After more than three decades, a is coming near the Oregon Convention Center.

Arrangements for bond funding are expected to close Aug. 8, with demolition and other prep work on the site north of the convention center set to commence shortly after, said Tom Lander, executive vice president for Mortenson.

Mortenson closed on its $165 million construction loan. Regional government body Metro, which operates the convention center, is in the process of selling $60 million in bonds.

Lander expects Mortenson to hand over the property to Hyatt at the end of 2019. The hotel is scheduled to open to the public one month later.

He’s confident the firm will be able to weather the labor shortage gripping the construction industry during this period of unprecedented growth.

“Mortenson has had an office in the Northwest for more than 30 years,” he said, referring to the design-builder’s Seattle office. Mortenson opened a Portland office around six years ago.

“We have a strong presence in the Portland market. We have a strong relationship with the local unions, and we have identified our subcontractors and we feel that we are in a good position to advance the project. But it is a challenging market and it’ll be a fun build.”

The $240 million building will have 600 rooms, a market, a bar and a restaurant. The 14-story hotel will be located on two blocks just north of the Oregon Convention Center in the Lloyd District. A parking garage with 419 spaces is being developed with the help of Prosper Portland.

TriMet‘s MAX light-rail train already has a station that will be between the convention center and the 440,000-square-foot hotel.

Of the total project cost, around $170 million will be covered by Hyatt, $60 million by Metro bonds, $10 million by the Oregon Lottery and $4 million by Metro grants.

Economic development interests in the area have tried since the late 1970s to recruit a large-capacity hotel to the convention center Urban Renewal Area. The most recent effort to delay the project was a set of legal challenges by a rival developer. The matter was settled when Metro agreed to allow that developer, Gordon Sondland, to control a nearby parking structure.

Hyatt Regency Hotel

Size: 440,000 square feet

Cost: $240 million

Contractor: Mortenson

Design: ESG Architects, Mayer/Reed Landscape Architecture, Hyatt

The post Finally, huge hotel poised to rise in Lloyd District appeared first on Daily Journal of Commerce.

In 2017, Portland is poised to be the city that works on parking garages.

The city is preparing to spend tens of millions of dollars on parking even as it pursues goals to fight climate change and promote dense, walkable neighborhoods.

The moves by the Portland Development Commission and the Portland Bureau of Transportation are prompting new criticism from a coalition of activists and armchair urban planners who are pushing a future for central Portland that is less reliant on cars.

The PDC is working with Mortenson Development to build a $20 million, 425-stall parking garage adjacent to the Hyatt Regency hotel, which crews are expected to start building near the Oregon Convention Center in June. Meanwhile, in a previously unreported move, the PDC is in discussions with Guardian Real Estate Services to buy the parking portion of the proposed Block 33 mixed-use building in Old Town Chinatown for an as-yet-undisclosed sum, and then lease it back to the developer.

Also, the Portland Bureau of Transportation and the PDC are moving forward on plans to renovate the city’s towering parking garage between Southwest Ninth and 10th avenues and Morrison and Yamhill streets.

Taken together, the plans indicate the city wants to grow central Portland’s parking stock alongside the extensive parking construction planned by private developers.

The public parking garage spending comes as the city promotes other initiatives, from the streetcar to Biketown to the $135 million vehicle-free Tilikum Crossing, to get residents and visitors out of their cars and on their feet or into public transit vehicles or onto bikes.

The largest parking project on the boards is Mortenson‘s $25.9 million deal with the PDC to build the parking garage at the Hyatt Regency hotel near the Oregon Convention Center. Critics of new parking say it’s a risky long-term deal.

PDC documents show the hotel would use 375 stalls, with the other 50 stalls to eventually be sold to TriMet. The garage would bring in approximately $1.8 million in annual net operating income, according to the agency.

Tony Jordan, a Portland activist who founded the anti-parking group PDX Shoupistas, said he’s skeptical that the garage will meet projections given the rise of ride-share platforms such as Uber and the proliferation of do-it-yourself lodging like Airbnb.

“If this garage next to the Hyatt is such a good deal, why isn’t Hyatt doing it?” said Jordan, whose group is named for Donald Shoup, an influential urban planner.

“You have a building that’s going to be around for a long time, that PDC is going to pay for for a long time, that’s going to exist in a very different transportation environment,” he said. “All of these factors conspire to say that this garage is not going to be full in 2025.”

A PDC spokesman said that without the garage, the Hyatt Regency hotel – a long-planned anchor for the Lloyd District – would not be built.

“The project doesn’t move forward without the garage,” PDC spokesman Shawn Uhlman said. “Fundamentally, this is part and parcel to that.”

The garage is to be constructed with further development of the site in mind. A 100,000-square-foot office building on top of the garage would help increase density and activity, including along the MAX light-rail line, and increase property tax revenues, according to the agency.

The Hyatt Regency is expected to bring in $600 million in tourism spending each year and millions of dollars more in tax revenue. The hotel could also give Portland enough capacity to host big events such as an NBA All-Star game.

“It’s a 600-room hotel,” Uhlman said. “That’s a really big number of guests. It’s pretty difficult to imagine a hotel of that size without a parking operation.”

The PDC has already given Mortenson $1.2 million to design and plan for the parking garage, all of which has been spent, according to a report from the agency.

Ground is anticipated to be broken in June, and the PDC is holding ongoing meetings for interested subcontractors.

The PDC has taken note of the criticism regarding its focus on parking garage construction. The agency even posted a lengthy explanation on the frequently asked questions section of its website.

Ethan Seltzer, a Portland State University professor of urban studies and planning, said it makes sense for the city to incorporate motor vehicle parking into its plans.

“As long as there are cars in the road, there’s going to be a need to have somewhere to put them,” he said.

Yet there’s a risk that driver behavior could change so quickly in coming years that large parking garages will become relics. Urban residents are driving less, and the advent of driverless cars could dramatically change demand for parking.

“What seemed like total science fiction a few years ago is seeming like an inevitability in the next five,” Seltzer said. “If you have driverless cars, you don’t need parking structures. You don’t need parking.”

Developers are broadly supportive of more parking in Portland’s urban center.

“Parking is not a highly profitable component,” said Tom Brenneke, president of Guardian Real Estate Services. “It drives many deals forward or not. “The idea of having more parking rather than less, if the city would partner it’s just going to increase the development potential in the city.

“You need people in the core to have a successful development.”

Guardian’s development plans for Block 33 include two levels of underground parking with 200-plus spots. The site has the potential for more, Brenneke said.

“We have potential to do a third (level) and are considering that,” he said. “We would probably need a PDC-type partner if we were going to do that.”

Guardian sent a letter of intent to sell the parking to the PDC, according to the Feb. 8 document. Jordan obtained the letter via a public records request.

The deal has not been finalized, Brenneke said.

“We have no deal with PDC, but we’ve had some dialogue,” he said.

The full-block project also has to clear the Historic Landmarks Commission, which questioned the proposed height in an initial hearing.

“We’re trying to get our height issue figured out,” Brenneke said. “Our deal works at 125 feet; it doesn’t work at anything less.”

Additional parking would increase the project’s cost.

The city is also working to extend the life of existing parking garages. In February, the city submitted a design advice request to make improvements to the seven-story Smart Park garage at Southwest 10th Avenue and Yamhill Street.

The city wants to remove stairs and elevators from two corners in favor of additional retail space. Existing retail tenants have received 18 months’ eviction notice, but will be welcome to reapply for space in the building later, according to the agency.

The plan also calls for mechanical upgrades, access improvements and new canopies and solar panels. The number of parking stalls will not change.

The post City driving ahead to expand parking stock appeared first on Daily Journal of Commerce.

Plans for a new 15-story, 221-room hotel at the corner of Southwest 11th Avenue and Alder Street won conditional approval from the Portland Design Commission by a 4-3 vote on Thursday.

Despite the close vote, there was widespread agreement among the commissioners that SERA Architects had made major strides with the design since its first appearance in July 2016. The major point of contention was whether remaining issues with Mortenson Development‘s project should be addressed via the Design Commission’s involvement.

Jeff Roberts, a SERA Architects associate, contended that major design progress had been made and that the remaining issues didn’t warrant another meeting before the commission. He said he believes the team can address the issues by working with city staff under conditional approval.

“I am completely respectful of the commission’s opinion,” he said. “I think we have shown you a very extreme, modern (side) and a very conservative side. I think we have made a very good faith effort to find a middle ground and advance the building a long way.”

The main problem remaining, commissioners said, lies with the design of two sides of the structure. While they liked window-heavy plans for the north and east sides, they decidedly disliked designs for the south and west facades.

“It looks like nobody’s home,” Commissioner Tad Savinar said. “I think it deserves one last pass.”

Commissioners said they want to see the walls modified in a way that distinguishes the structure because they will be prominently visible aspects.

“They have come a long way,” Commissioner Don Vallaster said of the project’s designers. “Why not take it over the finish line instead of stopping 10 yards back. It’s also (an) important location and important part of the city.”

Design Commission Chairman David Wark added, “Given the fact that this is a 100-year building, I think the two facades on the street could use that one last push to get that energy and have more to them and not have so much repetition.”

Roberts agreed that the two walls in question could be improved.

“We need to go back and work through that with staff and advance it in a meaningful way,” he said, “but to spend another month going back through and getting back on the calendar to look at those two elevations, I would prefer to keep moving.”

Other commissioners agreed that needed changes could be handled by city staff with conditional approval.

“I do have some reservations,” Commissioner Julie Livingston said. “Does it merit a trip back?”

Commissioner Jessica Molinar said conditional approval was appropriate.

“This is already adding quite a lot,” she said. “Maybe it’s not in the design that we would necessarily think is the optimum design, but it is already adding a lot more than most of the buildings in the neighborhood, so I feel comfortable.”

In the end, Wark, Vallaster and Savinar voted against issuing project approval. However, four of the commissioners – Sam Rodriguez, Andrew Clarke, Livingston and Molinar – decided that the issues could be addressed with conditional approval. The conditions included changing the type of wood used on benches along Southwest 11th Avenue as well as modifications to the south and west walls. Additional minor conditions involved floor area ratio and the extensions of canopies from the wall on the ground floor.

Also on Thursday:

1825 N.W. 23rd Avenue

Works Progress Architecture‘s revised design for a five-story mixed-use building received approval by a 5-0 vote of the commission. Developer Parker McNulty’s plan calls for 64 market-rate apartment units, parking for 55 cars and ground-level retail space.

City staff had recommended approval; however, commissioners attached conditions that included lowering the header on the garage door on the west side of the building as much as possible. Commissioners also required a cutoff on the light fixtures in the ceiling in order to prevent light from spilling into neighbors’ yards.

1440 S.W. Taylor St.

The commission voted 7-0 to approve Leeb Architects‘ design for a seven-story mixed-use building. Eric Evans Shelter Holdings‘ plans call for 107 residential units, 21 parking stalls, 95 bike spaces, a rooftop amenity deck and ground-floor retail space.

The commission added several conditions, including relocation of the door of the northernmost live-work unit as well as a change of the garage’s east wall to brick where visible and block where not. Also, metal panels within that wall must be changed to a perforated metal.

Southwest Park Avenue and Columbia Street

GBD Architects‘ design for a seven-story mixed-use building at the corner of Southwest Park and Columbia was approved 5-0 by commissioners, with two abstentions. The Downtown Development Group, through Front & Pine LLC, is planning to put 73 residential units in the 85-foot-tall, one-quarter-block structure.

The only conditions are that glazing be added to the bike room and that the sill of a window near live-work units be lowered.

The post Hotel project barely OK’d by Design Commission appeared first on Daily Journal of Commerce.

The Portland Development Commission has amended its development agreement with Mortenson Development for a planned parking garage to serve the new hotel near the Oregon Convention Center.

The project to build the 442-stall parking garage is now expected to cost approximately $32.2 million, up from an earlier estimate of about $25.9 million.

The garage is considered a key support project for the 600-room Hyatt Regency hotel, and will not only provide needed parking, but also serve as a steady source of revenue for the PDC. The agency estimates the garage will generate $1.85 million annually.

Construction of the hotel is expected to commence once financing is in place in June 2017. The garage project will follow.

The PDC pointed to several reasons for the 24 percent cost increase.

• Additional foundation superstructure adds $1.6 million to the building’s cost. The superstructure changes are necessary to support future development of an office building atop the parking garage, according to a PDC staff report.

Overall, the PDC is spending $3 million so that an office building can be built on the parking garage.

The design also allows TriMet to operate a ground-floor police precinct without disruption of its operations.

• TriMet’s design specifications were responsible for an estimated $2.1 million cost increase. The transit agency has asked for 19,000 square feet of commercial space and 47 secured parking spaces.

The change requires deeper excavation and more shoring than first anticipated, PDC project manager Eric Jacobson said.

The agency had earlier indicated it would need only 14,000 to 15,000 square feet. The cost increase will be passed on to TriMet.

• Changes to gain the Portland Design Commission‘s approval will add $2.3 million in development costs. These changes include adding ground-floor retail space and bicycle parking, and modifying exterior design and materials.
• Costs are projected to increase by $320,000 because of the state’s 1.5 Percent for Green Technology in Public Buildings program. PDC staff had not initially realized the garage would be subject to the program.

“We hadn’t budgeted for that in part because we don’t build and own too many buildings,” Jacobson said.

Mortenson Development is expected to deliver the hotel in mid-2019, and then the garage. Mortenson Construction is the general contractor. Both companies are part of M.A. Mortenson Co. of Minneapolis.

The parking garage would add to the PDC’s portfolio an asset that could generate revenues for other programs. Currently, the PDC owns two parking structures: Station Place Garage at Union Station and parking at the Strand condominiums in Southwest Portland, near the Willamette River.

The PDC’s board approved an amended development agreement by a unanimous vote Dec. 14.

The post Costs grow for parking garage planned near hotel appeared first on Daily Journal of Commerce.

The long-planned project to build a massive hotel near the Oregon Convention Center is close to gaining approval. But the Portland Design Commission last week had some lingering details to discuss with the design team during a two-hour meeting.

ESG Architects of Minneapolis is designing the project, which calls for a 600-room hotel and a six-story parking garage with more than 400 spaces. The development is planned for property bounded by Northeast First Avenue and Martin Luther King Jr. Boulevard, and Northeast Holladay and Multnomah streets.

The design team has been very responsive to many areas of concern, city planner Tim Heron said. He plans to meet with team members several times to refine project details before the next hearing on Oct. 20, when he expects the Design Commission to give its approval.

Heron mentioned three major areas of concern: architectural coherency in response to the Lloyd District; street-level activation for both the hotel and garage along Northeast Holladay Street; and frontage and corner activation along Northeast Second Avenue.

Staffers took issue with the dark appearance of the hotel tower and need for more glazing along storefronts. They also had questions about proposed screening of the garage and street-level pedestrian coverage, as well as use of open slatting over entrances that allow for landscaping but provide no rain protection for people walking by.

Trace Jacques, a principal at ESG Architects, went over each point and explained that the color of the tower would be lightened, as requested by the Design Commission. The metal panels and glass tower will be in three shades of gray, with the darkest shade only for accents.

The metal skin will also be very bright, Jacques said, with a “very silvery, bright finish” and be made of Galvalume, a carbon steel sheet coated with aluminum-zinc alloy.

“That skin is meant to change with different atmospheric and lighting conditions, and it literally does change moment by moment,” he said. “The colors are the same, but the distribution and use are very different than it was before. The metallic finish catches light differently than just painted surfaces.”

Also, in following commissioners’ advice, Jacques said, a prominent stairwell has been moved from the garage corner so that elevator lobbies instead offer views at the corner.

The updated design also includes a new ornamental screening system for the garage and in front of the hotel’s restaurant, with more glazing added, increased retail space at the corners and intimate wood accents at entrances and portals.

One big change in the design to reflect advice of commissioners and staffers was to introduce retail space at the hotel’s southwest corner, Jacques said. The open trellis design could be closed, he added.

“It would allow for some planting below it but is at odds with this desire to have more shelter,” he said. “But it could be just clean hardscape and glazing.”

Retail space was also expanded at the northeast corner, and open bike parking was changed to a fully-enclosed retail space while the street-level generator room was dropped down one level.

The project has been through three design advice hearings and two design reviews since 2014.

Architect Paddy Tillet, a board member of the Portland chapter of the American Institute of Architects, said he has now seen the design three times and believes it has come a long way.

“The greatest challenge in working with a big building of this sort is to find an engagement between the building and the folks on the street,” he said. “The challenge of making scale work at such extremes is a great one, but what we’ve seen is a progression toward what we think is a very good solution.”

Stephanie Soden, chief of staff for Metro Council President Tom Hughes, told the commission that many public agencies – including the city, the state, Multnomah County and Metro – have invested “significant resources” to see the hotel built. It will create thousands of jobs and bring millions of tourist dollars into Portland, she said. Prompt approval is vital, she added.

“The project has experienced delays, which have increased costs,” Soden said. “Any further delays will put the project at risk, and final approval is needed as soon as possible.”

The post Convention Center hotel’s design nearly set appeared first on Daily Journal of Commerce.

Ankrom Moisan Architects will not work on the remainder of the $212 million Hyatt Regency hotel project planned near the Oregon Convention Center.

The Portland firm had served as Mortenson Development‘s local design partner on the project, performing urban planning, land use services and other preliminary work. It leaves remaining design work to Minnesota-based ESG Architects.

The news was confirmed in an email Thursday by Ankrom spokeswoman Erin Stutesman.

“Mortenson Construction and Ankrom Moisan decided as a team that having one architecture firm (ESG Architects) lead would streamline the project,” she wrote.

Mortenson has submitted a packet to the Portland Design Commission and anticipates a hearing next month.

“If all goes well we’ll be tying up financing by the end of the year with construction starting in the first quarter of next year,” Tom Lander, Mortenson vice president of development, told the 91ĘÓƵ.

The hotel project has had a rocky development path to this stage. Metro proposed a plan to publicly finance the project and fielded appeals from rival developer Gordon Sondland. Earlier this year Willamette Week the conditions of an unusual legal settlement to move the project forward: Sondland agreed to drop several lawsuits tying up the project in exchange for a parking lot near the convention center.

Mortenson, headquartered in Minneapolis, has had a Portland office for six years. Aside from the Hyatt hotel, it has three projects now in development, including the Marriott AC Hotel in downtown.

Lander disagreed that Ankrom was added to the team to help the project win approval, then jettisoned, saying the firm was brought on to perform preliminary work only – work that’s now complete.

“Their big contribution as the local entity was helping us understand the urban setting of the project and that that was their role,” he said.

Lander provided a list of 16 local companies he said have all worked on the project.

The post Local design partner drops out of convention center hotel project appeared first on Daily Journal of Commerce.

A 20-story hotel proposed for downtown Portland was criticized for being “too dark” at a recent Portland Design Commission hearing, drawing comparisons to the Yard, a 21-story building close to completion at the east end of the Burnside Bridge.

It’s not the biggest controversy the project has faced. Designed by Ankrom Moisan Architects, the new hotel drew criticism from preservationists late last year because the project will require demolition of the three-story, 110-year-old Albion Hotel that houses the Lotus Cardroom and CafĂ©.

Ankrom Moisan principal Murray Jenkins said at the time that his firm, serving as project architect, tried its best to save the Hotel Albion. However, the challenges were too great because the building had not been maintained. Jenkins said 3-D scans showed both internal and external unreinforced masonry walls in the old building were load-bearing and made reconstruction unfeasible.

The pending demolition was not mentioned at the June 16 design hearing. Instead, discussion referenced the fact that the Yard came under fire for not adhering to the design the commission approved, appearing much darker because of reduced glazing on its upper floors.

As a result, commissioners were hesitant to approve the new hotel until they had further evidence that it would not be a gloomy addition to Portland’s skyline.

Ankrom Moisan Architects’ Michael Great said the design team decided to go from light gray to burgundy for the color of the building’s brick – a change that drew Commission Chairman David Wark’s objection.

“The biggest challenge I see is color,” he said. “What made you go to the dark side?”

Great said that after walking the neighborhood where the hotel will be located, he observed there were many light-colored buildings, leading him to believe a darker building would be complementary and relate well to the historic Auditorium Building next to the site.

“We will make sure we get the glass right and then we can avoid the dark monolith buildings people are talking about,” Great said.

But Commissioner Tad Savinar said the building was still “too dark,” and Wark suggested it might be more interesting to have a grouping of light-colored buildings.

“We have lessons learned from the bridgehead project,” he said. “We’re much more reticent to approve dark buildings. The city doesn’t need another 20-story dark building.”

Commissioner Jeff Simpson noted that reflective glass might not add a lot.

“I’m not anti-dark buildings and you might have reflectivity, but we have a lot of gray days,” he said.

Commissioner Julie Livingston said she liked the color of the previous design and suggested the design team come back with a light gray color for the brick, even if the color of bronze accents had to be adjusted.

City planner Hillary Adam also asked Great to come back with more detailed renderings that accurately reflect the color.

“We want it to be right rather than just making it through the day,” she said.

In addition to new renderings and a lighter color, Savinar asked Great to include surrounding buildings in renderings for the project’s next hearing.

The current design calls for a 20-story, 225-room hotel attached to a three-story building with restaurants and retail space. The three-story building will have a green roof that slopes at an angle to become a green wall extending two floors down to an all-glass primary entrance on Southwest Salmon Street. A secondary entrance on Southwest Second Avenue will lead to a rooftop bar with terraces and a shallow pool.

Wark asked about maintenance of the green wall, which will extend down into the lobby area.

Kurt Lango of Lango Hansen Landscape Architects said the green wall will use a hydroponic felt system that comes in large sheets. He said the green roof will be planted with sedums and other low growing plants and the green wall will be mostly ferns.

Commissioners also discussed the composition of the building. Savinar said the design is “just not there,” but Commissioner Jessica Molinar disagreed.

“The composition, for me, meets the guidelines,” she said.

Livingston and Simpson also indicated that they would approve the design, and the project appears to be on track to pass when it comes back for review on July 7.

“It’s a grand improvement from the previous version,” Simpson said.

Two apartment projects approved

Also on Thursday, the Design Commission took only about 20 minutes to approve the design of a 14-story apartment building at 1133 S.W. Market St. designed by SERA Architects and developed by M.A. Mortensen Development.

The 150-foot building will sit on a quarter-block and provide 146 residential units, 21 parking spaces with mechanical stacking, ground-floor office space and a fitness center that can be converted to retail. A rooftop amenity deck will include an eco-roof, fitness and common rooms, two stair enclosures, an elevator overrun and screened enclosure for mechanical units.

Commissioners also approved, with minor conditions, the design for a new four-story mixed-use building on a partial-block site fronting Northwest 23rd Avenue and Savier Street. Four small wood-framed buildings on the site will be demolished.

The project, designed by GBD Architects and developed by C.E. John Co., will have a second-floor roof deck for residents and provide 51 residential units over ground-floor retail with interior mechanical vehicle parking.

During the citizen comment period, Greg Tyson of the Northwest District Association complained about the “lack of an attempt” to save an old oak tree on the property that had been cut back for power lines over the years.

After considerable discussion, Simpson, a landscape architect, said since the city arborist rated the tree as only “fair” and the tree had damaged the sidewalk that it should come down.

“The problem is that we have a project with a 100-year life with a tree that could come down in 15 years,” he said.

The post Design Commission: planned hotel ‘too dark’ appeared first on Daily Journal of Commerce.

Metro officials and a group opposing the proposed 600-room Hyatt hotel at the Oregon Convention Center said Friday they have reached a legal settlement.

Gordon Sondland of Aspen Lodging Group had challenged the project, including Metro‘s plan to issue $60 million in bonds to help pay for construction of the $212 million hotel.

The two sides reached agreement to dismiss ongoing lawsuits and avoid future legal challenges.

The agreement clears the way for the Hyatt Regency, which is slated to begin construction later this year. It will be located north of the Convention Center and is expected to open in late 2018.

Minneapolis-based M.A. Mortenson Co. is the builder on the project.

The post Headquarters Hotel: Metro, Sondland, reach settlement appeared first on Daily Journal of Commerce.

The headquarters hotel planned near the Oregon Convention Center is one of many either in development or under construction in the Portland-metro area.

Competing hotel developers said at an industry forum Thursday that they support the proposed 600-room Hyatt hotel near the Oregon Convention Center.

Homer Williams, chairman of Williams & Dame, said the hotel could help revitalize the Lloyd District.

“If they do a good job at the street level, it will be additive” to the neighborhood, he said. “If not, it will be an island.”

The Hyatt project has attracted critics, most prominently hotelier Gordon Sondland, who objected to Metro’s role. Metro plans to issue $60 million in bonds to support construction of the $212 million project; they will be repaid by lodgers’ tax revenues.

Sondland and Metro officials announced Friday that they have reached a legal settlement to dismiss pending lawsuits challenging the project, and to avoid future legal action.

The agreement clears the way for construction of the Hyatt Regency to begin later this year. It’s expected to open in 2018.

Kimo Bertram, the San Francisco-based vice president of development for Hyatt, said the project is supported by “three pillars” – a strong base of corporate business travelers, positive expectations for the Oregon Convention Center and a steady supply of leisure travelers looking for “Portland authenticity.”

The comments came at a breakfast hosted by NAIOP, a commercial real estate development association, at the Multnomah Athletic Club.

Minneapolis-based Mortenson Construction is the builder for the headquarters hotel, as the project is known. Mortenson also is developing the AC Hotel Portland at Southwest Third Avenue and Taylor Street, and a 15-story hotel at 619 S.W. 11th Ave.

Nate Gundrum, Mortenson’s director of real estate development, said the company isn’t concerned that the rush of development will exceed demand.

“We’re not afraid of new supply,” he said.

The Hyatt is only one of many hotel projects slated for construction this year. High occupancy rates and strong revenues are encouraging new development.

Portland hotels enjoyed approximately 80 percent occupancy and $200 average room rates in 2015, exceeding the national averages of 65 percent occupancy and $125 room rates, said Kasia Russell, managing director for HVS Consulting and Valuation in Portland.

Demand was even stronger in summer, when local occupancy rates push up to 95 percent, she said.

While downtown is the hottest market for hotel developers, Washington County is also attracting interest. Russell said she’s tracking 12 projects there that would total 900 rooms.

That wave will be the first new hotel inventory for the southwest suburban county since 2006, Russell said.

“That’s where we see all the employment growth and the residential growth, so it makes sense that’s where we see hotels coming online,” she said.

Developers also discussed what they see as a high cost to win approval for Portland projects. Gundrum said it cost $2 million to move forward with AC Hotel Portland, while a similar project in Minneapolis incurred only $800,000 in predevelopment costs.

“The influence of neighborhood groups and the Design Commission (in Portland) is pretty high,” Gundrum said.

Williams, a prominent developer of the South Waterfront District and the Pearl District, said developing in Portland is worth the price tag.

“It’s a price most developers are willing to pay,” he said. “The bigger issue might be time.”

Hotel development also tends to be more volatile and prone to cyclical downturns than are the residential and commercial sectors, said William Balinbin, vice president of acquisitions at Denver’s Sage Hospitality.

“The moment there is a disaster somewhere in the world, the moment there is a terrorist attack, we are empty,” he said. “And it hurts.”

Several participants said too few new hotel rooms will come online this year to significantly affect room rates and occupancy. The developers and analysts said the hotels under development won’t change the market dynamics until 2017 or ’18.

The post Hotel projects galore booked in metro market appeared first on Daily Journal of Commerce.

Hotel development in Portland is booming in response to rising room rates driven by the city’s surging popularity as a travel destination.

“It’s a hot market, so we latched onto it,” said Jeff Madden, general manager of Mortenson‘s Portland office.

The general contractor and developer, which opened a Portland office in 2012, has two hotel projects in the works, the Oregon Convention Center Hotel in the Lloyd District and the AC Hotel by Marriott in downtown Portland, and firm leaders are seeking more similar opportunities.

“Portland is an awesome place. It was somewhat underserved,” Madden said. “It can be virtually impossible to get a hotel room downtown. It’s just market demand. That’s why people want to develop hotels here.”

Mortenson isn’t the only developer to pounce on the trend. The 204-room AC Hotel and 600-room Hyatt Regency Convention Center Hotel are among a slew of hospitality projects in various stages of development in Portland.

Demand for hotel rooms and rising rates in Portland have been driven by increased tourism as the city garners more national and international attention, according to commercial real estate service companies tracking the hospitality market. The city also is attracting more business travelers in part because an increasing number tech companies have opened offices in the Portland-metro area.

“People want to come here,” said Brian Resendez, a real estate broker with Sperry Van Ness who specializes in Pacific Northwest hospitality properties. “People are interested in it. We are an up-and-coming gateway city to the West Coast and a gateway city to Asia. The market is very solid for hospitality.”

Another factor encouraging more hospitality investment in Portland: Compared to other West Coast cities it’s still relatively cheap to purchase property –if you can find it– and develop a hotel in the city, said Mark Fraioli, senior vice president of the hotels and hospitality group of the commercial real estate services firm Jones Lang LaSalle.

“There’s a great deal of interest in Portland from commercial real estate investors,” he said. “Many of them find that they’re underrepresented on the West Coast. The opportunities are hard to come by for the buyers, but they’re motivated because they want the diversity of their portfolio.”

Numerous projects on the horizon

In upcoming meetings, the Portland Design Commission is set to review several new hotel projects. A hearing is scheduled on Thursday for the 299-room Porter Hotel on Southwest Jefferson Street. The project is being developed by Widewaters Hotels LLC to be part of Hilton’s Curio brand.

Two other hotels off of Northwest Ninth Avenue are scheduled to go before the Design Commission in May: the 243-room HIS Pearl Hotel being developed by the Raymond Management Company and a 150-room hotel being designed by Portland-based ZGF Architects.

Last year, design commissioners approved two projects that are currently under construction: a full renovation by the new owners of the former Red Lion Hotel on Northeast Grant Avenue into the Hotel Eastlund and the new 203-room Hyatt House hotel, being developed by Portland-based Williams & Dame Development in the South Waterfront.

Developers have also filed plans with the city of Portland to convert existing properties into hotels. This includes plans led by Portland-based Naito Development to renovate and expand the Grove Hotel building in Old Town Chinatown into a 52-room, 190-bed boutique hotel.

The 96-year-old Buck-Prager Building, a former office building Northwest Portland, could also be converted into 70-room boutique hotel, according to an early assistance intake filed with the Bureau of Development Services. Late last year, the Portland City Council rejected a proposal by Portland-based developer Gerding Edlen to demolish the building, considered a contributing structure to the Alphabet Historic District, and construct in its place an 82-unit apartment complex.

Alan Battersby, president and CEO of Grand Ventures Hotel said he was encouraged to purchase and renovate the Red Lion into Hotel Eastlund because of development that’s reshaping the Lloyd District. In particular, he said the proposed Convention Center Hotel will bring more visitors to neighboring hotels like the Hotel Eastlund.

“I wish it was going up today,” Battersby said. “What we’ve found is that until you’ve reached a saturation point by bringing in a new hotel, it’s actually better for your business. It would be very healthy for the city. The more hotels we get around the convention center, the more we can compete with other cities for convention business.”

A boutique market

Large national hoteliers have been attracted to the city mostly as an ideal market for their boutique brands, Madden said. This was the case with the AC Hotel, a joint venture between Marriott and a Spanish hotel company, he said. The 12-story boutique hotel was designed by Portland-based SERA Architects to have an upscale, European feel. This should be a good fit for the type of clientele Portland tends to attract, Madden said.

“Portland would seem to like a hotel like this, that’s a little European,” he said.

Demand from national brands to build hotels in the city that are uniquely Portland has been a boon for SERA Architects, which started designing hospitality projects less than a decade ago, principal Lisa Zangerle said. Along with the AC Hotel, the firm designed the Hyatt House and the recently completed Marriott Residence Inn in the Pearl District.

“We have just had a lot of work and it’s really expanded our portfolio quite significantly,” she said. “The projects we like to work on are urban, custom and complex. I think what we really excel at is providing that local feel to our hotels. It’s sort of infusing our touch from a design standpoint that gives it a custom feel.”

SERA designers have been so busy with hospitality work that the firm has actually had to turn away other hotel projects because it doesn’t have the capacity, Zangerle said.

“Portland, a while back, was really considered a third-tier city and now it’s a hotbed,” she said.

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