An Old Town Chinatown warehouse that’s been through fits and starts of development may soon get a full renovation into creative offices.

The new owners of the two-story building at 208 N.W. Fifth Ave. have applied for design advice from the Portland Bureau of Development Services. Plans call for renovating the 75-year-old structure’s core and shell.

The warehouse – an annex to the Mason-Ehrman Building, which is listed on the National Register of Historic Places – was originally used as a storage facility for Zellerbach Paper Co. The Kalberer Company owned the building, and attempted in the past to renovate it. Then, on Jan. 8, the local, family-owned real estate investment company sold the parcel for $14.5 million.

City information lists the new owners as Los Angeles-based GC Mason Ehrman LLC. Patrick Gortmaker, vice president of Kalberer Co., said representatives of the purchasing LLC “came in with Gaw Capital Partners” when negotiating the sale.

The design advice application submitted to the city names Jonathan Malsin, a principal at Portland-based Beam Development, and Valerie Yip, senior vice president of investments at Gaw Capital Partners USA, as the building’s new owners.

“It’s a partnership between Beam and Gaw Capital USA,” Malsin Said. “They reached out to us because they were interested in doing a creative office project in the area.”

Portland-based SERA Architects has been hired to design the renovation. Plans for the approximately $450,000 project include door and window upgrades, seismic upgrades, a roof upgrade and construction of “core additions,” such as restrooms and bike parking, according to documents submitted by SERA to the city.

Renderings of the exterior indicate that the most visible changes would be the replacement of two roll-up doors on the Fifth Avenue facade with windows and a pedestrian entrance.

On the interior, drawings show restrooms with showers and bike storage built in to an otherwise open space. The first floor will have nearly 9,000 square feet of leasable space for one tenant, or almost 7,000 square feet of total leasable space if the space is occupied by multiple tenants. Plans for the second floor resemble the open first-floor space, with about the same amount of leasable space.

Gortmaker said Old Town Chinatown is ideal for renovations like this one because it offers large spaces with relatively low rent.

“There aren’t a lot of developable pieces like this one left in the city that are perfect for those creative tenants that are moving into Portland,” he said. “The spaces we have right here are everything Class A building owners are trying to replicate.”

Today, the 20,000-square-foot building sits mostly vacant, though the Portland Development Commission – a neighbor – uses a portion of the second floor to store records.

The PDC has occupied the adjacent seven-story Mason-Ehrman Building since 2001, after Kalberer Co. completed a $12.3 million remodel and partial seismic upgrade. The Mason-Ehrman Building is due for another seismic upgrade by 2018; Malsin indicated that they will complete that work during the warehouse renovation.

The occupancy and future of both the Zellerbach Paper Co. warehouse and the Mason-Ehrman Building have been uncertain in the recent past.

In 2010, the PDC considered leaving its Mason-Ehrman space in favor of a move into the unbuilt Park Avenue West, but reconsidered and released the space through 2020.

In January 2014, Portland-based Ankrom Moisan Architects Inc. began working with Kalberer Co. on a design concept for renovating the annex. Those designs included full occupancy of the warehouse space and occupancy of the second and third floors of the adjoining Mason-Ehrman Building. The firm also considered constructing a penthouse atop the warehouse. Ultimately, those plans were scrapped and Ankrom Moisan instead opted to renovate Block 8L nearby.

The current renovation project doesn’t include plans for additions to the existing structure, Malsin said.

The project team on Wednesday presented its plans for development to the Old Town Chinatown Community Association, and Malsin said attendee reactions were favorable.

“The presentation went really well; they clapped when we were finished,” he said. “I think people are happy to see progress. A lot of passes have been made on development, but nothing has stuck. We fully intend to move forward.”

The Historic Landmarks Commission will offer design advice March 9, beginning at 1:30 p.m., at BDS offices, 1900 S.W. Fourth Ave, in room 2500A.

Malsin said the project team has a pre-application conference scheduled with the bureau on March 10.

“We’re really trying to move as quickly as possible on this project,” Malsin said.

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The historic Mason-Ehrman Building – a landmark in the Old Town/Chinatown neighborhood – recently received a Leadership in Energy and Environmental Design gold rating for operations and maintenance of an existing building.

“This (LEED rating) is an extraordinary achievement for a historic building,” said Patrick Gortmaker, property manager for the building owner, Kalberer Co. SERA Architects served as a consultant for the complex LEED-EB:O&M process.

The seven-story building, listed on the National Register of Historic Places, was constructed in 1908 as a grocery warehouse. The Portland Development Commission is now the primary tenant, and New York-based Gilt Groupe recently leased 8,900 square feet of the second floor.

“The certification demonstrates the high standards of the building owners, as well as the building tenants,” Gortmaker said. “To consistently maintain such a high level of awareness within a building takes the participation of every occupant.”

Kalberer Co. installed low-flow water systems and provided lighting upgrades, while the PDC ensured that staffers would pay attention to their water and electricity usage and recycling habits. In addition, the janitorial staff switched to environmentally friendly cleaning products.

Venerable Properties and Kalberer Co. in 2001 co-developed a $12.3 million project that included major seismic upgrades and an overhaul of the mechanical system in the 70,000-square-foot building.

After the renovation, the PDC signed a 10-year lease, which was set to expire Aug. 31, 2011. The commission considered leaving the Mason-Ehrman Building and moving into the unbuilt Park Avenue West office tower, but last year it negotiated a new lease that will expire in 2020.

“It’s certainly part of our commitment to this building and this neighborhood to achieve LEED gold,” PDC spokesman Shawn Uhlman said.

The Kalberer Co.’s flexibility with the PDC’s changing space needs and the commission’s commitment to support Old Town’s fragile businesses were among the board’s reasons for staying in the Mason-Ehrman Building.

“The PDC manages their floors incredibly well,” Gortmaker said. “We’re going to see more and more (existing building) certification – especially given the enormous historic inventory in this city. When people today are looking for spaces to lease, they’re looking for LEED-rated, green buildings.”

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The Portland Development Commission board of commissioners voted Wednesday to keep their digs in Old Town. The somewhat surprising decision came after landlords of the Mason-Ehrman Building, the Kalberer Co., cut 9,000 unneeded square feet out of the deal, bringing rent and operating costs down.

The board voted 3-1 in favor of signing a new ten-year lease at the Mason-Ehrman Building, located at 222 N.W. 5^th Ave. Commissioner Steven Straus was the lone dissenting vote, although commissioner John Mohlis abstained from voting due to a conflict of interest. PDC will pay an annual average rent of $1.04 million and $511,189 in annual operating costs for 59,487-square-feet. They currently pay $1.66 million in annual average rent for 68,485-square-feet.

The commission had been weighing its options for more than a month between staying at its current headquarter in Old Town or moving to the un-built Park Avenue West tower in the Park Blocks. Construction on Park Avenue West stalled over a year ago. The PDC lease combined with two other anchor tenants would have secured the necessary funding to resume construction.

“We’re at a point and time where we need to make a decision because our budget hearing is coming up next week and this decision will significantly impact it,” J. Scott Andrews, commission chair, said during the meeting.

The decision had been delayed for the previous two weeks because the board wanted to conduct further economic impact analysis on their presence in Old Town. Additionally, the board wanted conformation that Stoel Rives LLP and Nike were still committed to leases at Park Avenue West.

A study conducted by ECONorthwest showed that PDC staff and visitors spend an average of $425,000 annually in Old Town, 80 percent of which is spent within four blocks of the Mason-Ehrman Building.

Andrews said he lost confidence in the notion the Park Avenue West would be completed upon PDC signing a lease with TMT Development after receiving a letter from Stoel Rives that didn’t confirm their commitment to the un-built building, and not even receiving a response from Nike.

“I have come to the conclusion that TMT believes we are the lynchpin for this project and I’m just not sure we are,” he said. “I don’t feel comfortable taking on that lease with that uncertainty.”

While executive director, Bruce Warner, and staff recommended signing a new lease with the Kalberer Co., the majority of public support at the meeting was for Park Avenue West.

Scott Madsen, a principal at Capacity Commercial, said PDC has done a good job finding the lowest rate between the two, but in the real market they wouldn’t even be competing because Park Avenue West is Class A office space and the Mason-Ehrman Building is Class C. Considering the different qualities of the space the price differential isn’t comparable, he said.

There was also some very heartfelt and compelling testimony from a dozen construction workers that were laid off when construction was halted at Park Avenue West.

The board was attracted to the Mason-Ehrman Building lease because of the immediate upfront costs. The old lease, which would have run through August of 2011, will be torn up when the new lease is signed. PDC will save $1 million over that time frame in reduced rent.

Commissioner Straus, the lone dissenting voter, said he was disappointed with the board’s decision. It was a momentous opportunity to do something meaningful, he said.

Commissioner Bertha Ferran said she agreed with the staff recommendation, but would hope PDC would help TMT get a tenant and resume construction. TMT president, Vanessa Sturgeon, said the company needs a lease signed by June to secure the financing to finish the project.

The post PDC votes to stay in Old Town appeared first on Daily Journal of Commerce.

The Portland Development Commission board today delayed its decision on where to headquarter its operations. The board, at its meeting on May 12, will decide whether to sign a new lease at its current home, the Mason-Ehrman Building in Old Town, or at the unbuilt Park Avenue West tower.

The board said it wanted additional time to conduct further economic impact analyses of both areas and to provide the public with an opportunity to look over the numbers associated with each proposed lease.

“We want as many critical eyes to look at these numbers as possible,” said Scott Andrews, the chairman of the PDC board. “We’ve come to the decision today that there are just too many loose ends.”

Wednesday’s meeting offered a glimpse into the proposed lease agreements for both buildings. Currently, the PDC pays $1.65 million a year in rent, with $507,474 in operating costs for 68,485 square feet of space. Under a new, 10-year lease offered by the Kalberer Co., owner of the Mason-Ehrman Building, the PDC would pay a base rent of $1.16 million a year and $581,927 in annual operating costs. If the PDC were to sign a 10-year lease with TMT Development, owner of Park Avenue West, the commission would pay $1.25 million in annual rent and $340,261 in annual operating costs for 50,203 square feet of space.

The PDC would be leasing 18,000 fewer square feet at Park Avenue West, and operating costs would be significantly lower because of energy efficiency. Under the lease with the Kalberer Co., the PDC would have the opportunity to sublease one floor of the building, which would result in reduced rent and operating costs.

Andrews told attendees in the packed room that this decision was the most difficult one involving him in his time on the board. He said the PDC is faced with two very distinct issues: spurring economic growth and spending public dollars wisely.

“If I were in the audience today I would want to know what the factors are that are driving this decision,” he said.

The board also will take the next two weeks to confirm that Stoel Rives LLP, the proposed anchor tenant at Park Avenue West, is committed to its lease with TMT if construction were to resume. TMT needs the PDC lease, in addition to the Stoel Rives lease, by June in order to secure financing and restart construction.

“We need to make sure we are the keystone for this project,” he said.

The debate over where the PDC should be headquartered has picked up steam over the past month.

On one side, if the PDC were to sign a lease at Park Avenue West, then Portland could see an economic boost. Resuming construction would create 300 on-site jobs and put 30 steel manufacturers back to work immediately. Also, once Park Avenue West was completed, TMT would pay $1.8 million annually in property taxes.

On the flip side, the PDC’s presence has been instrumental in the growth of Old Town over the past 10 years. Numerous lunch spots, coffee shops and markets have opened in the district since the PDC moved its 185 employees to Old Town in 2001. Plus, a proposal by Seattle-based Uwajimaya Inc. for a large, mixed-use development in Old Town could hinge on the PDC’s decision.

The post PDC stalls decision on future headquarters appeared first on Daily Journal of Commerce.

The debate over where the Portland Development Commission should headquarter its operations once its lease runs out next year is turning into a heavyweight bout of sorts. In one corner is Old Town and the PDC’s current digs, the historic Mason-Ehrman Building. In the other corner is the downtown retail district and the state-of-the-art, albeit unfinished, Park Avenue West Tower.

Each contender is circling the ring, listening to the arguments from the other side and countering with its own. The Mason-Ehrman Building would offer the PDC lower rent, the benefit of not having to move and space in a repurposed historic building within a historic district. On the other hand, Park Avenue West boasts premium office space, pre-certified LEED platinum, in a central part of town.

Both landlords have expressed what this lease would do for the residents and businesses in their respective districts, and the city as a whole.

Park Avenue West

The major tenet of the Portland Development Commission is to promote economic growth in Portland. Choosing Park Avenue West as its new headquarters would have the most direct impact toward achievement of that goal.

Construction on the yet-to-be-built high-rise, at 700 S.W. Ninth St., has been stalled since April 2009 because of funding issues. TMT Development, the company developing the 26-story mixed-use building with over 300,000 square feet of office space, already has an anchor tenant for Park Avenue West. Stoel Rives LLP is set to lease more than 150,000 square feet on 11 floors, but an additional tenant must be secured by June 1 for the project to meet the stipulations set by private financiers. Representatives of Stoel Rives will be making a decision in early June whether to fulfill their lease with TMT or seek another location.

Vanessa Sturgeon, president of TMT, said the need for the PDC to sign a lease is a matter of timing. TMT needs to lease three more floors by June and the PDC needs a lease by mid-May. No private company could commit to a lease that big in such a short time, she said.

The PDC would lease slightly less than 50,000 square feet on three floors in Park Avenue West for 10 years beginning September 2011, when the PDC’s current lease runs out. The state-of-the-art space would be constructed to the needs of PDC. The high-rise is pre-certified LEED platinum and is more centrally located than the PDC’s current home at the Mason-Ehrman Building.

“PDC would accomplish three of its goals by moving to Park Avenue West,” Sturgeon said. “It gives them the opportunity to be in a very sustainable building, puts Oregonians back to work by creating construction jobs and becomes an economic catalyst during this economy.”

If construction were to resume, 30 steel fabricators would return to work immediately for Tigard-based steel manufacturer Fought & Co., which has been hit hard by the recession. TMT estimates that 300 full-time, on-site jobs would be created if construction of Park Avenue West were to resume.

While the lease rate for Park Avenue West is presently confidential, rent will undoubtedly be higher than at PDC’s current home, the Mason-Ehrman Building. But Sturgeon pointed out that the rent differential isn’t as great as it is being perceived.

“The rent differential is insignificant,” she said. “The $975,000 in one-time, above-ground permit fees that TMT will pay the day construction resumes more than covers the rent delta between the two buildings over a 10-year lease.”

To sweeten the deal, TMT would pay to move PDC offices to Park Avenue West.

The city also would benefit from $1.8 million in annual property taxes once Park Avenue West is completed.

“There is no doubt that PDC has left a lasting footprint in Old Town,” Sturgeon said. “But the downtown business and retail district is hurting in this economy and is in need of a similar catalyst. Continuing this project could single-handedly jump-start the local economy, not to mention the effect it will have on financing big projects across the country.”

Mason-Ehrman Building

The Portland Development Commission’s current home is the Mason-Ehrman Building, a 68,000-square-foot structure at 222 N.W. Fifth Ave. in Old Town. The building was originally constructed in 1908 and is a contributing structure in the nationally registered New Chinatown/Japantown Historic District. The Kalberer Co., owner and landlord of the old warehouse, redeveloped and seismically upgraded the space in 2001. The Kalberer Co. charges the PDC $24 per square foot for the space, 8 percent above market value, in order to pay off a portion of the building’s $13 million remodel.

The Kalberer Co. has proposed two new 10-year leases for the PDC, each of which would terminate the current lease of just under 60,000 square feet. One would eliminate about 10,000 square feet from the lease due to the Portland Housing Bureau‘s relocation. The other lease would be for the entire building, but would give the PDC six months of free rent for 10,000 square feet in the building, or until a tenant was found to sublease the extra space. In each instance, the lease would be for approximately $17 a square foot, with a 3 percent annual increase.

But not only would Kalberer Co. be offering rent at a substantially lower rate, it also would be forgiving about $2 million in revenue by terminating the old lease immediately and locking into a 10-year deal, said Mike Kalberer, co-president of Kalberer Co.

“For two decades Old Town has struggled to find the right balance between retail, restaurants and services,” Kalberer said. “When PDC moved here in 2004, it showed everybody that Old Town is a good place to do business.

“The University of Oregon has even said that they didn’t decide to move to Old Town (in the White Stag Building) until PDC made that jump. The same goes for the Northwest Health Foundation as well.”

Kalberer pointed out that the PDC’s decision could ultimately affect a large proposed development at Block 33 in Old Town. The development, being proposed by the Seattle-based Uwajimaya Inc., would consist of 177 new housing units and a large-scale Asian grocery.

“The company is at a decision point right now and is waiting on this lease to determine whether to develop Block 33 or take a different route,” he said.

While leasing at the Mason-Ehrman Building would meet the charge to relocate city offices into historic buildings whenever possible, it would negate the charge to relocate city offices into sustainable buildings whenever possible. Noting this, the Kalberer Co. is in the process of applying for LEED gold certification for remodeled existing buildings. The company hopes to have the designation within a year.

There has been ample support from Old Town residents and businesses, including Central City Concern, the Historic Preservation League of Oregon and the Old Town Chinatown Neighborhood Association.

“Downtown Portland is only as strong as its weakest link, (and) right now that link is Old Town-Chinatown,” said Alexander Mace, chair of the OTCTNA, in a letter to PDC Executive Director Bruce Warner. “Today, our neighborhood has the best chance in the past quarter-century at continuing to grow into a livable balanced neighborhood for daytime workers, residents and nightlife. PDC’s relocation would tragically jeopardize that opportunity.”

Patrick Gortmaker, property manager at the Kalberer Co., said the PDC’s presence in Old Town has benefited economic growth in the area, but blight still exists. Also, removing 185 employees from the already small workforce pool in Old Town would be detrimental to future growth, he said.

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Friday I was afforded the opportunity to meet with Vanessa Sturgeon of TMT Development, Rex Smith of Fought & Company and Shannon McCarthy Berg of Gallatin Public Affairs. As I understand it, the group is making its rounds to local media outlets in order to promote Park Avenue West, the stalled high rise located at 700 S.W. Ninth St. in downtown Portland, as the most viable candidate to become the new home of the Portland Development Commission. The PDC board will be making its final decision on the future home for its 185 employees next Wednesday, deciding between Park Avenue West and the Mason-Ehrman Building, PDC’s current home located at 222 N.W. Fifth Ave.

Construction of Park Avenue West has been stalled since April 14 of last year. While they already have an anchor tenant – Stoel Rives Law Firm has signed a lease for over 150,000 square feet – TMT Development needs to sign an additional tenant by June to meet the stipulations set forth by lenders to continue construction. PDC would lease enough space to meet those stipulations. Also, Stoel Rives can’t wait forever, and they will reconsider its lease at Park Avenue West if those same stipulations aren’t met by June.

It is an interesting argument. Choosing Park Avenue West would accomplish one of the major goals of PDC, economic development. TMT will pay $975,000 in above-ground building fees and $1.8 million a year in property taxes, all of which would supposedly go away if PDC didn’t sign the lease. Not to mention 30 steel fabricators that would go back to work with Fought & Company if the project was resumed. But, the premium office space would come at a greater cost than the PDC’s current digs.

On the other side, rent is cheaper in the Mason-Ehrman Building, a nice perk for tax payers in this economy. Plus, PDC has been instrumental in bringing some of the current operations to Old Town, like the University of Oregon and Mercy Corps.

The first question I asked Sturgeon was, “Why does it have to be PDC? Couldn’t you attract another outfit for the space?”

The answer was simple. PDC needs a lease by mid-May, TMT needs a lease signed by June. No private company could sign a lease in that short of time, said Sturgeon.

She also suggested that if a lease wasn’t signed now, it could be up to ten-years before the project is resumed, based on average real estate cycles for office space needs of this quality in Portland. Although this could very well be a real possibility, it is a worst-case-scenario of sorts as there are several other stipulations that could get construction started again. The point is, it is going to be a whole lot harder to start construction again on the stalled high rise if PDC doesn’t sign this lease.

But more than just getting PDC to sign a lease so construction can continue, Sturgeon believes that Park Avenue West is a great fit for PDC. It has great access to public transportation, is pre-certified as LEED Platinum and is close in proximity to the Bureau of Housing.

As for the rent price differences (which are confidential right now), Sturgeon suggested that the $975,000 in above ground permits would more than cover the rent differential over a ten-year lease period.

“We can’t overestimate the importance the Park Avenue West project will have on the region,” said Sturgeon. “Continuing this project could single-handedly jump start the local economy. Not to mention the effect it will have on financing big projects across the nation.”

While PDC has yet to make a decision, it is an interesting story nonetheless. Look out for a side-by-side comparison of the buildings sometime next week in the 91ĘÓƵ.

The post Park Avenue West campaigns for PDC lease appeared first on Daily Journal of Commerce.

Friday I was afforded the opportunity to meet with Vanessa Sturgeon of TMT Development, Rex Smith of Fought & Company and Shannon McCarthy Berg of Gallatin Public Affairs. As I understand it, the group is making its rounds to local media outlets in order to promote Park Avenue West, the stalled high rise located at 700 S.W. Ninth St. in downtown Portland, as the most viable candidate to become the new home of the Portland Development Commission. The PDC board will be making its final decision on the future home for its 185 employees next Wednesday, deciding between Park Avenue West and the Mason-Ehrman Building, PDC’s current home located at 222 N.W. Fifth Ave.

Construction of Park Avenue West has been stalled since April 14 of last year. While they already have an anchor tenant – Stoel Rives Law Firm has signed a lease for over 150,000 square feet – TMT Development needs to sign an additional tenant by June to meet the stipulations set forth by lenders to continue construction. PDC would lease enough space to meet those stipulations. Also, Stoel Rives can’t wait forever, and they will reconsider its lease at Park Avenue West if those same stipulations aren’t met by June.

It is an interesting argument. Choosing Park Avenue West would accomplish one of the major goals of PDC, economic development. TMT will pay $975,000 in above-ground building fees and $1.8 million a year in property taxes, all of which would supposedly go away if PDC didn’t sign the lease. Not to mention 30 steel fabricators that would go back to work with Fought & Company if the project was resumed. But, the premium office space would come at a greater cost than the PDC’s current digs.

On the other side, rent is cheaper in the Mason-Ehrman Building, a nice perk for tax payers in this economy. Plus, PDC has been instrumental in bringing some of the current operations to Old Town, like the University of Oregon and Mercy Corps.

The first question I asked Sturgeon was, “Why does it have to be PDC? Couldn’t you attract another outfit for the space?”

The answer was simple. PDC needs a lease by mid-May, TMT needs a lease signed by June. No private company could sign a lease in that short of time, said Sturgeon.

She also suggested that if a lease wasn’t signed now, it could be up to ten-years before the project is resumed, based on average real estate cycles for office space needs of this quality in Portland. Although this could very well be a real possibility, it is a worst-case-scenario of sorts as there are several other stipulations that could get construction started again. The point is, it is going to be a whole lot harder to start construction again on the stalled high rise if PDC doesn’t sign this lease.

But more than just getting PDC to sign a lease so construction can continue, Sturgeon believes that Park Avenue West is a great fit for PDC. It has great access to public transportation, is pre-certified as LEED Platinum and is close in proximity to the Bureau of Housing.

As for the rent price differences (which are confidential right now), Sturgeon suggested that the $975,000 in above ground permits would more than cover the rent differential over a ten-year lease period.

“We can’t overestimate the importance the Park Avenue West project will have on the region,” said Sturgeon. “Continuing this project could single-handedly jump start the local economy. Not to mention the effect it will have on financing big projects across the nation.”

While PDC has yet to make a decision, it is an interesting story nonetheless. Look out for a side-by-side comparison of the buildings sometime next week in the 91ĘÓƵ.

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