The city of Portland is preparing to offer developers $7 million in incentives to convert vacant office space into multifamily housing.

Prosper Portland will administer the pilot program, which was first announced in May. It’s one part of the city’s strategy to reduce its massive stock of vacant office space, which totaled more than 9 million square feet during the third quarter, according to CBRE.

Mayor Keith Wilson, in remarks given during a Multifamily NW event on Oct. 16, said the funding would likely go to only a few office-to-housing conversion projects.

“We’re not going to spread that peanut butter thin,” Wilson said.

Funding may be awarded in the next four to six weeks, Prosper Portland spokesman Shawn Uhlman said Monday.

Funding for the pilot program is expected to come from the Portland Clean Energy Community Benefits Fund (PCEF) through an intergovernmental agreement with Prosper Portland.

Limited available funding, approximately $7 million, will support two to three pilot projects, Elliott Kozuch, the city’s spokesman for community and economic development, stated in an email.

City officials are looking for projects that are ready to go.

“The initial pilot projects are expected to both be development-ready and provide access to detailed project data … and participate in an embodied carbon study with PCEF and Prosper Portland,” Kozuch stated.

The conversion incentive grew out of recommendations from the Multifamily Housing Development Workgroup that was convened by Wilson and Gov. Tina Kotek in the spring.

The City Council still must agree to an adjustment to the PCEF’s Climate Investment Plan to allow the funding to be used, and to increase the allocation beyond the pilot phase.

Prosper Portland’s board approved guidelines for the program on Oct. 8.

“Portland faces the dual challenge of historically high office vacancy rates and a shortage of affordable and middle-income housing,” Prosper Portland Executive Director Cornell Wesley wrote to the board.

Public officials have lauded office-to-residential conversions as a solution to empty urban office space, but getting those projects to construction has proved difficult. Conversion costs are significant: Building codes require stronger seismic protection in residences. Floor plates designed for an office can poorly suit an apartment building. And features including staircases, windows, heating and cooling systems, and elevators may need to be rethought or relocated.

Sarah Zahn, director of development for Security Properties and a member of the governmental work group, said it makes sense to give large amounts of funding to a few projects.

“It’s good they recognize it’s going to take a substantial investment to do a project like this,” Zahn said.

The program should interest developers, said Ezra Hammer, a shareholder at Portland-based law firm Jordan Ramis.

“Is free money good?” he said. “Yes, free money is good.”

A successful conversion project could spur more of the kind, Hammer said.

“The real value is you get the projects going, but you prove the concept in the market,” he said.

The incentive will be structured as a forgivable 10-year loan at 2 percent interest. One-tenth of the principal balance of the loan would be forgiven each year. Rents must remain affordable to renters at 60 percent to 120 percent of area median income. The affordability requirement will make apartments available to a broad swath of renters but could limit developers’ potential upside.

“This targeted investment not only accelerates the delivery of new housing units but also advances Portland’s climate action and housing production goals in tandem,” Wesley told the Prosper Portland board.

So far, prior to the incentives taking effect, two conversion projects have moved forward in Portland. A project team plans to convert the Oregon Casket Building, at 403 N.W. Fifth Ave. in Old Town, into a 25,000-square-foot mixed-use building with 34 residential units and retail space.

The second conversion project involves the Falcon Building, at 321 N.W. Glisan St. It previously held 85,500 square feet of office space and is on track to become 59 units of middle-income housing.

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Seabold Construction‘s closure in 2023 left two multifamily projects in North Portland incomplete. Building equipment worth millions of dollars was stored in an underground parking garage in one of the buildings.

Only chain-link fences guarded the Zeal Lofts and Fargo Apartments properties in Albina, a neighborhood deeply affected by crime and homelessness.

Nathan Weide, a construction-industry veteran who had been hired by Seabold as general superintendent for the projects, figured he had to do something.

Working with the owner-developer, Vibrant Cities of Seattle, Weide called every subcontractor working on the two projects. He asked them some basic questions: How much have you been paid? How much are you owed? And are you still interested in working on the projects?

Weide spent months clearing liens on the projects. Not every subcontractor came back, but many did. And after 14 months of inactivity on the projects, they went back to work.

Vibrant Cities kept Weide as general superintendent and formed a single-purpose entity, Solterra Strata, a limited liability company. (Vibrant Cities declined to comment for this article, citing ongoing litigation).

Seabold assistant superintendent Mark Staley stayed, and assistant superintendent Jesse Hiellig also joined to help manage construction. Judy Parish, also from Seabold, served as bilingual language foreman and Austin Weide (Nathan’s son) served as fire-stop technician. Many other subcontractors contributed.

“We had a good team put together,” Nathan Weide said.

Weide and Staley instituted a daily coordination meeting of subcontractors at the neighboring sites. Some didn’t love the idea of attending a meeting every day, but it proved crucial, Weide said.

“That really helped speed up the project right there,” he said.

Security was an ongoing concern. Weide rehired a security contractor. Construction continued even as shootings occurred nearby, with police and ambulance sirens a frequent backdrop.

“With the neighborhood as it is, it’s challenging,” Weide said.

Zeal Lofts comprises 215 units and the Fargo Apartments another 102 units. Designed by Jackson | Main Architecture of Seattle, the projects entered construction in October 2021.

Work led by Seabold halted on Nov. 9, 2023. The circumstances are in dispute, but Seabold’s contract and all subcontracts were terminated.

Weide, 48, has served in the construction industry since 1997, when he joined Robert Gray Partners as a carpenter. He worked his way up in the industry, later working for major contractors such as Swinerton and Deacon Construction, and playing a role in projects including the Wingspan Event and Conference Center in Hillsboro, Ilani Casino Resort in Ridgefield, Washington, the Northeast Portland Ikea outlet, and the Edward J. Ray Hall at the Oregon State University-Cascades campus.

That left him well prepared to handle the mess left by the end of Seabold Construction. Harry Seabold, the contractor’s co-founder and president, died in January 2023 at age 69. Some legal cases related to the company’s demise have been settled, but others remain open.

The Fargo Apartments building was completed in January 2025, and the Zeal Lofts followed in March, roughly three and a half years after construction began.

The Fargo, at 25 N. Fargo St., has five floors of wood construction over two floors of concrete, while the Zeal, at 3185 N. Williams Ave., has a six-over-two design. Both projects have some parking — the Zeal has an underground garage, while the Fargo has ground-floor spaces.

Both buildings are intended to draw market-rate renters with small, relatively affordable units. The Zeal offers lofted studios and a few one-bedroom apartments with a shared full-service kitchen and amenity spaces on each floor in a dormitory-style configuration. The Fargo has a mix of studios and apartments with one or two bedrooms.

Projects connected to efforts to remake Albina are under way. They include the Williams & Russell project featuring affordable apartments, houses and a Black business hub with offices and retail space, and Albina Vision Trust‘s Albina One, a 94-unit apartment project.

Other signs of growth have popped up. Williams Coffee House opened a block south at 3037 N. Williams Ave. earlier this year. A Southwestern-themed bar, The Waypost, has held on directly across the street from the Zeal. A New Seasons grocery store a couple of blocks north provides a retail anchor.

The Fargo’s residential units are approximately 50 percent leased, while the Zeal’s are 25 percent to 30 percent full. A restaurateur has agreed to lease retail space at the Fargo. Two spaces at the Zeal remain unoccupied.

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For nearly six years, plans for a large-scale multifamily development in the heart of Portland’s Central Eastside remained dormant. But thanks to an emergency land use measure taken during the COVID-19 pandemic and the entrance of a new developer, ground is set to be broken on the project this fall.

Pine Street Lofts, previously SE 8th Ave Apartments, will be a seven-story building with 144 market-rate apartments (including five live/work units) and retail space at 830 S.E. Pine St. The site is across Sandy Boulevard from where the 12-story Sandy Pine mass-timber development will be built.

The Portland Design Commission approved the former Specht Development project, designed by SERA Architects, in June 2017. During that hearing, Commissioner Sam Rodriguez described the brick-laden, “flat-iron” building as “simple without being simplistic.”

But due to escalating construction costs and a slowdown in rent increases following approval, the project was placed on hold, Specht Vice President Peter Skei said.

Projects approved through design review typically have three years to begin construction; otherwise the land use review entitlement expires.

“In 2020, the assumption of Specht Development was that since they actually hadn’t started construction on this project,” SERA Architects principal Kurt Schultz said, “the project wasn’t going to get built – wasn’t going to move forward.”

But in summer 2020, Portland City Council enacted an emergency measure that extended expiration of land use approvals to Jan. 1, 2024 (an additional three years) for developments approved from July 1, 2017, to Dec. 31, 2020. That gave developers and construction firms more time to break ground on projects amid economic and development review process challenges.

“That was huge and actually brought the project back to life,” Schultz said.

However, with construction costs still at record highs, Specht Development did not want to advance the project, Skei said. Instead, Pine Street Lofts was dusted off and sold to Chicago-based developer 29th Street Capital, which bought the property and development rights for $4.6 million in 2021.

Pine Street Lofts will be 29th Street Capital’s first project in Portland. The firm, since being founded in 2009, has amassed more than 30,000 units across 21 U.S. markets, said Jesse Maas, vice president-Pacific Northwest of 29th Street Capital.

“We’ve been looking at expanding into the Seattle and Portland areas,” Maas said. “We typically look at suburban multifamily, but in this case, there was an opportunity to do development.”

Three main changes have occurred to the project since 2017. One is the addition of a fitness and club room. Another is that vehicle parking will be via a mechanical stacker in the building’s center instead of in an underground parking garage.

The most significant alteration is to the ground floor. A new Portland General Electric policy no longer allows underground sidewalk utility vaults, so more than 800 square feet had to be taken from building programming to include an electrical room. As a result, one of the live/work units was relocated and the lobby and retail space were reconfigured.

The Portland Bureau of Development Services has approved issuance of a building permit for Pine Street Lofts. Emerick Residential Builders will serve as the general contractor.

Editor’s Note: This story was corrected on March 27 to note that Emerick Residential Builders will serve as the general contractor for the project.

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The design team working on a five-story multifamily development in the North Interstate Plan District received advice from the Portland Design Commission on Thursday.

West Architects is designing the Maryland Apartments for Seneca Development, which acquired four separate tax lots at 6319-6346 N. Maryland Ave. for the project. Hamilton Building Co. will be the general contractor.

As proposed, the 64,043-square-foot building will have 70 units – most with private balconies. There will be a mix of studios, one-bedroom apartments and two-bedroom apartments; some will be inclusionary housing units, architect Josef West said.

“The studios, we’ve decided to really focus on enlarging them and always providing, as much as we can, outdoor private space for these units,” West said.

Maryland Avenue is lined with mainly single-family houses on both sides, with a newer building adjacent to the development. The apartment building will be the largest building on the Arbor Lodge block.

The development will be about a block away from the Rosa Parks light-rail station. A goal of the design is to provide substantial pedestrian access, West said. Benches in front of the building will provide public seating.

The building will include an outdoor amenity space on the fourth floor and an indoor-outdoor sheltered community space on the ground floor. The latter space will feature a shared family room, living room and lounge. Personal lockers and cubbies would be included in the lounge.

A patio canopy will sit below the first level of residential balconies, West said. Planters are proposed atop the canopy to offer separation from the balconies to the patio below. Commissioners expressed that would make the space feel more confined and suggested modifying it.

A maximum height of 65 feet is proposed for the building. The project team is looking to add windows to the street frontage.

On-site parking is proposed with a mid-block garage entrance from Maryland Avenue at the building’s northwest corner. A total of 13 parking spots are proposed.

“The LCDC (Land Conservation and Development Commission) has proposed wide, sweeping state rules, known as the Climate Friendly and Equitable Communities rulemaking, which was subsequently approved by the LCDC last summer,” said Tanya Paglia of the Bureau of Development Services. “These provisions need to be placed in our zoning code by June 30, 2023.”

The provisions will eliminate all parking minimums. The project will likely not have a minimum parking requirement, Paglia said.

Commissioners agreed that the roof should be modified or thinned down because it would be out of proportion with the building and make it appear larger than it would be.

Also, commissioners agreed that the balconies significantly help give the development a residential feel.

The project is valued at $12 million, according to BDS. It’s set to go through type II design review, with land use review processed by staff. The project will not return before the Design Commission unless the decision by staff is appealed.

Construction could begin later this year.

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The Forest Grove Planning Commission on Monday approved site development and design plans for a proposed 45-unit apartment complex. The project team includes Creekwood Homes, Suntel Design, and AKS Engineering.

West Grove Apartments is to be constructed at 2230 and 2320 26th Ave., near the Pacific University campus. The site includes two tax lots in the Curtis subdivision. Each lot currently has a single-family residence; both would be demolished. Properties abutting the site mostly have single-unit residences. A vacant property to the southeast is owned by Pacific University.

Plans call for construction of four three-story buildings. Combined, they would hold two one-bedroom units, 41 two-bedroom units, and two three-bedroom units. An additional management office would be in one of the buildings. Site improvements would include 72 motor vehicle parking spaces and 20 bicycle parking spaces. Parking would be in the site’s east, south and west portions.

Open space around the buildings would be landscaped with trees, shrubs and ground cover.

One of the project team’s goals is to achieve compatibility with single-family detached homes in the area. During Monday’s meeting, AKS Engineering consultant Tony Mills said the team accounted for neighboring residences as much as possible by doubling the required setback for most buildings.

Building 1, adjacent to 26th Avenue, would be set back 20 feet from the front property line. Buildings 2, 3 and 4, in the site’s interior, would be set back at least 10 feet from property lines, a city staff report states.

Creekwood Homes “has committed to building a six-foot cedar fence around the exterior of the property,” Mills said.

The fence would help screen the buildings from neighboring properties.

The commission’s approval came with conditions. Some include: providing frontage improvements in accordance with code requirements and in coordination with the city’s 26th Avenue improvement project, providing striping and signage designating the western access drive aisle as a one-way exit-only lane, ensuring pathways are separated from dwellings by at least 10 feet (with small reductions allowed in certain areas), and providing a children’s play area.

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A two-building, 96-unit multifamily development proposal received the Beaverton Planning Commission‘s approval last week. The commission also approved the project team’s request to remove some trees and another request to deviate from the maximum front setback requirement.

The applicant for the Scholls Ferry Apartments project is Scholls Development LLC (Placid Holdings of Portland). Pacific Community Design is the planner, civil engineer and landscape architect, and Sinan Gumusoglu Architecture LLC is the architect.

Scholls Ferry Apartments is planned for 15584 S.W. Scholls Ferry Road. The primary area of development is a flag lot identified as Tax Lot 200, which currently has a single detached dwelling.

All trees on site were evaluated, including those that will be retained, project arborist Todd Prager said. The proposal calls for removal of 78.8 percent of “nonexempt surveyed trees within the significant grove.”

“We really worked to provide as much room as possible for the root system and the protection of the root zone of the trees and shift that building as far from the root zone as possible, particularly for the trees on the northern property line,” Prager said.

Another constraint for the development is vehicle access. Plans call for creation of a new intersection of Southwest Winterhawk Lane and Bunting Street. Two speed cushions are proposed for Southwest Sheldrake Way and Harlequin Drive.

A 10-foot maximum front setback is included in the development code, Pacific Community Design planner Maureen Jackson said. The applicant requested a 15-foot setback.

“The intent of the maximum setback is to activate street frontages next to high-density development,” she said. “This project is unique in that it’s located on a flag lot and does not have street frontage.”

Also, the site’s topography is impacting the development. The nearest manhole is at Southwest Winterhawk Lane, at an elevation of 370 feet. The buildable area falls to an elevation of approximately 332 feet, Jackson said. That elevation change prohibits the gravity-fed sewer system from serving the development, she added. The applicant is proposing to use the existing sewer line on Sheldrake Way. No alterations to the existing home near the sewer line are proposed.

Approximately 125 parking spaces will be provided for residents and visitors. There will be 24 underground parking spaces in one building and 30 in the other building. A total of 71 surface parking spaces will also be provided.

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