A new retail venue in Happy Valley is nearly ready for tenants.

Happy Valley Crossroads East is being built on a 6-acre lot at the northeast corner of Southeast Sunnyside Road and 172nd Avenue – directly east of the existing Happy Valley Crossroads anchored by Fred Meyer. This new, six-building center will have 60,720 square feet of tenant space.

It’s the seventh retail center Gramor Development has brought to the Sunnyside Road corridor. For every 3,000 homes in a development plan, a shopping center anchored by the likes of Fred Meyer, Safeway or New Seasons can be supported, said Gramor’s director of leasing, Marc Strabic.

Roughly 30 years ago, the developer’s only retail venues in the area were Sunnyside Plaza and Sunnyside 205. But Happy Valley’s population has since climbed to more than 23,000 people with a median household income upwards of $125,000, . That enabled development of Sunnyside Marketplace, Sunnyside Village Square, Happy Valley Town Center and Happy Valley Crossroads.

Currently, approximately 28,000 housing lots either exist or are planned under Happy Valley’s development plan, Strabic said.

A number of retailers – including Stickmen Brewing Co., Willamette Valley Vineyards and Domino’s Pizza – have signed for space in Happy Valley Crossroads East, according to Gramor’s website.

“We really noticed that Happy Valley is becoming a big draw in the suburbs,” said Carissa Cook, development manager for Willamette Valley Vineyards.

The winery will open its third off-site tasting room, as well as a restaurant, at the new center. Happy Valley was selected in part, Cook said, because some customers already reside there and because the area is a little farther than other Portland-metro areas from Oregon wine country.

Strabic said he’s seeing more retailers and restaurateurs consider suburban opportunities because there’s less competition and consumer bases already exist.

Willamette Valley Vineyards’ 3,563-square-foot space will feature an outdoor seating area, and Stickmen Brewing’s space, on the opposite side of the lot, will as well. Outdoor dining options are being constructed in response to the COVID-19 pandemic, Strabic said.

Happy Valley Crossroads East was designed by LRS Architects and built by CSI Construction. The center can hold 20-25 tenant spaces depending on how suites are split – currently, slightly more than 70 percent have been leased, Strabic said.

The project team expects core and shell construction to wrap by the end of the year. Then spaces will be turned over to tenants in January.

“As fast-growing as (Happy Valley) is, it’s going to continue to grow for a decade or more,” Strabic said.

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After nine years in business, including production of award-winning brews, Stickmen Brewing is gearing up to open a couple of new taprooms.

One location in Happy Valley should open by early December, and another in Cedar Mill is expected to follow around April 2022, principal owner and recipe creator Tim Schoenheit said. The company currently operates in Lake Oswego and Tualatin.

The Happy Valley space will be 5,873 square feet, at the corner of Southeast 172nd Avenue and Vogel Road; there will be patio seating for up to 100 people. It’s part of the second phase of the Happy Valley Crossroads East shopping center led by Gramor Development.

LRS Architects designed the shell space, and CSI Construction is building it. Delivery is expected in late September. Then the building will be dressed up to create a family-friendly vibe.

Like in Tualatin, the company in Happy Valley will offer 28 taps, wood-fired pizza, and salad. But during morning hours, the taproom will serve as a traditional Italian coffee bar. That plan stemmed from when Schoenheit lived in Italy and would visit a coffee bar every morning on his walk to the train station, he said. The idea is to entice customers for more hours of the day.

“From a business construction (standpoint), rents are expensive in the new areas,” he said. “If I can take four to five hours (when the business) would be closed easily and monetize it, it would be huge.”

The Cedar Mill taproom will be 5,000 square feet at Kirkland Place Plaza, near the intersection of Northwest 118th Avenue and Barnes Road. That space was originally slated to open this fall, but construction was delayed. There will be outdoor seating for as many as around 30 people.

Stickmen Brewing is known for its original IPA and “The Bee’s Knees” – its take on a German Kölsch style of beer. Business in the flagship location, in Lake Oswego, was challenging for several years while the company tried to distinguish itself in Oregon’s renowned craft beer scene, Schoenheit said. But “it’s great” now, he added, being able to expand.

“The thing I’m really excited about is the ability to move through more experimental beer,” he said.

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A Vancouver, Washington-based firm plans to break ground in August on a seven-story AC Hotel by Marriott on the Vancouver riverfront.

The $50 million hotel, expected to appeal to business travelers, will have 150 guest rooms and two floors of above-ground parking on the second and third floors. It’s the latest ground-up project for Vesta Hospitality, which in the past has mostly used a different strategy.

“Our primary focus has been acquisition of product and repositioning for better value of product,” Vesta CEO Rick Takach said.

The building will also have about 5,000 square feet of top-floor office space that Takach said he may take for Vesta.

In the case of the AC Hotel, Vesta took a gamble on the chance to be part of new development on Vancouver’s south-facing Columbia River frontage.

“We wanted to be down on the waterfront,” Takach said.

The project comes amid a rapid transformation of the area. Gramor Development is overseeing a massive 20-block redevelopment of a former Boise Cascade paper mill site nearby.

The AC Hotel will occupy land leased by the Port of Vancouver USA. Takach agreed to build the hotel to Leadership in Energy and Environmental Design gold standards as a result of negotiations with the port. He also agreed to build 160 parking spaces for the fast-growing area.

Takach said he turned his attention to the port’s land after declining to meet Gramor’s asking price for a parcel at The Waterfront Vancouver.

Takach said he’s interested in bringing in additional investors for the AC Hotel project, which is in an opportunity zone. The tax designation helped attract construction financing from Rockbridge Capital of Columbus, Ohio, a frequent Vesta partner.

DLR Group is designing the AC Hotel, and Camas, Washington-based Robertson & Olson Construction is serving as the general contractor. Otak is the engineer, and Urban Resources Inc. is the developer’s representative. Robertson & Olson’s experience working on the Vancouver waterfront and its relationships with subcontractors made it an obvious choice, Takach said.

Meanwhile, Vesta is also closing in on a purchase of the Cannery Pier Hotel, a 15-year-old, 46-room hotel that juts into the Columbia River in Astoria. Vesta is under contract to buy the hotel for $13 million, Takach said. The property is being offered by the estate of Astoria developer Robert “Jake” Jacob, who died last year.

Takach is waiting on approval of a waterway lease from the Oregon Department of State Lands before the transaction closes.

“I think it’s arguably an irreplaceable asset,” Takach said, noting development of the hotel took more than a decade.

Takach said he meets with Vesta’s acquisition team every Friday to review hotels for sale across the United States. Currently, the company owns 12 hotels, but that could change, he said.

“It’s a good time to sell,” he said.

Notably, the company has avoided the crowded hospitality market in Portland’s Central City. Takach described Portland’s hotel market as “in one word: scary.”

More than 1,900 hotel rooms are in development or under construction in central Portland, including the 600-room Hyatt Regency at the Oregon Convention Center, the 486-room Toyoko Inn, the 251-room Ritz-Carlton at Block 216, the 170-room Hyatt Place in the Pearl District, the 250-room Hyatt Unbound and the 179-room Moxy.

“As an industry, we try to do this to ourselves every few years,” Takach said of the rapid expansion.

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The Port of Vancouver USA is seeking developers interested in creating mixed-use space on two blocks at the port’s 10-acre site along the Columbia River.

The port has issued a request for proposals. Submissions are due by 5 p.m. on March 21.

The property, at the port’s Terminal 1, includes two blocks between the riverfront and downtown Vancouver, north of Columbia Way. Two additional blocks are slated for development at a later date.

The port envisions office, residential, ground-floor retail and parking uses, as guided by the Concept Development Plan approved by the city of Vancouver in 2017.

“One of the biggest things we really hope for is partnership,” said Abbi Russell, spokeswoman for the Port of Vancouver USA.

The port needs a development partner who understands the history of the property and the importance of the link between the riverfront and downtown Vancouver, she said.

Plans call for adaptive reuse of the Terminal 1 facility – a 1920s warehouse that currently houses a restaurant.

Meanwhile, Gramor Development‘s The Waterfront Vancouver continues to attract office, residential and retail tenants to the newly redeveloped area.

“Terminal 1 is a little bit different in that it’s owned by a public entity, and it really has a community connotation,” Russell said.

An informational meeting will take place at 2:30 p.m. on March 5 at the port’s commission room, 3103 N.W. Lower River Road.

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Maryhill Winery will occupy space at The Waterfront Vancouver, along the Columbia River, Gramor Development announced on Monday.

The winery is poised to join restaurants Barlow’s Public House and Twigs Bistro and Martini Bar in Block 12 at Grant Street Pier. New & Neville is representing Gramor Development in leasing the Grant Street Pier food-and-beverage spaces.

Maryhill Winery is set to open a 4,890-square-foot wine tasting room with a large patio at Grant Street Pier – the first part of the sprawling waterfront development to come to fruition.

The new venue, which will be Maryhill’s third tasting room, is expected to open this winter.

Maryhill Winery owners Craig and Vicki Leuthold said they were looking for a new centrally located space that would allow them to directly serve Vancouver and the rest of the Portland-metro area.

“We’ve been eyeing the Vancouver market for many years,” co-owner Craig Leuthold stated in a media release. “The Waterfront Vancouver along the Columbia River is a natural fit for us, given that our two other Washington tasting rooms, our flagship tasting room in Goldendale and our tasting room in Spokane, are also riverfront properties.”

Gramor Development President Barry Cain said he is excited to add one of Washington’s premier wineries to The Waterfront Vancouver.

More information about the Waterfront Vancouver is available at: .

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Barry Cain, president of Gramor Development, paused to catch his breath at the top floor of a seven-story office building at The Waterfront Vancouver, near the Columbia River.

Workers below were finishing staircases and elevators. A block away, heavy equipment was being used to drive piles to support excavation of what will become the Indigo Hotel and condominiums. Construction management trailers occupied surface parking lots.

With breathtaking speed, The Waterfront Vancouver is becoming a real place. Restaurants are poised to open soon. White-collar professional firms have signed leases for office space under construction. Apartments could begin being leased as soon as next week. There will be parks, a seven-mile trail and a hotel.

“We wanted to get the project started and have a little bit of everything,” said Cain, whose company is managing the build-out of the 20-block site.

Visiting The Waterfront Vancouver these days is a bit like venturing inside a bee hive. Workers are everywhere – hundreds of them in brightly colored T-shirts and safety vests, shouting and stomping among scaffolding and staged equipment in a heat wave. The din of steel slapping into place is matched only by blaring backup alarms from construction vehicles and the roar of F-15 fighter jets taking off from Portland International Airport across the Columbia River.

The numbers give only a sense of the magnitude of the development – 3,300 residential units and 1.5 million square feet of office space. Robertson & Olson, a Southwest Washington firm, is the general contractor handling construction of the first three buildings.

“There’s a big, pent-up demand for this kind of development in Vancouver,” Cain said.

Gramor Development aims to attract many of the 70,000 workers who commute daily from Vancouver to Portland. Cain believes many companies have offices in Portland only because Vancouver lacked good options.

“We think pretty quick we’re going to get a lot more office interest,” he said.

Last week, McKean Smith, a law firm with offices in Portland and Hillsboro, agreed to lease 3,600 square feet in the Block 6 building, Gramor announced.

The legal practice joins Murdock Charitable Trust, Chicago Title and Fidelity National Title in taking office space at The Waterfront Vancouver. The Block 6 office building is more than 50 percent leased.

The Waterfront Vancouver started as a partnership among five parties from real estate and construction backgrounds who were eager to invest in Vancouver’s future. They jumped at the opportunity to land riverfront property when Boise Cascade decided to close a paper mill on the site and sell. Gramor Development agreed to lead the development with backing from retired managers of Kiewit Corp., a construction firm based in Vancouver. The partners formed Columbia Waterfront LLC.

“It sounded like something where you could come in and really change the face of the town,” Cain said.

The plan was never for Gramor Development to build everything itself, Cain said. Already, two blocks have been sold. Gramor sold Block 3 to Summit Development, which plans to break ground in January on a 12-story cross-laminated timber building with approximately 250 residential units and ground-floor retail space. Kirkland Development purchased Block 4, where ground has been broken for an 11-story tower that will have the 138-room Hotel Indigo and 40 condominiums.

Gramor Development is in negotiations on a deal for another block, Cain said.

“We’re happy to have someone come in and do it all,” he said.

Restaurants will open in the first wave in a bid to attract visitors. Sometime in August, WildFin American Grill will open. The seafood restaurant will have a sidewalk-facing window to serve fish tacos to outdoor diners on nice days. Twigs Bistro and Martini Bar is poised to open about a month later. Barlow’s Public House should open by the end of the year, Cain said.

The development is already attracting jet boat users interested in checking out a mast installed as a piece of public art. A 180-foot-long water feature from artist Larry Kirkland that maps the Columbia River and its tributaries is in development.

The Waterfront Vancouver is unfolding largely with public dollars. Columbia Waterfront laid the groundwork for the development with new streets or extensions of Columbia Way, Grant Street and Columbia Street. The development also contributed to construction of a railroad trestle that provided access to the property. The city of Vancouver is paying for the new park.

Calls to Vancouver officials were not returned promptly.

That stands in contrast to Zidell Yards in Portland’s South Waterfront District, where development has halted because of a disagreement between ZRZ Realty Co. and the city of Portland regarding the amount of public funding for streets and other infrastructure. In Vancouver, the developer largely paid for the infrastructure.

In comparison to Portland’s bureau structure, Cain praised Vancouver’s city manager-led government.

“The government here is effectual,” he said.­­

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Developers looking to build in Portland are increasingly coming to the same conclusion: In this market, it’s time to go big or go home.

Large projects are in development or under construction all over the Portland-metro area, including a 35-story mixed-use downtown tower from Walt Bowen’s BPM Real Estate Group and Downtown Development Group, Gramor Development‘s The Waterfront Vancouver and the Oregon Museum of Science and Industry master plan. Security Properties of Seattle is on the verge of breaking ground on a 24-story mixed-use tower at the Press Blocks in Goose Hollow, and beginning the design review process for the PepsiCo superblock redevelopment on Sandy Boulevard.

A number of factors are pushing developers in the direction of large projects, according to sources:

• Institutional lenders and investors are behind many of Portland’s largest current projects, and they prefer to dole out capital in large chunks rather than small ones. Big projects need big loans. Some lenders are also willing to accept smaller returns and remain patient while large projects get built.

“They’re willing to do lower and lower yields than we’ve seen before,” said Tom DiChiara, founding principal at Cairn Pacific.

Cairn Pacific’s major backer is Prometheus Real Estate Group of San Mateo, California. Prometheus has taken a long-term position on Cairn Pacific’s Slabtown projects in Northwest Portland, DiChiara said. Cairn Pacific is the developer behind the George Morlan Plumbing building and the Leland James, L.L. Hawkins and New Seasons mixed-use projects in the fast-changing industrial area.

• In the 10th year of economic growth, most developers have successfully completed profitable projects in recent years and are flush and confident enough to do something bigger. Developers figure if they made a little money with a smaller project a couple of years ago, they can make more with a larger project now.
• The loss of income due to inclusionary housing rules, which require developers to either devote 15 or 20 percent of units to qualifying tenants below market rate or pay a hefty fee, hurts less in a large project.

“Part of it is that there’s economies of scale, especially when construction costs start going up,” said Sam Rodriguez, senior managing director of Mill Creek Residential Trust, a major multifamily developer in Portland. “Inclusionary housing, for example – it becomes at some point somewhat neutral.”

• Many costs are fixed or grow only modestly with larger scale. The same holds true for permit approval: a multifamily project of 350 units and one of 150 units face similar design review processes.
• Land costs are high.

“You paid for the land,” Rodriguez said. “In theory, the more density you put in, the less you’re paying per unit.”

• Population and job growth are driving demand for ever-increasing density in central Portland.

“Demand is driving most of the need,” said Bob Thompson, founding principal of TVA Architects. “The demand for housing, it’s just over the top.”

TVA Architects designed Fremont Place Apartments, a 17-story tower that won approval from the City Council in May after an appeal from the Pearl District Neighborhood Association. The firm is also designing a potential future $1 billion Major League Baseball stadium for the Portland Diamond Project in a partnership with global firm Populous.

“That’s an exciting project that is a reflection of the growth we’ve seen,” Thompson said.

A number of headwinds suggest the red-hot pace of development could cool. Construction costs are causing some developers to carefully consider whether to pull the trigger, and subcontractors are so backlogged that projects are facing delays.

“The labor pool is just completely tapped,” DiChiara said. “Everybody is behind schedule, the cost is higher and the quality is lower. It’s a tough recipe.”

Furthermore, new projects face increasing competition, particularly in the multifamily and office sectors, as earlier projects deliver. DiChiara said he expects to see some developers hit pause on large projects.

“I can’t really see how any of them make economic sense,” he said. “I think a lot of people, frankly, don’t know their costs, and they’ll be shocked when they come in.”

Then there’s the question of when the broader economy could cool. Interest rates have risen, and a flattening yield curve is showing foreboding signs. A slowdown may be in the offing, DiChiara said.

“I don’t have concerns about the long term here,” he said, “but I think the next year or two could be a little bumpy.”

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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.

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Kirkland Development has begun accepting pre-reservations for condo units at the Kirkland Tower – the first residential project at The Waterfront in Vancouver, Washington.

The Kirkland Tower will have 40 condominiums on floors two through 11. The condos will range in size from 1,000 square feet to more than 3,000 square feet.

Kirkland has applied for a building permit for the first phase: an underground parking garage. “We’re hoping to be mobilizing and getting the site ready to go in about six to eight weeks,” Kirkland project manager Dana Gardner said.

A crane is expected to be moved into place in coming weeks. Completion is scheduled for spring 2020.

The 11-story tower, plus a rooftop deck, will be adjacent to the Hotel Indigo, a 138-room luxury hotel. Tower residents will have access to hotel services including concierge, food delivery and room cleaning and turndown.

Prices for the condos will not be released publicly, Gardner said.

The project was designed by Otak of Portland and developed by Kirkland, a Vancouver development firm founded by Dean Kirkland.

Condo construction has been sparse in recent years, although a few developers have forged ahead with for-sale units. Most multifamily developers have overwhelmingly favored apartments during the past decade.

“There haven’t been condos built in Vancouver since the late ’90s, early 2000s,” Gardner said. She said the modest number of units and waterfront location will help the condos succeed.

“It aligned really well with this project,” she said.

The condo tower and hotel will share a firewall. The hotel will take up about two-thirds of Block 4 at The Waterfront site, and the Kirkland Tower will occupy the remainder. An in-house construction company, Kirkland Construction, will serve as general contractor.

The Waterfront is Gramor Development‘s 32-acre project along the Columbia River. At full build-out, the master-planned development is expected to have 3,300 housing units and 1.25 million square feet of office space along with restaurants and retail shops. WildFin American Grill, Twigs Bistro and Martini Bar and Ghost Runners Brewery have leased space at The Waterfront and are scheduled to open this summer.

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(Editor’s note: This story has been updated to reflect the correct project architect.)

A pair of multi-tenant restaurant buildings overlooking the Columbia River will be the first structures completed at The Waterfront, a sprawling development rising in Vancouver, Washington. Core and shell work is wrapping up on the two-story buildings; both are part of the first phase of Gramor Development‘s $1.5 billion transformation of 32 acres near the city’s downtown.

Robertson & Olson Construction is building these first two structures; others planned in the first phase include a seven-story building with residential units and ground-floor retail space as well as another mixed-use building with offices, residential units and retail space.

The two restaurant buildings total about 40,000 square feet of space and were designed by LRS Architects. One, Block 9, will have more than 17,000 square feet. WildFin American Grill will occupy the entire ground floor. A tenant has yet to be named for the second floor. The second building, Block 12, will have 28,000 square feet, including an expansive deck overlooking the river. Twigs Bistro and Martini Bar and Ghost Runners Brewery have leased space on the first and second floors, respectively. All three restaurants are aiming to open this summer.

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