Self-storage projects around the Portland-metro area are on hold amid a burst of oversupply, and few are likely to be built anytime soon, according to analysts and developers.

For years, Portland has been one of the nation’s busiest markets for self-storage construction. In the Pearl District, for example, inventory has risen from 250,000 square feet five years ago to 550,000 square feet today.

“The negative is Portland is the number one most overbuilt market in the world,” said Kevin Howard, owner of Northwest Self Storage, a large operator based in Clackamas with 97 facilities around the region. “Not just in the country – in the world.”

Rental rates in Portland for 10-feet-by-10-feet climate-controlled units have dropped 10 percent since 2017, according to a Cushman & Wakefield report released July 7.

Self-storage companies were attracted to Portland, which was touted along with Denver and San Antonio as a growing market. Self-storage has some of the highest operating margins of any real-estate class – upwards of 60 percent to 70 percent margin on net operating income, according to Cushman & Wakefield. High-dollar sales helped pique interest.

“There was a lot of pent-up money,” Howard said. “Developers were looking to release that money.”

More recently, however, in-migration has slowed and the COVID-19 pandemic sent shockwaves through the economy. And as developers rushed to meet demand for self-storage, they quickly exceeded it.

Portland was among the leading markets of a long expansionary bubble, with construction spending on storage nationally surging 584 percent from January 2015 to January 2020, according to the U.S. Census Bureau. Yardi Matrix, a national real estate analysis firm, recently forecast new self-storage deliveries in the U.S. to fall 52 percent by 2023, Cushman & Wakefield reported.

Some local projects were paused, and may never be built. A six-story self-storage facility from Hoyt Street Properties in the North Pearl District was approved by the Portland Design Commission in April 2018. Construction of the 129,520-square-foot facility designed by MCA Architects has not begun.

“We have put the project on hold for now,” Tiffany Sweitzer, president of Hoyt Street Properties, stated in an email. “We still think storage is a viable option for a future project on our property, but just not sure when we might take up the project again. Given the density built in the Pearl, this would be a great asset to those living in both condos and apartments.”

Hoyt Street Properties would have more time to begin building the facility under a plan being considered by the City Council to extend development deadlines. If proposed amendments were approved, the project team would have until Jan. 1, 2024, to begin construction.

Northwest Self Storage recently opened a new facility at 4716 S.E. Powell Blvd. Before that, the company built one on Southeast 82nd Avenue. Another facility opened in Camas, Washington, after a lengthy delay in obtaining an elevator inspection because of the pandemic, Howard said. But no more will follow in the foreseeable future, he added.

“That’s all on hold,” he said. “Obviously, with this kind of market, there’s a couple of them I wish I hadn’t built.”

Others stopped short of construction. A PacTrust proposal to build a multistory storage facility north of Benson Polytechnic High School went before the Portland Design Commission for design advice in 2018, but the project has not moved forward.

Occupancy has held up amid the pandemic, Howard said. Few people are moving, but some renters are consolidating apartments or moving back in with their parents and need storage, he said.

Other large self-storage projects have popped up around Portland, including West Coast Self-Storage, a four-story (three above grade) building at Southeast McLoughlin Boulevard and 17th Avenue; and Extra Space Storage, a four-story, 126,820-square-foot facility at 685 S.E. Division Place that is part of a Salt Lake City-based chain. Both projects were completed in 2019.

Storage unit rents in the Portland-Hillsboro-Vancouver area fell 4.9 percent in May, compared to a year earlier, according to a survey by Yardi Matrix. The metro region remained among the most expensive self-storage markets in the U.S., with the 10th-highest rent among the top 100 markets. The average rent for a standard unit was $135 in May.

Nationally, self-storage has largely avoided the rush of consolidation that has transformed other industries. Approximately 20 percent of the market is owned by the five largest real estate investment trusts – Public Storage, Extra Space Storage, CubeSmart, Life Storage and National Storage Affiliates (NSA) – while the remainder is owned mainly by small operators, according to the Cushman & Wakefield report.

“Self-storage remains relatively resilient with minimal fundamental changes to underlying drivers of demand in the long term,” the analysts stated.

Yet in Oregon’s largest city, the expansion has created a massive oversupply, Howard said.

“It’s a bloodbath in Portland,” he said.

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Portland design commissioners agreed that exterior alterations proposed for the PacWest Center are headed in the right direction, but not yet ready for approval.

“I think it’s a very sensitive intervention of a very interesting building,” Commissioner Samuel Rodriguez said during a design review hearing on Thursday.

Construction of the 30-story PacWest Center finished in 1984. It’s part of the transit mall, on the block surrounded by Southwest Madison and Jefferson streets and Southwest Fifth and Sixth avenues. Lincoln Property Co. owns the skyscraper.

Plans call for remodeling the Fifth Avenue entrance, removing the canopy at the Sixth Avenue entrance, removing and replacing granite planters, sidewalk material, steps and landscaping by the Fifth and Sixth entrances as well as the east corner of Madison Street, and altering the third-floor roof terrace.

“This is an important project for the city,” Vice Chairman Tad Savinar said. “This is a fantastic building that serves fantastic tenants. It’s a dream and we’re fortunate to have it.”

The project goals are to create presence through the entries, cultivate and activate the ground-floor experience and enhance the landscaping, according to GBD Architects‘ Dustin White.

“We’re trying to offer better opportunities and enhance opportunities for pedestrians,” he said.

Along the main entrance on Fifth Avenue, designers proposed removing the existing one-story entry vestibule and partially removing the existing metal panels and glass at the second level façade, and then adding a two-story vestibule and a new metal canopy above it.

They also proposed removing the granite planter that is partially in the sidewalk and replacing it with two smaller planters in an effort to open up the pathway to the entrance.

“We feel that it struggles because the sense of identity as an entrance is not there,” White said about the existing layout.

The design team also wants to replace the large canopy over the office entryway along Sixth Avenue and a portion of the storefront with a new all-glass entrance. However, commissioners didn’t approve the proposed change to pavement material on the sidewalk adjacent to the building.

For the corner retail space along Madison Street, the team proposed removing the brick planter, stair and railing, and installing a granite planter, retaining wall and glass railing.

Retail has struggled in the building for quite some time, White said, so the goal is to highlight the retail space by increasing the visibility and improving the entrance.

However, commissioners didn’t like revisions to the Madison Street corner and asked for the design team to come back with alternatives.

“I think in general the concept is a good idea, but not the execution,” Commissioner Jessica Molinar said. Commissioner Andrew Clarke agreed, saying he doesn’t think the alterations create a successful retail space.

For the third-floor terrace, the design team proposed replacing the existing planters and landscaping with new metal planters, wood benches and lighting.

Overall, most commissioners said they like the direction of the proposal, but want to see some revisions.

“What you’re proposing is waking up that area, that whole pedestrian experience,” Clarke said. “You’ve been able to add a lot more usable space for the tenants and a lot more spaces for people who have to walk around this whole entire building and experience it from a whole block perspective.”

The design team will come back on April 26 to present design alternatives.

Also on Thursday:

Pearl District storage facility design approved

The Design Commission voted 5-0 in favor of a proposal by developer Hoyt Street Properties to build a new 129,520-square-foot self-service storage facility in the Pearl District, on a vacant site at Northwest Savier Street and 14th Avenue.

MCA Architects‘ design calls for a six-story, 97-foot-tall building with an 8,400-square-foot plaza and six ground-floor retail spaces. A 20-foot-high rose sculpture by artist Ivan McClean has been proposed within the plaza.

The building’s upper stories will be clad in metal panels, with alternating gray tones, and glass. Entry to the storage facility and surface parking area will be along 14th Avenue.

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At nine or 10 stories – depending how you count the original mezzanine – the Woodlark Building was one of Portland’s early skyscrapers. When its ribbon was cut in 1912, “one of the most modern and complete buildings of its kind.”

Next door is the equally illustrious Cornelius Hotel, which, over its 108-year life has served as an upscale hotel, a gay bathhouse and a fire-scarred vacant building.

Now, workers are fusing the two historical properties into a 150-room hotel for the ownership trio of Arthur Mutal, NBP Capital and Provenance Hotels.

“They want a nice hotel that also respects the unique history of the buildings,” said architect Christian Robert, principal at R&A Architecture, one of the architects employed for the project.

Owners kicked around a number of ideas for the past couple years, including various combinations of office, multifamily and hotel. They also purchased the nearby Sullivan Building and other adjoining parcels.

Robert said the design team had to “fight for every inch” to update the buildings and still abide by preservation guidelines. Certain materials and building technologies considered out of touch with the original historical era – including exposed brick in the lobby – were nixed in design development. To maximize space, the team created unique mezzanine and junior suites that employ the historic ceiling heights.

The project will have two restaurants – one for formal dining and a smaller tavern in the Cornelius building’s northern portion, the original entry lobby of the hotel.

Design-wise, there are a lot of cooks in the kitchen. Firms are under contract for room design and the design of the ground-level bar area that wasn’t included when the project went through permitting. And after the first construction permits were obtained (which took more than a year), R&A took over construction administration from the project’s initial architect, MCA Architects.

MCA has stayed on as architect of record.

“These are very old buildings,” MCA partner Dan Gates said. “There’s a million things about this project. It’s very complicated.”

Combining two buildings that have non-aligning floors is no easy task.

“None of the floors actually match up, so we solved it by providing a different stair length at each level,” Robert said.

Another major task is bringing Woodlark and Cornelius up to seismic code. The Woodlark is a concrete building. The Cornelius has some steel columns in the center, but is basically a wood-framed building with exterior walls made of unreinforced masonry (URM).

To achieve uniformity, the contractor, LCG Pence, is employing shotcrete with a fiberglass mesh to stabilize the URM from within. Other advantages include requiring less space to apply, and allowing the team to retain more of the historic URM.

In a way, tying two buildings together provides structural support, Robert said.

“It’s like you have two feet to stand on,” he said.

R&A project lead Richard Destin said it’s an honor to bring old artifacts back to life. And it’s exciting to work on a wood high-rise, he added, at a time when emerging mass timber products are de rigueur.

“Under current code, none of it would be allowed,” he said.

The Woodlark

Cost: $30 million

Architect: R&A Architecture

Architect of record: MCA Architects

Contractor: LCG Pence

Expected completion: spring 2018

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Bringing an iconic Oregon business’ store into the future can be a challenge for any design and architecture group. Plus, pressure to deliver can arise when the store is located in one of the top-rated airports in the nation.

But the architecture and design teams of MCA Architects, Czopek Design Studio and COR Construction rose to the challenge and “refreshed” the Made in Oregon store on Concourse C at Portland International Airport.

“We wanted to enhance the brand,” Made in Oregon General Manager Candace Vincent said. “We wanted it to still be Made in Oregon and have an easier flow of shopping. We wanted to have a cleaner environment.”

The result was a redesign of the 950-square-foot store that has made it the showpiece of the company. Features include new fixtures, a “living wall” and fiberglass trees to keep the Northwest vibe of the store. The aisles were also expanded and the number of products was reduced to make the store feel less cluttered.

“The funny thing is all the people don’t realize that it’s Made in Oregon because it looks so different,” Vincent said.

The revamp was necessitated in 2015, when the Port of Portland decided to require businesses at the airport to update their store appearances. Businesses were required to re-apply in order to keep their existing locations.

Currently, Made in Oregon has three locations at the airport – one outside of security checkpoints, one on Concourse C and another on Concourse D. However, the company was allowed to keep only one of the two concourse locations and chose to keep the one on Concourse C; the store on Concourse D will close Jan. 31, 2017.

“The deal was you could bid on as many (locations) as you want, but you could only get one (location),” Vincent said.

The Port of Portland had very specific guidelines as to what a successful applicant would have to include. The redesigned stores would have to include a high level of design and quality of material. The companies would have to incorporate features that account for employees’ well-being and ergonomics. The designs would also have to improve the look and user experience within the business.

There were also environmental requirements that factored into product choices.

“The port has exceedingly high standards for materials,” Czopek Design Studio principal Linda Czopek said. “They have requirements about all the things that can be used.”

Czopek Design Studio dealt with much of the interior design and meeting the port’s requirements. One of the big ones was that no synthetic materials or plastics be included.

“A lot of shelving is plastic or vinyl, and we had to avoid that,” Czopek Design Studio senior designer Jen Pucillo said. “We had to custom-build most of the retail fixtures to use more sustainable materials.”

In an effort to keep much of the custom work local, the design team turned to Overkill Design and Creation for much of the shelving and Oregon Lumber for flooring. The port’s requirements affected nearly all decisions made during the redesign.

“There were some cases in terms of durability that the requirement to use all natural materials determined what we used,” MCA Architects associate Frank Rudloff said. “Some of those might not wear as well as some synthetic materials might. Overall, I think it’s a positive thing.”

Other challenges in the redesign involved the airport environment. In most retail businesses, patrons aren’t dragging luggage behind them. The fact that Made in Oregon sells such a variety of products in such a small space presented problems.

“They have a lot of (foot) traffic,” Czopek said. “You have to have materials that can hold up to it. Everything has to be super-efficient. Wrapping and bagging can’t take up half the store. People are carrying bags, dragging suitcases. We were really focused on trying to make the experience of going through the store a little more pleasant.”

Another challenge that was unique to the redesign was security. For most projects, construction workers don’t have to pass security checks and wear badges. Then there was the fact that Made in Oregon wasn’t the only store undergoing construction.

“The whole security and the badging process takes time if they aren’t already badged,” Rudloff said. “That can be surprisingly long. The port set the process up where they had a lot of work going on all at the same time. There usually is not such a concentrated amount of work being done by so many people. We also had to do a lot of work at night when it’s less busy.”

Timing was a big element of planning and execution of reworking the store. Construction began the weekend after Labor Day and was completed on Nov. 23. During construction, the company had to settle for operating out of a small kiosk in front of Gate C8.

“Our first goal was Nov. 8,” Vincent said. “Then our main goal was to be up and running by Thanksgiving. We had this little kiosk, but we had to take it down every night. It was definitely an inconvenience.”

Much of the delay stemmed from Made in Oregon’s need to special-order many of the fixtures and shelving.

“The time that it took to order the special lights and the fiberglass trees caused issues,” Vincent said. “We definitely kept the ‘Northwesty’ feel we wanted.”

Despite all of the obstacles, everyone involved was pleased with the results. In fact, some of the design changes could be incorporated into some of Made in Oregon’s nine other locations around the state.

“There are elements from that store that could be used in other places,” Vincent said. “I think it is one of our best accomplishments in the company. I think it turned out well beyond our expectations.”

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