Established firms and gritty startups alike are attracted to office space in a historic, downtown Eugene building renovated recently.

The $11 million project restored some of architect A.E. Doyle’s design from 1927, but the new office spaces within the Broadway Commerce Center intentionally retain a “do-it-yourself” atmosphere.

, the renovated building’s first tenant, invested approximately $1 million to customize 8,500 square feet of the third floor. But other companies that have signed letters of intent may simply add some desks and chairs.

“It’s definitely a new product for Eugene,” said Pete Eggspuehler, head of real estate development for . “People kind of have to get used to it, but when they see it – they love it.”

Brad Malsin, a Beam co-founder and principal, described the occupancy plan as “menu driven” – similar to what the firm did with its renovation of the historic Olympic Mills Commerce Center in Portland into mixed-use, creative office and flex space.

Unlike Olympic Mills, though, the Broadway Commerce Center did not qualify for the National Register of Historic Places because of damage sustained by the building’s skin during previous redevelopments.

“We tried very hard to bring back the original feel, both of the exterior and interior, but the original part of the skin was so invaded and intruded upon that we had to peel it off,” Malsin said. “It still has historic significance, but didn’t qualify for the historic register.”

While designed a renovation that would echo the building’s original appearance, Beam also is encouraging incoming tenants to come in and “put your fingerprints on the space and make it your own,” Malsin said.

Leases start at $1.50 per square foot, but can vary based on the desired finishes. So far, interested parties have chosen a wide range of budgets and improvement projects, according to Malsin.

“You can load it up or dress it down, and we can give you a price tailor-made to your budget,” he said. “Pivot came in and put a huge (tenant improvement) budget in, and other people will come and throw in a desk and computer terminals and almost nothing else.”

Pivot’s design required a year of work from a five-person team. The firm has operated out of its new, open office space for a couple of weeks, and principal-in-charge Toby Barwood said the new space is “basically awesome.”

“We used to be ‘siloed’ into individual spaces with lots of divisions,” he said.

Pivot, which has 22 employees, for 15 years operated from offices in the neighboring Washburne Building, another Beam property.

“Now we’re in one big space and have a much more varied way of collaborating – the communication between project team members is just way superior,” Barwood said.

Pivot’s work contrasts with the plans of future tenant Code Chops, which will create a co-working space for technology-focused freelancers. Code Chops is finalizing a lease in the building, but its spatial plans are comparatively sparse. In addition to approximately 700 square feet of space, Code Chops’ office needs are listed on its website as a coffee machine and “more power strips.”

Beam also is finalizing leases with Rabbit Bistro, Eugene Magazine and reports having letters of intent with other companies that they are not yet willing to name. Approximately 15,000 square feet of space is still available, and Malsin said interest is significant enough that Beam is choosing between parties based on their potential contribution to the building community.

“We’re committed to work with small startups that may be less creditworthy or at an early stage of business development,” Malsin said. “I mean, we still want to see a plan and understand what they’re doing, but we’re much more flexible with getting them in and working with them.”

The Broadway Commerce Center, formerly called the Center Court Building, is one of three major renovation efforts under way in downtown Eugene. Next door, is building a five-story, 50,000-square-foot office building developed by And just one block west, is working on a new housing complex for Lane Community College.

“I’m sure it’s been frustrating to be walking through all of the construction going on,” Eggspuehler said. “But Eugene languished kind of late and we’re happy to see some attention being paid to it. We’re trying to look for our next project downtown – there’s still work to be done and we want to keep going.”

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An apartment complex for sale in Northwest Portland may look like it has seen better days, and it has.

Despite its nicks and scratches, the Historic Fairmount Apartments at 2561 N.W. Upshur St. was once a star attraction. It opened as the Fairmount Hotel for the 1905 Lewis and Clark Centennial Exposition. The asking price for the 41,650-square-foot building is $4.8 million.

While the exposition is not officially considered a world’s fair by the Bureau of International Expositions, it is often described as such. More than 1.6 million visitors came to Portland from around the world during the four-month exposition, and Portland is estimated to have grown from 161,000 to 270,000 residents in the five years after the event.

The property is on the National Register of Historic Places thanks to its owner, preservationist and developer Brad Malsin. He has a portfolio of 10 properties, and most of them are historic. The Fairmount property was one of his first, and he has a large picture of it from 1905 hanging in his office lobby.

Malsin, owner of Beam Development, is selling the property so he can move on to other projects. One, the Burnside Bridgehead development, is set to begin receiving renovations by the beginning of 2012.

The apartment complex has about 80 units – 26 with either one, two or three bedrooms on the first floor, and 54 studios with shared bathrooms on the second floor. The studios start at around $300 per month, a near rock-bottom rent for Northwest Portland.

Because of its historic status, property taxes are frozen at 2000 levels through 2015, with the possibility of an extended tax reduction to 2030.

For details on purchasing the Historic Fairmount Apartments, contact broker Cody Hagerman with Hagerman Frick O’Brien at 503-241-5541 or cody@hfore.com.

Block by Block is a weekly look at commercial real estate around Portland. Send suggestions for properties to BlockxBlock@djcOregon.com.

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Leasing rates at one of East Portland’s landmark office buildings have typically been fairly high. But once in a while, quick turnover will open space for a new tenant.

The Olympic Mills Commerce Center, at 107 S.E. Washington St., has been popular with sustainably-minded tenants since a renovation was completed in 2008. The building’s occupancy is now at 92 percent – impressive, no doubt, but not full.

So brokers representing the building are looking for ideal tenants. Creative tenants – from entrepreneurs and start-ups to computer programmers – fit the bill, said broker Lindsey Chrysler with Elliot Associates.

Olympic Mills is the star of developer Brad Malsin‘s portfolio. Malsin’s company, Beam Development, has established a respectable reputation of preserving old buildings – for instance, converting a warehouse like Olympic Mills into an office building.

Olympic Mills is the largest of Malsin’s developments, with seven stories and more than 133,000 square feet. Spaces totaling 8,759 square feet are available, ranging from 466 to 4,500 square feet. The asking rate is $18 per square foot, modified gross.

The building was constructed in 1920 by the Hurley-Mason Co. It was originally the Olympic Cereal Mill, which helped establish the area as a principal west coast port for flour products.

The mill’s importance is mostly because of two companies that owned it – the Portland Flouring Mill and General Mills. The Portland Flouring Mill, founded in 1883, expanded to the Olympic Mills site in 1914, demolishing existing buildings there and erecting the Olympic Mills building in their place. In 1923, the mill was purchased by Sperry Flour, a subsidiary of General Mills. Products such as Bisquick and Wheaties were produced there.

For details on leasing space at the Olympic Mills Commerce Center, contact Chrysler at 503-972-7209 or lindseychrysler@elliottassociatesinc.com.

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The Portland Development Commission announced today it is seeking bids for the demolition of the former Oregon Mountain Community building on Block 8 in Old Town.

The PDC-owned building sits on the same block as the former Globe Hotel Building, which is the future home of the Oregon Oriental College of Medicine.

The building, located at 1 N.W. Couch St., was most recently home of Oregon Mountain Community, an outdoor retail store, before the company moved to the Hollywood District in 2004. Brad Malsin, principal with Beam Development, said the demolition will allow for the renovation of the Globe Hotel Building and will open the site for future redevelopment.

“We are exploring some options for the site, but it is too early to know exactly what we will do with it,” Malsin said.

SD Deacon, the general contractor on the Globe Hotel Building renovation, is expected to get to work on the building sometime next month.

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“It just wasn’t fun anymore.”

Barry Cain, president of Tualatin-based Gramor Development and one of the many eternal optimists in the industry, lost enthusiasm for his work in the past three years.

It’s a clear indication that business in Portland was as bad as it ever had been … or maybe worse. Even some of the area’s most notable developers were conspicuously absent from the public eye during the recession.

Now, however, many say they’re ready to return to the business of building Portland – although it won’t be business as usual. While most would welcome the return of high rental rates and low vacancies of 2006, they agree that the most recent downturn has taught them the importance of conservativeness and thorough planning.

“It’s a lot easier to juggle the balls and get caught up in the fast pace of the industry when you are going up,” Cain said. “But when things head down it doesn’t take long to remember how important being cautious is.”

A lot of what Gramor did in its first 25 years helped the company navigate this recession, Cain said. But he still gleaned some lessons from this downturn.

“I’ve had it reaffirmed that a good rule to live by is don’t buy the land before you know what you’re going to do with it and you’re ready to use it,” he said.

Cain’s company is beginning work on its biggest project since the recession hit, Progress Ridge TownSquare in Beaverton. In the past, Cain would have moved forward with a project before any anchor tenants were secured. But this time, he decided to wait until he had agreements signed by three anchor tenants and nine additional tenants.

“This industry lost some good developers, and frankly, good people, because they bought land on speculation before the recession,” Cain said.

Art DeMuro, president of Venerable Properties, said he was a fairly conservative borrower even before the financial markets collapsed in the past couple of years.

“The ones that stayed liquid and didn’t over-leverage are the developers that are still here to talk about,” he said. “We compete in a free enterprise system and there is going to be cycles in both directions, so we just don’t want to over-commit to anything.”

DeMuro said he has learned that he has a stake in the success of all of his tenants. Instead of focusing on locking tenants into long-term leases simply to fill spaces, DeMuro plans to conduct his own research to make sure he has the right tenant for the right space in the right part of town.

Developers are generally optimistic that the market is experiencing a turnaround, but they all believe that more job growth is needed before Portland can experience a full recovery.

“The office market and retail market both rely heavily on job growth,” said Mark Edlen, managing principal of Gerding Edlen Development. “So we are going to be really cautious before going ahead with any of those types of projects.”

Instead, Edlen’s company is looking at apartments as a good investment in Portland nowadays. Over the past nine months, the company has leased 265 apartments at the Indigo, where only seven units are still vacant. Another downtown Portland complex, the Cyan, hit 85 percent occupancy during the same time period.

Beam Development Principal Brad Malsin, meanwhile, is looking at building more office space. He thinks projects such as the Convention Plaza Building, part of the Burnside Bridgehead redevelopment site, can convince new businesses to locate in Portland and spur job creation.

“To improve employment in Portland we don’t need more class-A office space; we need as many creative, flexible and cost-effective spaces as possible,” Malsin said. “We need to create employment districts and business districts that bring the creative population in Portland together and let them collaborate.

“This is what we’ve always tried to do, but now we want to be even more selective on what we do. We want everything to fit our brand and fit our strategy.”

Developers said they were glad to still be in business.

“These cycles are part of the industry, but they are still tough to go through,” DeMuro said. “But I think I can speak for most developers in town when I say that just because things are tough, I haven’t lost my faith in the industry, in Portland or the tenants we build for.”

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After other developers said to knock it down, one Portland development company plans to reuse a historic building and spark the long-stalled Burnside Bridgehead project.

The Convention Plaza Building, at 123 N.E. Third Ave., is the subject of a Disposition and Development Agreement between the Portland Development Commission and Beam Development. The building would be the first project to move forward in the five-block redevelopment area in Portland’s central eastside.

“We are still early in the process, but this DDA is really the initiation of phase one,” said Geraldene Moyle, senior project manager with the PDC. “Both Beam and the PDC believe Convention Plaza is ideally suited to be the catalytic project for the Burnside Bridgehead development.”

Beam’s contract with the PDC for providing strategic advice during the Burnside Bridgehead framework process included a clause that gave the company exclusive rights to develop at least 20 percent of the entire project. After deciding during the framework process that the Convention Plaza building should not be demolished, Beam targeted the 97,000-square-foot building for its portion. The Convention Plaza building and the adjacent parking lot, known as Block 68, would account for the 20 percent allotted to Beam.

“Everyone who’s looked at the Burnside Bridgehead project before us has suggested demolishing it,” said Jonathan Malsin, director of operations at Beam. “So the first thing we did in the framework process was a reuse analysis, because we wanted to see if this thing was worth restoring.

“In evaluating our options, and understanding the current state of financing, we saw potential and really didn’t want to get rid of it.”

Beam’s early plan for the building, which was constructed as a warehouse in 1924, is to house office space for creative industries, according to firm principal Brad Malsin. Ideal businesses, he said, would be involved in clean technology, software design or architecture.

“We have a waiting market for our other buildings on the eastside, so this could help accommodate those needs,” he said. The Olympic Mills Commerce Center is 98 percent occupied, while the Water Avenue and Eastbank commerce centers are both fully occupied. All three are listed on the National Register of Historic Places, and Beam plans to pursue the same designation for the Convention Plaza building.

“We really like rehabilitating buildings because it gives the space more character and a more authentic feel,” Jonathan Malsin said. These types of spaces are ideal for businesses in the creative industry, but also businesses in Portland as a whole, he said.

Brad Malsin added that the building’s exterior would be restored to its original look, but the interior would have a more contemporary feel.

Beam is presently studying the building’s structural, mechanical and historical characteristics. The developer would prefer to avoid performing any seismic work on the building, but it has planned for the possibility.

“Depending on the route we decide to take with occupancy, parking and the ground-level spaces, there is a chance that some seismic work might have to be done,” Jonathan Malsin said. The firm has concluded that any necessary seismic work could be performed without damaging the building, he added.

Depending on the structural work that needs to be done, and what comes out of the DDA, Jonathan Malsin said the project could have financing secured and be ready for construction as early as the end of the year.

Through the DDA, Beam will purchase the building – appraised in 2003 at $8 million – from the PDC. Beam will look to supplement private financing with historic tax credits and new market tax credits.

Though exclusive negotiations of the DDA call for Beam to develop the Convention Plaza building, Moyle said, the rest of the developable blocks within the Burnside Bridgehead properties are fair game, she said.

The PDC on Wednesday issued a request for information from firms interested in working on any of the other developable blocks. These include portions of blocks 67, 68, 69, 75 and 76.

“We view this DDA as a great sign for the Burnside Bridgehead and the entire central eastside,” Moyle said. “It’s really exciting that we are moving ahead with this long project even during the current economic conditions.”

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Art DeMuro remembers hitting the point of no return in the redevelopment of the White Stag Block in Portland.

After boasting for months to University of Oregon higher-ups that the renovation of the historic block would make the perfect home for the university’s architecture school, the president of Venerable Properties walked into a crowded conference room one morning. Architects and UO staff were all nodding in agreement over DeMuro’s plan to turn three ailing industrial buildings from the late 19^th century into a modern educational facility.

And that’s when DeMuro realized that he and the project were linked, for better or worse, until the end.

“There’s an old saying about the dog that chases the car,” Demuro said. “What will he do when he finally catches it? With older buildings, you chase a vision of what they might become with all of your might. Then you have a moment where you think, ‘Oh my God. Now I actually have to do what I said I was going to do.'”

For developers like DeMuro, Brad Malsin, and Mark Edlen, the opportunity to pluck an older building from obscurity and bring it into the modern day is too good to pass up. With little promise of profit, and little knowledge of what they’ll find in the walls of these older structures, Malsin said, the desire to redevelop starts with a connection.

The art of listening

Whether it’s an interesting location, a rich history or architectural significance, Malsin, president of Beam Development, doesn’t undergo the work it takes to renovate an older building, like his Olympic Mills office development in the Central Eastside, unless it speaks to him.

Once that connection is made, a process begins for Malsin that borders on obsession. His most intensive project, he said, was the Fairmount Apartments at Northwest 26^th Avenue and Vaughn Street. Constructed as a temporary hotel for the Lewis and Clark Exposition in 1904, the building wasn’t meant to survive beyond the exposition.

By the time the building caught Malsin’s eye in 1999, it was in such poor condition that the city was planning on tearing it down. Malsin, however, was hooked on saving the building, even if it meant going to extremes. He incurred the expense of having the structure lifted so new foundations could be poured in order to bring the building up to current city seismic codes. Today, the building’s apartments operate as affordable housing.

“You fall in love with the building first and deal with the challenges to get it to maturity,” Malsin said. “It’s just like having kids. You adopt this building, bring it up and put it back into public use. But it’s always your child. I have an attachment to every building I’ve touched.”

Lessons in perseverance

DeMuro is currently chasing Washington High School, a vacant Southeast Portland school built in 1906. Mired in budgetary woes, Portland Public Schools, which owns the building, doesn’t have the school’s redevelopment high on its agenda. And possible funding from Portland Parks and Recreation to remake the school into a community center died with a decision by Parks and Recreation to not pursue a bond measure this year. Developers who have tried to turn the school into housing in the past abandoned the efforts once they saw the price tag.

Still, DeMuro won’t walk away from Washington High. The desire to see the building brought back into the community is too strong, he said.

“After I worked on another renovation at in the neighborhood, I felt this connection to the place where Washington High is located,” DeMuro said. “I’ve never done a school rehab. The project doesn’t have a high probability of a successful conclusion, yet it could have so much community impact.”

A historic investment

When Mark Edlen, president of Gerding Edlen, and his firm tackled the Brewery Blocks in Northwest Portland, a commitment was made to preserve the former Henry Weinhard brewery and Portland Armory even though the monumental financial investment would result in little payback to the development company. Just to keep a non-functioning smokestack on the Weinhard brewery building in place, for example, Edlen’s firm shelled out an extra $750,000.

Edlen says his firm lost money on the brewery renovation, but the preservation work added value to the overall redevelopment of the Brewery Blocks, which have made money.

“We lost money on the brew house renovation,” Edlen said, “but it creates this rich texture at the street level. Could we have made more money without it? Yes. But you only have one shot at preserving something. Once it’s gone, it’s gone.”

Edlen, Malsin and DeMuro all say they are less driven by the fear of recouping an investment than by the fear of losing something that cannot be replaced. In cities where developers have torn down and built up to the point where no older buildings remain, there is a sense of anonymity, according to Malsin.

“If you were blindfolded and dropped into some of these places, you couldn’t identify where you were,” he said. “A city’s historic inventory distinguishes it from other places. When you tear down buildings no one could afford to build or would build today, you lose that uniqueness.”

Next on his plate, Malsin will redevelop Convention Plaza, a historic eastside office building he encouraged the city of Portland to save from the wrecking ball. A former Meier and Frank warehouse in Northwest Portland is Edlen’s next preservation project – if he can find enough tenants to fill the structure.

As for DeMuro, he plans to continue seeking out a new use for the Washington High School building.

“Successful people are not that way because they are so in love with success,” he said. “It’s out of fear of failure. These projects take you down a longer and steeper path than you first expected. After enough time and hurdles pass, you look up one day and see how far you’ve traveled. The pursuit is the intoxicant. You just don’t want to admit it can’t be done.”

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The Portland Development Commission board approved a 98-page framework plan for the development of the Burnside Bridgehead property at Wednesday’s board meeting.

The report was mapped out by Beam Development of Portland and PDC Staff. It outlines possibilities for the future development of the four-block site on the east side of the Burnside Bridge that PDC plans to develop into a high-density mix of sustainable residential, office, and retail space.

Brad Malsin, the president of Beam Development, said the 96,000-square-foot Convention Plaza building would most likely be the first site to undergo construction. The space, which has been vacant since 2007, would be renovated into a sustainable office building, he said.

Beam Development was awarded the right to develop 20 percent of the property for the Burnside Bridgehead property after completing the framework plan. The company hopes to have an agreement signed to begin work on the Convention Plaza building over the next few months.

According to the plan, five key principals should be kept in mind while development occurs. These include developing the site to its full potential, making sure the development is attainable, embraces sustainability, catalyzes productivity and promotes vibrancy.

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The Studios at Milepost 5

Location: 900 N.E. 81st Ave.

Size: 127 units, 150 to 350 square feet

Developer: Beam Development

Architect: Works Partnership

To date, most of Portland’s live-work space marketed toward artists, designers and Web innovators has been for purchase only. However, artistic endeavors don’t always generate enough money to pay the rent, much less a down payment on a condo.

But the second phase of the Milepost 5 development near Northeast 82nd Avenue will offer live-work studios starting at just $185 per month. The project is being developed by Brad Malsin of Beam Development.

“I think so many artists and creatives spend so much time doing other work to support themselves because the cost of living is high,” Malsin said. “Our goal is to provide the most affordable housing for creatives and artists in the city.”

Malsin said he was challenged to figure out how the project, which cost approximately $5 million, could pencil out. A 1928, three-story brick building is being converted from a former retirement community into 127 live-work studios, a restaurant, a performance space, a gallery and community studio spaces. Malsin has paid for much of the project from his own wallet.

“We’ve had to be very creative,” Malsin said. “It’s been a lot of self-financing at a time when it’s not that easy. But it’s also easy to spend way more money than is necessary for space like this. Throughout the project, we’ve looked at how we can accomplish the most cost-effective rental rate for the spaces.”

Developer Brad Fowler can attest to the challenges of developing rentable live-work space. While working on his Alberta Mercantile project, he found that its rentable live-work spaces needed to meet both commercial and residential code regulations.

“From a cost perspective, live-work is difficult to finance as a rental product because you have to incorporate legal commercial space,” Fowler said. “That means the units have to be fire protected and have their own ADA bathroom. If you’re a developer starting from the ground up, it can be expensive space to develop.”

Alberta Mercantile‘s 800-square-foot units are fully leased, to an apparel designer, a ceramic artist and others. But Fowler said it took longer than he expected, mostly because many people looking at the units wanted to rent them as living space and not as live-work space. Rents for the Alberta Mercantile units range from $1,150 to $1,450.

The Milepost 5 units, however, will be only 150 to 350 square feet. They also won’t include full kitchens and bathrooms, unlike Alberta Mercantile’s live-work units. Instead, shared kitchens will be provided on each floor, and some units will share bathroom facilities.

“I’m hoping to reemphasize the work aspect of this project,” Malsin said. “The idea is for people who are starting a career or wanting to be around other artists to have a safe, cost-effective place to work, and also live.”

Project designer Jonathan Heppner of Works Partnership Architecture said cost was in the back of his mind as he designed the studios. As a result, the building wasn’t gutted.

“We’re trying to create spaces that are affordable and at the same time, fresh,” Heppner said. “We want to get rid of things like the ADA handrails in the hallways. But there are quirky fixtures that we’re trying to retain. We’re putting fresh paint over the beiges that were used in the home and trying to work with what’s there.”

“We’re going for an Ace Hotel feel,” Malsin said. “We’re being very careful and using a light touch for painting, plumbing upgrades, heating, hot water and cosmetics. The building luckily is very structurally sound, so there’s very little deferred maintenance.”

To make sure the development is housing creatives and not just renters looking for affordable housing, Milepost 5’s creative director Gavin Shettler will vet each potential tenant. Applicants are required to submit a short statement on why they want to live in the studios, a brief bio and examples of their work. Currently, 400 people are on the waiting list for the Milepost 5 studios.

The first phase of the Milepost 5 development was for 54 live-work condominiums. Fewer than half of those are occupied, though Shettler said more units are continuing to sell. The condos cost from $99,995 to $274,995.

Malsin hopes that Milepost 5 condo owners may also want to lease studios. Owners receive discounted rent at the studios and don’t have to go through the application process. He added that his project will feature additional community spaces, including a dining facility, a coffee shop and an art store.

“We’ve finally found the money,” Malsin said. “And the time is now to get it going.”

Construction of the project is expected to wrap up in July. Beam Development is acting as its own contractor.

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A project to renovate Eugene‘s historic Center Court building into modern office and retail space is moving forward, according to developer Brad Malsin of Beam Development.

Malsin in December told the Daily Journal of Commerce he needed to have 50 percent of the building pre-leased to get $5.2 million in for the project. Now, Malsin says he has letters of intent to fill 60 percent of the 127,000-square-foot building.

“We’re marching ahead with Center Court,” Malsin said. “We started the demolition and abatement process a few weeks ago and plan to be into full construction by mid-May, early June.”

The estimated $10.5 million project will restore the A.E. Doyle-designed structure to its original design, which has been altered over the years by various tenants, include a JCPenney. It will be constructed by Highland Construction of Eugene, according to a design by Ankrom Moisan Associated Architects.

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