.

The choice raises the prospect that affordable-housing tenants will not only share a building with Ritz-Carlton hotel guests and office tenants, but also floors with luxury condo buyers. That will make the market-rate condos a tough sell, said Brad Golik, a Luxe Christie’s International Real Estate broker who specializes in luxury condos.

“That really takes away from the lure of the Ritz-Carlton, quite honestly,” he said. “People are buying the exclusivity of it, and allowing affordable housing takes away from that.”

Based on 2020 data, prices would be set at $226,404 for a studio unit, $250,449 for a one-bedroom unit and $318,664 for a two-bedroom unit. Those prices are pegged to annual incomes ranging from $51,600 to $66,320. Any mortgage payments would depend on buyer financing.

That compares to prices for the market-rate units of about $1.6 million for a one-bedroom unit to upwards of $7 million for top-floor penthouses.

Perception-sensitive luxury real-estate buyers may shy away from the building, Golik said.

“Who’s going to pay those prices if they don’t have that exclusivity they expected with the Ritz-Carlton brand?” he said. “I don’t think that’s a win for the people buying it, quite honestly.”

BPM Real Estate Group, led by local developer Walt Bowen, did not respond to messages seeking comment via a representative.

Listing agent Sarita Dua of Keller Williams Realty declined to comment.

Last year, Bowen’s group sent investors some documents forecasting prices of $1,350 to $1,900 per square foot for the condos, The Oregonian reported. But a lot has happened since, and the market and perception of living and working downtown has changed dramatically.

Not only has the deadly coronavirus made sharing floors with others seem unappealing, but the virus and ongoing protests have curtailed retail business and turned downtown streets lifeless, at least temporarily.

“The idea of living or working downtown is very different today than it was before George Floyd,” Cairn Pacific multifamily developer Noel Johnson said, referring to the death of a Minneapolis man that sparked nationwide protests. “And so, in the face of that uncertainty, it makes sense not to incur the extra $8 million paid to the city.”

Sensationalistic media coverage of the sometimes-violent protests in downtown Portland hasn’t helped. One prospective East Coast buyer who was interested in the condos held off while watching the protests unfold on TV, Golik said.

“They’re painting a picture that the city is burning down,” he said. “It’s not that way everywhere in the city, but it’s what he’s seeing, and it’s put a negative feeling on moving to Portland.”

Block 216, which will be one of Portland’s tallest buildings upon completion, attracted blue-chip brands such as Ritz-Carlton and an opportunity zone fund managed by Baker Tilly Capital. Mosaic Real Estate Investors contributed a $460 million, four-year construction loan.

Providing affordable housing on-site also means Bowen’s group will have fewer condos to sell at top-of-market prices during a period of economic uncertainty. If the project team sets aside 20 percent of units as affordable, 110 units would be available for luxury buyers.

Luxury condo buyers face no great rush to snap up a property, Golik said.

“For many of them, it’s a second (or) third home,” he said. “They can be patient. With what’s going in the city, they will probably be much more patient, I would guess.”

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As Portland developer Walt Bowen builds one downtown tower, he’s exiting another.

The office space within the 19-story Broadway Tower has sold to Principal Real Estate Investors for $132.3 million. The price equates to $756 per square foot.

The sale comprises 175,000 square feet of office space on floors nine through 19. The office space was 99 percent leased to tenants including Amazon, Markowitz Herbold, Cable Huston, Chicago Title and Lawyers Title.

The seller was a limited liability company, BDC/Broadway Office, linked to Bowen. His BPM Real Estate Group opened the building in November 2018. BPM is the developer of the Block 216 mixed-use tower now under construction in downtown Portland.

The transaction closed in early March. The purchase does not include the Radisson RED hotel on the first eight floors of Broadway Tower, which is located at 1455 S.W. Broadway, near Portland State University.

The buyer, Principal Real Estate Investors is based in Des Moines, Iowa; it’s a group within Principal Global Investors.

Newmark Knight Frank represented the seller. The sale includes “some of the very highest quality office space that Portland’s seen,” said Nick Kucha, an NKF vice chairman based in Portland.

“There have been very few high-quality modern office towers built in Portland in the last few years,” he said.

Because of that, Broadway Tower attracted high-quality tenants and eager buyers, he said.

Besides Kucha, James Childress (managing director) and Jeff Hodson (director) represented the seller in cooperation with Kevin Shannon (co-head of U.S. capital markets) and James Ikeguchi (senior financial analyst). Principal Real Estate Investors represented itself.

Available office space in the building was being offered at $35 per square foot on a triple-net basis.

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The architects designing the 35-story building for Block 216 have requested a number of changes to their proposal since it was approved by the Portland Design Commission.

The changes would add approximately 6,708 square feet to the building, bringing it to more than 850,000 square feet in total. That will exceed the base and bonus floor-area ratio allowed on the site, requiring the developer to transfer additional floor-area ratio rights, according to the Bureau of Development Services.

Proposed alterations include:

• replacement of two revolving doors into the building from the plaza at the corner of Southwest 10th Avenue and Washington Street with a window system that could fold up during warm weather,
• addition of canopy lighting and exterior lighting at roof terraces on floors three to eight,
• new in-ground lighting on the east elevation, on private property along Southwest Ninth Avenue,
• catenary luminaries and wire attachments over Ninth Avenue,
• reduction in the amount of bird-friendly glazing (the proposed bird-friendly glazing would no longer cover the entire podium, but would meet minimum requirements),
• changes to landscape design and decking on the terrace, and
• a new stair enclosure.

The Design Commission in December 2018. The proposed post-review changes are being evaluated by Bureau of Development Services staff in a Type II review.

“Generally speaking, the only way we’d go back to the Design Commission is if the applicants file another design review application or file appeal of decision,” said Ben Nielsen, a senior city planner at BDS who is evaluating the Block 216 alterations.

Reconsideration by the Design Commission can also be triggered if an applicant appeals a condition of approval, Nielsen added.

Typically, architects and city staff reach agreement on post-approval design changes that never draw public attention. On occasion, however, such changes cause controversy – most notably in 2015-16 when than anticipated. Some observers even likened the building to the Death Star from “Star Wars.”

Block 216’s developer, BPM Management, declined to comment on the requested changes through a representative. Also, a request to interview GBD designers was denied.

The building will occupy a full block in Portland’s West End, and include a Ritz-Carlton hotel, condominiums, office space and retail space. Construction is under way with Howard S. Wright serving as general contractor. BDS on Jan. 31 issued a building permit for the concrete foundation, core, superstructure and below-grade parking structure.

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Work was halted for a couple of hours Tuesday at the Block 216 construction site in downtown Portland after a crew hit a natural gas line, a fire bureau official said.

The gas line was on Southwest Alder Street between Ninth and 10th avenues, next to the Galleria building, Battalion Chief Scott Beyers said.

No injuries were reported.

Crews were attempting to access a vault that contains a valve to shut off the gas, Beyers said. Emergency responders were waiting on keys to access the vault.

The gas line break occurred at about 11 a.m. on Tuesday. Alder and Washington streets were closed to vehicle traffic. None of the nearby buildings were evacuated, Beyers said.

“From everything we can tell, (the gas) is escaping into the atmosphere,” he said. “It’s not migrating as best we can tell.”

Fire and NW Natural officials were monitoring the airborne gas reading in neighboring buildings.

Work resumed around 1 p.m., and streets were reopened.

Construction crews are performing shoring and excavation work for the Block 216 tower, a 35-story building for BPM Real Estate Group. Howard S. Wright, a Balfour Beatty company, is the general contractor.

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A shoring and excavation permit was issued Tuesday for the Block 216 project, allowing work to begin on the 35-story, 460-foot-tall tower in downtown Portland.

Excavators will have to go deep enough to make room for five floors of underground parking.

Block 216 will be the tallest building constructed in Portland since 460-foot-tall Park Avenue West was completed in 2016. The only taller buildings in the city will be the Wells Fargo Center, U.S. Bancorp Tower and KOIN Center.

The $600 million modern concrete and glass tower will have approximately 844,117 square feet of interior space, including Ritz-Carlton hotel rooms and condominiums, and offices. A food hall is planned for the ground floor along Southwest Ninth Avenue, where the Green Loop is expected to materialize eventually.

A spokesman for developer Walt Bowen’s BPM Real Estate Group could not immediately be reached for comment.

The project team hosted a ceremonial ground-breaking event earlier this month.

The full block at Southwest Ninth and 10th avenues and Alder and Washington streets was until June 30 home to Portland’s largest food-cart pod, with more than 50 carts.

The Portland Design Commission approved GBD Architects‘ design in December. The project team also includes general contractor Howard S. Wright, a division of Balfour Beatty; interior designer HKS Architects and landscape architect PLACE. The Goodman family’s Downtown Development Group owns the property, and has agreed to a long-term ground lease.

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Earlier this month, on a temporary stage set up on the Block 216 parking lot for a ground-breaking ceremony, an investment manager pitched to an audience of potential investors and VIPs an opportunity zone fund for the 35-story tower in downtown Portland.

Lenders and investment managers from San Francisco and Philadelphia discussed the $600 million project, the scale of which had attracted national capital. Mayor Ted Wheeler heaped praise upon the project. Meanwhile, a sleek, black Bentley sat parked where only days earlier an Iraqi food cart had been selling $8 shawarma.

An 844,117-square-foot tower with a Ritz-Carlton hotel and condos may not be the type of urban renewal foreseen by advocates of opportunity zone tax breaks, but it’s the type of project attracting investment.

It’s unclear how much of a role the Block 216 opportunity zone fund is playing in the project. Mosaic Real Estate Investors previously announced a $460 million, four-year construction loan. Terms of Ritz-Carlton’s deal have not been disclosed.

Tracey Nguyen, a partner at Baker Tilly Capital in Philadelphia, is managing the Block 216 opportunity zone fund. She referred requests for comment to Pat Walsh, a spokesman for developer Walt Bowen’s BPM Real Estate Group. Walsh declined to comment on the project’s financing.

Nationally, it’s difficult to assess how opportunity zone funds are functioning, who is using them, which zones are attracting registered funds or how much money they’re raising.

Opportunity zone funds are not subject to public disclosure, and there appears to be no comprehensive list or database of registered funds.

Opportunity zone funds stem from a federal tax law enacted in December 2017. The funds provide tax benefits for long-term asset holders. After 10 years, investors don’t have to pay any tax on capital gains realized for a property.

It was pitched as a boon for places passed over by the long economic expansion. Opportunity zones are “designed to spur economic development and job creation in distressed communities,” according to the Treasury Department.

Portland’s opportunity zones drew national interest because they cover much of the city’s most desirable real estate, including portions of downtown, the Pearl District and the inner Central Eastside. Yet, so far, opportunity zone activity appears to be modest.

“It hasn’t been a tsunami of opportunity zone funds, but I continue to see activity there,” said Dan Eller, a tax attorney with Schwabe, Williamson and Wyatt.

Eller said timing has been a deterrent for some clients who had considered opportunity zone funds.

“Some people had transactions that were ongoing that happened to be in opportunity zones, and looked into doing an opportunity zone fund, but just the timing of connecting investors with their project didn’t work, and so the fund didn’t take off,” he said.

Sturgeon Development Partners has raised $8 million for its opportunity zone fund; the firm’s goal is $330 million. The fund is backing construction of a 126-room hotel in downtown Salem. Demolition began at the site on July 15.

“Interest has been very steady,” co-founder Vanessa Sturgeon said.

More Sturgeon Development Partners fund projects lie in the future, she added.

“We expect to leave the fund open for the next four years or so, and continue to take investments on a rolling basis,” she said.

Sturgeon is eyeing Portland’s Central Eastside Industrial District for a second project: a seven-story office building to be constructed with cross-laminated timber. She declined to reveal the property’s precise location.

The Sturgeon Development Partners opportunity zone fund is one of a handful backing local projects. The Goodman family’s Downtown Development Group is working to form single-asset funds for both the Eleven West mixed-use tower at Southwest 11th Avenue and Washington Street, and the PAE Living Building at Southwest Second Avenue and Pine Street, co-President Greg Goodman said.

The Eleven West project will involve an opportunity zone fund in a 50-50 arrangement with a partner, said Goodman, who declined to identify the other investor. Construction of the project, which won Design Commission approval in December 2017, has not begun yet.

Eleven West vested before inclusionary housing rules required developers to provide below-market-rate multifamily units. The project wouldn’t be financially possible today, Goodman said.

“There hasn’t been a new high-rise in downtown Portland in 28 months with inclusionary housing,” he said. “While the opportunity zoning is good, it doesn’t offset the inclusionary zoning on the high-rise. The inclusionary zoning has shut that market down.”

Some investors have shied away from investing in multi-asset opportunity zone funds, fearing a lack of control or oversight compared to single-asset funds. A potential stumbling block is that investors must also be prepared to pay income tax on deferred gain in 2026.

In May, a bipartisan group in Congress introduced companion bills to require data collecting and reporting that was stripped from the original opportunity zone legislation. The bills were referred to the Senate Finance and House Ways and Means committees and have not advanced.

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