Developer Patrick Kessi made a bold bet by constructing a 162-unit condominium building when other developers wouldn’t touch condos. It didn’t pay off, and now Kessi is changing plans.

Kessi, president of PHK Development, said all of the units in the TwentyTwenty building now under construction will be converted into apartments.

“Pre-sales (of the condos) were slower than expected, but they were pretty good,” he said.

Interest rates increased in 2018, when pre-sales for the Lloyd-area building were under way.

“Now there are more products and more options, and there is a lack of urgency to immediately buy,” Kessi said. “The market isn’t really ready for condo sales now as it was two years ago.”

The units are now being advertised for rent – from $1,800 per month for a 481-square-foot studio to $4,125 per month for a 1,299-square-foot two-bedroom apartment. The building will be ready for residents in about two weeks, Kessi said. Coast Property Management is handling the rentals.

TwentyTwenty came on the heels of Hoyt Street Properties‘ Vista Condominiums, a 153-unit building that opened last year in the Pearl District. Also, BPM Real Estate Group‘s Block 216 tower, with 148 Ritz-Carlton condo units, is slated to open in downtown Portland in 2022.

Now TwentyTwenty will join a market that many consider overbuilt with luxury apartments. Kessi expressed optimism Lloyd will prove ripe for new apartments, particularly in a building with quality concrete and steel construction and contemporary architecture.

TwentyTwenty, designed by Hacker, will be “one of the most architecturally significant properties in more than a decade” in the area, according to Kessi. Andersen Construction is the project’s general contractor.

“There hasn’t been a building built recently that has been this type of construction,” Kessi said. “For the inner Eastside, we are competitively priced.”

TwentyTwenty could prove popular in the Central Eastside. Companies such as Autodesk have grown in the area, which now hosts about 17,000 jobs, according to the city of Portland. Meanwhile, office buildings such as 5 MLK and 7 SE Stark are due to be completed in coming months.

TwentyTwenty also has about 170 parking spaces for its 162 units. Parking has been at a premium in inner East Portland, where infrastructure hasn’t kept up with a boom in technology jobs.

Kessi previously developed The Windward in downtown Lake Oswego. The mixed-use project with 200 apartment units was completed in May 2018. The building is near full occupancy, he said.

Only a few condo buildings have been built in Portland during the past decade of economic expansion. Buyers began moving into Vista in October 2018. So far, 101 of the 153 units have sold, at prices ranging from the mid-$400,000s to more than $3 million, said Marilyn Andersen, principal broker at Hoyt Realty Group.

More people are looking at one-bedroom units, she said.

“We’re getting a lot of people who live in apartments – first-time homebuyers,” Andersen said.

The post Plans change for Lloyd residential building appeared first on Daily Journal of Commerce.

Portland’s Bureau of Development Services has posted public notice of a proposal for a 12-unit condominium development in the Gateway neighborhood.

The development would be constructed on a 24,800-square-foot parcel at 1133 N.E. 106th Ave. The property formerly held a 2,200-square-foot single-family house.

Etruscan Ventures LLC of Portland is the project developer and the general contractor, while Thogerson Design is the architect of record. Mark Dane Planning is serving as a consultant and aiding the design process.

This project will go through the Type II design review process, with BDS staff making the final decision subject to appeal to the Design Commission and City Council.

As envisioned, the property would gain 12 detached condominium units, each two stories in height and featuring an attached garage.

Including garage space, there will be a total of 39 automobile parking spaces as well as 14 long-term and short-term bicycle parking spaces.

Building materials will include James Hardie rough sawn lap siding with 5 inches of exposure and metal corner caps. There will be rough sawn Hardie trim around the windows and doors, vinyl single-hung, fixed and sliding windows and vinyl sliding doors.

Interested persons have until Oct. 22 to submit comments on the project.

The post Condominiums proposed for Gateway property appeared first on Daily Journal of Commerce.

A 162-unit condominium project under construction in Portland’s Sullivan’s Gulch neighborhood is slated to be topped out with a final post-tensioned deck pour on Friday. Andersen Construction is building TwentyTwenty, designed by Hacker, at the corner of Northeast Multnomah Street and 21st Avenue for PHK Development.

Andersen is self-performing structural concrete work on the building, which rises seven stories above grade and has a two-and-a-half-story parking garage below grade, via subsidiary ASI Structures. Friday’s deck pour will be the 19th conducted on the project, which has presented a unique construction challenge due to the building’s shape. The seven residential floors are Z-shaped and atop a box-shaped parking garage, meaning none of the upper floors’ columns stack into the garage. As a result, the transfer deck was unusually large, with a thickness ranging from 19 to 42 inches and over 800 post-tension cables on the first-floor deck.

Along with completion of the building’s structural core, crews are finishing interior MEP work and prepping for cover on the first floor. Interior wall framing is finishing up to level three, glaziers are installing windows on the second floor, and plumbers are roughing in wet systems on the fifth floor.

According to Glenn Whitefield, Andersen Construction’s project superintendent, the biggest project challenge to date is being able to access the building from only one side. All material deliveries and concrete pours have to happen from Northeast 21st Avenue, which necessitates cautious sequencing and scheduling for deliveries.

Andersen began work on the project in September 2017, and completion is slated for July 2019. The stucco-clad building will contain studios and one- and two-bedroom units, and feature amenities including a fitness room, bike storage and workspace, a pet wash area and a ground-floor outdoor courtyard.

The project team includes Lango Hansen Landscape Architects, civil engineers Humber Design Group Inc., and civil engineers Kramer Gehlen & Associates Inc. The MEP design-build team includes Hunter-Davisson, IES Commercial & Industrial and Jackola Engineering & Architecture.

The post Photos: TwentyTwenty vision in Northeast Portland appeared first on Daily Journal of Commerce.

The Portland Housing Bureau has loosened inclusionary housing rules pertaining to condo development after strong criticism from developers.

It remains to be seen whether it will be enough to encourage developers to build condos again. The rules modify the allowable size of affordable units, provide a path for hardship waivers, change the sales price formula and more.

A notice of final rulemaking was issued Aug. 28. That followed a first draft in January and a second draft in June. The rulemaking process was based on City Council authorization for the program in December 2016.

Inclusionary housing is part of the city’s effort to provide affordable housing during an economic expansion that’s now approaching a decade. The rules for condos are a companion to rules for rental properties – a far larger market.

“One big theme we heard in the rules (process) was that condo development is different than rental development,” said Matthew Tschabold, policy and equity manager at the Housing Bureau. “There should be more flexibility there given that the buildings are often of a different quality level, the amenities and fixtures are of a different quality level, and the purchaser is buying for life.”

Throughout the process, Housing Bureau officials spoke with condo developers and with Oregon LOCUS, a trade group.

“We had a lot of hearings, a lot of meetings, a lot of phone calls and emails with developers,” Tschabold said. “I think it was a positive process.”

Changes to the draft rules were able to address most of developers’ concerns, he said. Others could not be accommodated within Title 33, the zoning code enacted by the City Council.

Some developers remain skeptical condos can be built profitably.

“Yes, there is some improvement, but the city … still has a long way to go before new for-sale inclusionary housing rules can work,” Tiffany Sweitzer, president of Hoyt Street Properties, wrote in an email.

“There is a reason why there are currently only two condominium projects being developed in the Central City – financing,” Sweitzer stated. “Developers already have a difficult time getting financing for condo projects. With these added rules, construction lenders will require even more equity for a loan or reduce the total loan amount to developers.”

Hoyt Street Properties is nearing completion of the Vista Condominiums in the Pearl District. The building has 153 condos that were vested under pre-inclusionary housing rules.

“We are done building for-sale housing under these rules,” Sweitzer wrote in response to questions.

One major Portland project would boost funding for affordable housing, but not provide affordable units on site. Developer Walt Bowen’s proposal to build a 35-story tower on Block 216 in downtown Portland would be subject to inclusionary housing rules. Plans call for 148 high-end condominiums along with a luxury hotel, office space and retail space.

Instead of building affordable units, the Block 216 project backers plan to pay a sizable fee. It would be about $7.5 million, Phil Beyl, director of GBD Architects, said during a June meeting of the Design Commission.

Beyl told the Design Commission that more affordable housing could be provided off-site for the cost.

“We can do a far better job of spurring affordable (housing development) by paying into the fund,” he said.

Among the changes to the inclusionary housing rules finalized in August was a looser definition of reasonably equivalent units. Now, affordable condos are required to be 85 percent as large, on average, as their market-rate counterparts. That’s down from 90 percent.

The Housing Bureau also changed how the sales price of affordable units is calculated after criticism that it resulted in prices that were too low.

“We modified the formula to adjust the sales price to be something that would be more workable,” Tschabold said.

The bureau retains right of first refusal to purchase affordable units. The final rule clarifies the process for the listing and sale of affordable units to provide a waiver if a seller is unable to find an income-qualified buyer.

Generally, the inclusionary housing rule requires 20 percent of condos be affordable units at 80 percent of area median income, or 10 percent of units at 60 percent of area median income.

The post A push for affordable condominiums appeared first on Daily Journal of Commerce.

Luxury condos, once regarded by developers as a dead end, are making a comeback. The latest example: the ambitious proposal from Portland developer Walt Bowen for a 35-story tower on a full block in downtown.

The Block 216 project would have approximately 148 high-end residential condominiums. The skyscraper would also include a 250-room luxury hotel and 175,000 square feet of office space.

A few other major projects now under construction in Portland include condos, including Vista Condominiums, a 153-unit building in the north Pearl District from Hoyt Street Properties, and TwentyTwenty, a 162-unit project in the Sullivan’s Gulch area, from PHK Development. Also, The Waterfront Vancouver will have 40 condos adjacent to a luxury hotel. That project, from Gramor Development, is expected to be completed in 2020.

The move to build luxury condos represents a modest comeback for the product type. After the economy tanked in 2009, condo development all but halted in the Portland area.

At the same time, a flood of apartment construction in recent years has resulted in a softer market for luxury apartments. Rents in Portland were down 2.2 percent in May compared to a year earlier, according to Apartment List.

Many luxury apartment managers are offering concessions to sign up new residents. In that environment, some developers are looking anew at condos as a more competitive product.

Bowen, in a response to questions via email, stated the Block 216 condos will be unique in the city.

“Portland does not have any high-end, co-branded hotel condominiums like other cities,” stated Bowen, who is president of BPM Real Estate Group. “We believe there is demand for this type of product.”

The condos will begin on the 21st floor, giving buyers commanding downtown views. Bowen also pointed to timing: Vista will deliver more than three years before Block 216 is ready, allowing plenty of time for market absorption.

An alternative multifamily option was explored for Block 216 and rejected, according to Bowen.

“Market-rate apartments are not economically viable for this project,” he stated.

Cost is one of the challenges for condos because they tend to be more expensive to build than apartments. Condos are typically built with concrete and steel stud frames, while apartments often have wood frames. Condo developers also face greater legal liabilities from homeowners.

Patrick Kessi, president of PHK Development, said he does not believe the Portland area will see a rush of condo building.

“I think it’ll be a measured amount of building with condos,” he said.

At TwentyTwenty, condos will start around $300,000 for one-bedroom units and $500,000 for two-bedroom units.

Hoyt Street Properties’ Vista Condominiums in the Pearl District is expected to be completed in October.

So far, 90 of the 153 condos have sold. Tiffany Sweitzer, Hoyt Street Properties’ president, said she expects sales to accelerate once potential buyers are able to tour the units. Prices range from $441,000 to $3.2 million.

“People are not wanting to buy a year or two ahead of time,” she said. “They’re wanting to look at product.”

Sweitzer doesn’t believe condos alone would work at Block 216.

“They have hotel and office that can help their bottom line,” she said. “Could a luxury tower be built without those other components to it? I don’t think so.”

The city’s inclusionary zoning rules pose another significant obstacle for condo developments. The policy requires developers build affordable units or pay a hefty fee. The Block 216 project team has indicated it will take the latter route, with plans to pay $7.5 million into the city’s affordable housing fund.

City officials are looking at possible changes to the policy to address complaints from developers.

The rules are unworkable, Sweitzer said.

“We will not be building for-sale product with the rules that are currently in place, but the rules are in flux,” she said.

The post Developers turning to luxury condos appeared first on Daily Journal of Commerce.

A planning application has landed for a skyscraping tower on a downtown Portland block that is home to dozens of food carts.

The 33-story tower would comprise 750,000 square feet above ground, and four and a half stories of underground parking. The full-block tower would have a mix of uses, including office, hotel and residential functions.

The application is for the full block bounded by Southwest Ninth and 10th avenues, and Washington and Alder streets.

According to an early assistance application filed with the Bureau of Development Services, the project may include condominiums. If so, the project would be a major test of the city’s inclusionary housing regulations that pertain to condos. The city promulgated condo regulations before pulling them back after developers responded that the rules would make condo projects unworkable.

City officials are writing revised draft rules for inclusionary housing condo units, and they will be released in coming months, said Kyle Chisek, director of bureau relations and policy for Mayor Ted Wheeler’s office.

The building would rise to 410 feet – the maximum allowed height following the impending passage of the Central City 2035 plan. Under current rules, the height limit is 325 feet.

The building’s largest portion would be taken up by the hotel, according to the early assistance application. Plans call for 294,000 square feet of hotel space, 260,000 square feet of condos, 186,000 square feet of offices and 10,000 square feet of retail space.

GBD Architects is listed as the applicant (a GBD representative did not promptly return a message seeking comment). Public documents do not list a developer.

The block is owned by the Goodman family’s Downtown Development Group through limited liability companies. Downtown Development Group co-President Greg Goodman declined to comment. He referred questions to a public relations representative, Pat Walsh, who would not answer questions.
“Due to confidentiality agreements, we cannot comment about whether or not a project is under consideration,” Walsh stated in an email message. “We discuss a project when all involved are ready to do so.”

The project represents a big bet that Portland’s run of economic expansion will continue into 2019 and beyond.

To Vanessa Sturgeon, whose TMT Development built the 30-story Park Avenue West and the 27-story Fox Tower in downtown Portland, the market remains ripe for big projects.

“At this point with construction costs, projects need to be very big to pencil out,” she said. “It makes a lot of sense. Knowing what the Goodmans do, it will be of very high quality, so I’m very excited about another addition to the skyline.”

Architecturally, the building’s lower levels would have a “terraced massing” that appears to erode, according to the early assistance application. The upper floors would have a crystalline quality designed to catch light as it tapers upward.

The Goodmans previously partnered with developers on projects including Twelve West – a mixed-use tower in the West End. Downtown Development Group and its affiliates have an ownership interest in more than 1.5 million square feet of developed space and 28 parcels in central Portland.

The Goodmans are seeking financing for Eleven West – a planned mixed-used tower in the West End. The family has developed some projects itself, but often partners with developers such as Gerding Edlen.

At Southwest Ninth Avenue and Washington Street, the full-block parcel – also known as Block 216 – hosts the largest collection of food carts in the Portland area. Carts come and go, but some stay for years. On Monday, the block had 52 carts, including a few that were closed.

Altengartz, a bratwurst vendor, was the first cart on the block in 2000. The block took off as a food destination around the time of the 2008-09 recession, when many restaurants downsized to carts, said George Wittkopp, Altengartz’s manager.

Wittkopp was philosophical about the potential loss of the food-cart block. The company has a second location in Beaverton; a replacement will be sought for the downtown location, he said.

“We’ll stay alive and we’ll just have to look for another spot,” he said.

The cart block has evolved into a tourist destination, with visitors coming from as far as Manila, Philippines, after seeing the block featured on TV programs, Wittkopp said.

“I suppose some change is inevitable,” he said.

The early assistance application makes no mention of incorporating food carts into the proposed development.

Block 216 is near O’Bryant Square – a city park now closed because of structural issues related to an underground parking garage. Some online commenters raised the possibility of moving carts to O’Bryant Square. Even if that were feasible, the square is only half the size of Block 216.

The post Updated: 33-story tower proposed for downtown appeared first on Daily Journal of Commerce.

Tiffany Sweitzer has built in Portland more than 2,000 housing units, including the luxury Cosmopolitan condos in the Pearl District.

But now Sweitzer’s development company, Hoyt Street Properties, will not build more condos in Portland’s Central City, she said, unless changes are made to the city’s inclusionary housing program.

“With the latest inclusionary zoning constraints, we will probably sell our remaining land or build office (space) instead,” she said.

A year after inclusionary housing rules took effect, they are being reviewed by the Portland Housing Bureau. The rules for condos are the first part of a comprehensive reassessment of inclusionary housing, which took effect Feb. 1, 2017.

“We’ll look at what changes are needed to make sure the inclusionary housing program is effective, because the more units that are built, the more inclusionary units we get,” said Matthew Tschabold, policy and equity manager for the Housing Bureau.

Mayor Ted Wheeler has made building affordable housing a priority during his administration to address Portland’s self-declared housing crisis. In December, he shook up the Housing Bureau, replacing Director Kurt Creager with Shannon Callahan, a city policy analyst who is serving as interim director.

The inclusionary housing program has dramatically affected the multifamily pipeline. Developers rushed to submit applications for projects before the effective date, putting 19,000 units into the pipeline. But the amount of work for architects who design multifamily projects has since dwindled.

Among rental proposals, 23 projects totaling 1,083 units have moved into the permitting process. Of those, 730 units come from the private sector, with the Housing Bureau responsible for the rest.

The flow of condo projects has already slowed to a trickle. Since Feb. 1, 2017, only one application for a condo project – totaling 15 units – has been submitted for land-use approval, according to the Housing Bureau.

The condo rule changes are expected to take effect March 20. Prior to that, the Housing Bureau will take public comment at a Feb. 21 staff hearing.

The draft changes outlined by the Housing Bureau set restrictions on the resale of inclusionary housing condos. The bureau is given first right of refusal on purchasing units. Refinancing is tied to the restricted resale value of a unit set by the Housing Bureau.

Other rules require condos be maintained as a primary residence, be purchased by a first-time homebuyer and not be operated for purposes such as vacation rentals. Cash purchases of inclusionary housing condos would be barred. And units must be maintained under affordability rules even if they are converted from condos to apartments or vice versa.

Taken together, the rules would spook lenders, making financing for condominium projects difficult, Sweitzer said.

“It looks like condo construction is stopped in its tracks – and it will be with us,” she said. “We will be done under rules like these with building condos.”

Sweitzer said she was disappointed she was not asked to weigh in on the draft rules.

“I’ve built over 2,000 housing units, and I have not talked to the city of Portland, the Housing Bureau or anyone else working on the rules, which is just incredible,” she said.

The draft rules revisions allow for more flexibility, Tschabold said. For example, if a condo owner is unable to sell for 12 months within the program guidelines, the income restrictions on sales would be loosened. A buyer with 100 percent of Portland’s median family income could purchase a condo set aside for buyers at 60 percent of median family income, and a buyer with 120 percent of median family income could purchase a unit set aside for buyers at 80 percent of median family income.

“We’ll do whatever we can to help facilitate linking a buyer and seller,” Tschabold said.

Even after inclusionary housing rules took effect, the Housing Bureau permitted approximately 5,000 units – about the annual average in recent years, Tschabold said.

A forthcoming report from the Bureau of Planning and Sustainability analyzing inclusionary housing’s first year is expected to add fuel to the debate.

The Housing Bureau has been working with Oregon LOCUS, a trade group for developers, to devise incentives for developers who applied before inclusionary housing rules took effect to opt into providing affordable units. Mike Kingsella, executive director of Oregon LOCUS, did not return messages seeking comment.

The incentives will look similar to the Housing Bureau’s old Multiple-Unit Limited Tax Exemption (MULTE) program, Tschabold said, offering tax breaks in return for affordable units.

The post Inclusionary housing rules may soon affect condos appeared first on Daily Journal of Commerce.

This week Pearl District developer Hoyt Street Properties showed off its newest asset – the 28-story Cosmopolitan tower – one of the only condo projects going up in Portland, and the new tallest building in the Pearl.

The $78 million project, once called Block 15, is a throwback of sorts. It’s a glassy skyscraper in a time of midrises, and a condo project in an age of apartments. It has 167 residential units, 197 vehicle parking spaces and 6,800 square feet of retail. Bora Architects designed a sleek and slender tower atop a four-story above-grade podium.

As of Tuesday, all but five of the condos had been sold. It should be occupiable by June 1, according to project manager Ben Miles of Andersen Construction.

Lately crews have been wrapping up paint and tile finishes, sidewalk work and a wood deck on the east side of the building.

On the walkthrough sponsored by the Construction Specifiers Institute, representatives of the Portland building community saw firsthand what’s become of a parcel that for years was one of the Pearl’s most prime. It’s located on a streetcar line and flanked by two parks – The Fields Park to the north and Tanner Springs Park to the south – meaning views in those directions are assured for years to come.

Designer Bora Architects sought to optimize views in every unit. This is apparent in the penthouse units in the top three floors, where no room is without a stunning panorama.

The parcel was one of 20 that once held a railyard when the Pearl was a hard-edged industrial zone. It had been vacant for years as the Pearl was developed, starting to the south with the Brewery Blocks development.

The project team was originally going for LEED certification, before running into cost.

“One of the bigger challenges has been the products coming from overseas,” Andersen’s Miles said.

Because each condo unit was made to buyer specifications, finish materials arrived piecemeal throughout the project. This meant lots of measuring and double-checking, Miles said, because once a product, like the Italian slab marble counters or dark larch Pedini cabinets, are ordered from the palatte available to buyers, they can sit on a boat for up to five months.

The Benson curtain wall systems used in the project traveled far, as well. For years, the facade systems were assembled locally, in Gresham. But the company has since moved some operations to Tijuana, Mexico.

“Now the aluminum is extruded in Korea, the glass comes from the Midwest, and it’s all assembled in Tijuana then shipped here,” Miles said.

The post Cosmopolitan’s luxury condos nearly complete appeared first on Daily Journal of Commerce.