Northwest commercial real estate projects and professionals were honored recently, during the annual Night of Excellence Awards event. It took place at the Sentinel Hotel in downtown Portland on March 5, prior to size restrictions on gatherings to combat the spread of the COVID-19 virus.

Local chapters of the National Association of Industrial and Office Properties (NAIOP), the Oregon-Washington Commercial Association of Brokers (ORWACAB), the Society of Industrial and Office Realtors (SIOR) and the Building Owners and Managers Association of Oregon (BOMA) hosted the event. Achievements from 2019 were recognized.

Awards included:

Office Development of the Year: 7 SE Stark, Portland, Harsch Investment Properties
Multifamily Development of the Year: Club at The Park, Vancouver, Washington, PacTrust
Hospitality Development of the Year: Hyatt Regency Portland, Mortenson
Industrial Development of the Year: Denney Road Commerce Center, Beaverton, Harsch Investment Properties
Office Redevelopment of the Year: Harrison Square, Portland, Mackenzie

Investment Broker of the Year: Nicholas Kucha, NKF
Office Broker of the Year: Trevor Kafoury, CBRE
Retail Broker of the Year: George Macoubray, Commercial Realty Advisors
Industrial Broker of the Year: Stuart Skaug, CBRE
Rookie Broker of the Year: Zac Nelsen, Niehaus Properties
Industrial Team of the Year: Steven Klein, Peter Stalick, Brendan Murphy, Kidder Mathews
Investment Team of the Year: Charles Safley, Paige Morgan, CBRE
Multifamily Team of the Year: Josh McDonald, Phil Oester, Joe Nydahl, CBRE
Office Team of the Year: Kristin Hammond, Ajay Malhotra, CBRE
Retail Team of the Year: George Diamond, Nicholas Diamond, Michelle Rozakis, Real Estate Investment Group
Property Manager of the Year: Emily Mandic, American Assets Trust
Bill Naito Award: Portland Meadows Racetrack, Jerry Matson, Colliers International; Sean Colletta, Prologis

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Bridge Development Partners is opening an office in Seattle, and has hired a partner to oversee the Seattle and Portland markets.

Justin Carlucci will oversee Bridge Development Partners’ operations in the Northwest, the industrial development firm announced. He will be responsible for acquisitions and developments in the region. Carlucci, formerly with DCT Industrial, is a member of the Washington state chapter of commercial real estate association NAIOP.

The Seattle office is the fifth for Bridge Development Partners, a limited liability company based in Chicago. The firm has an investment partnership with Banner Oak Capital Partners of Dallas.

In the Seattle area, Bridge within the past few years developed, leased and sold a 241,140-square-foot cold-storage facility.

Bridge Development Partners is not to be confused with Bridge Housing, a Portland nonprofit developer, or Bridge Development and Asset Management, a local boutique developer.

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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.

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On Tuesday evening in room 249 of Portland State University’s Lincoln Hall, a group of six students pondered a property development brainteaser: how to deliver the highest return on investment for a 15-acre green field in Hillsboro.

The discussion was active, collaborative and thought provoking.

“So you think it needs a daytime anchor?”

“Yeah, I think it’d be nice. I’m just trying to think of something to activate it.”

“Is there enough employment to justify a dry cleaner or something like that?”

“What does Oregon allow as far as wood framing? Is it five over one?”

“If this is an extreme outlier we might just want to remove it from our scattergraph.”

The class, a real estate development workshop, is sponsored by commercial real estate development association NAIOP. Students are presented with hypothetical development problems for real properties, and can then bounce ideas off of industry experts or mentors.

This workshop is PSU‘s ninth; past projects have focused on properties like the Brewery Blocks, University Place and the Con-way Commons.

“What I really think is useful for them is it’s very rare that someone thinks these things all the way through – including people in the industry,” said Jerry Johnson, an adjunct faculty member who is leading the class.

Johnson, managing principal of development firm Johnson Reid LLC, said many people come to development meetings with ideas from their own specific area of expertise – such as architecture, construction or marketing – but few are rarely in position to call the shots.

But the students will be in that position for a 15-acre site, at the intersection of Northwest 194th Terrace and Tanasbourne Drive, owned by Standard Insurance. The challenge is basically to figure out what kind of development will give the property the highest value.

During Tuesday’s meeting, the group tossed around ideas as they walked through an organized decision tree, which included hotel, multifamily, restaurant, retail, office building and senior housing development options. The tree also included the option to sell the property undeveloped.

“You should always have the ‘do nothing,’ ” Johnson said during the class. “Just walk away. It’s some of the best decisions we’ve ever made.”

However, the group zeroed in on a mix of uses – hotel, restaurant, multifamily and destination retail. Each student left the meeting with an assignment; Jeff Sakamoto said his was hotels.

“What we need to figure out is what hotels are willing to pay for land and how they go about their ownership,” he said. “We need to figure out the business model from a hotel’s development standpoint.”

Sakamoto works for a company called Velocity Capital Partners and said he was in the feasibility planning stage for a North Portland apartment project. He said he hopes the workshop will help him hone his skills.

“This is great hands-on experience, and the more you do it, the better you get,” he said.

During the meeting, the students bounced ideas back and forth about things like the size and shape of a possible boutique hotel; the type of customers – business or tourist – that business would serve; ideal restaurant candidates; and feasible development for multifamily buildings.

Sakamoto said he was scheduled to meet with Oswego Grill’s owners to learn about their business model, and Johnson said the class was planning to host Howard S. Wright Senior Vice President Gordon Childress in the near future for a discussion on construction logistics.

Johnson said it will be interesting to watch the project evolve as the students learn what ultimately drives development – the market.

“What they don’t really realize until they get into it – and they’ll still be finding this out later in this process – is that the market and the pro forma are going to start driving their development form a lot more than they think they will,” Johnson said.

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The Oregon chapter of the National Association of Industrial and Office Properties is accepting for nominations for the organization’s first ever Sustainability Awards.

The organization’s Oregon chapter president Mike Wells is seeking nominations for the Sustainable Development Award, which recognizes a project that exemplifies best practices for sustainable development within the building type and use. He is also seeking submissions for the Green Building Pioneer Award, which recognizes an individual NAIOP member that has shown leadership in support of sustainable design or operation of a commercial building.

The only stipulation for the Sustainable Development Award is that the project must have been fully completed since Jan 1, 2007, and one of the project team members must also be a NAIOP member. For the Green Building Pioneer Award, the individual nominated must be a NAIOP member, or willing to become one, and in addition to being in the industry, can be a consultant, government official, nonprofit organization or an educator.

NAIOP is accepting nominations until Aug 31. The award winners will be announced Nov 17 at NAIOP’s largest event, the annual Developers Panel Breakfast.

To find out more about the awards visit .

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Creating industrial jobs in the Portland-metro area starts with making land available where business can locate. On that, local commercial real-estate groups can agree.

But where two of Portland’s most notable commercial real-estate organizations can’t agree is how that land should become available.

The Metro Council for regional government Metro will make a decision by the end on the year whether to expand the urban growth boundaries in Multnomah, Washington and Clackamas counties. And while Metro staff has noted a glaring deficit of large-lot industrial land – lots more than 50 acres – in the current UGB, not everyone is convinced that adding more land to the UGB is the key to creating jobs.

On one side is the Oregon chapter of NAIOP, a local commercial real-estate development association. The group is fighting for more large-lot industrial land to be included within the UGB, a move members say will make the area more attractive to out-of-town, industrial businesses.

On the other side is the Columbia Corridor Association, a group of industrial business owners and real-estate professionals representing industrial land between the Willamette River and the Sandy River. While the group understands the importance of having available land, organization leaders say they are concerned that underutilized industrial land currently in the UGB is being left out of the expansion discussions.

“Suitable industrial land is hard to come by in the Metro region,” said Michael Jordan, the chief operating officer at Metro who is leading the potential UGB expansion discussions. “A site has to be large, flat and close to multiple transportation options.”

In a preliminary recommendation, Metro staff targeted 310 acres west of Hillsboro to be included in any potential expansion. But NAIOP says the acreage is not enough to help cure the region’s 10.4 percent unemployment rate.

“Right now we do not believe the region has a competitive enough inventory to attract potential employers to the area,” said Mark Clemons, director of NAIOP Oregon and the director of project development at Group Mackenzie. “We’re supportive of the 310 acres being suggested, but it’s not nearly enough to help us create the jobs this region needs.”

Clemons’ organization thinks the amount needs to be closer to 1,200 acres to make any significant difference.

During the urban reserves process last year, Metro’s policy advisory committee found a need for between 200 and 1,500 acres of additional large-lot industrial land to meet the needs of the region during the next several decades.

“Because of our geology and geography there’s not a lot of opportunity out there. We understand that,” he said. “But when out-of-town companies come here, they want options, and right now, we don’t have many.”

The Columbia Corridor Association agrees with NAIOP that more usable land is important. But the group also believes there are alternatives to adding more land.

“We can keep adding acreage to accommodate industrial businesses moving to the outskirts of the region, but we all need to realize that there is land within the current urban growth boundary that is not being allowed to be utilized,” said Corky Collier, executive director of the CCA. “And until everyone acknowledges that, the problem isn’t going to be solved.”

The CCA is concerned about the city of Portland’s recent attempts to add environmental zoning to industrial lands along the Columbia Slough and up the Willamette River. New zoning in both areas would completely curb any future development within 50 feet of the banks of a body of water. This is the prime portion of most industrial zoned lots, and the reason a business would be next to the water in the first place.

“The city is slowly, bit-by-bit putting constraints on the industrial land,” Collier said. “And when we take away the usage of a parcel we lose industrial acreage, industrial businesses and industrial jobs.”

Also, the group believes that the city’s many brownfield sites – contaminated lots that would be usable if cleaned up – could be used for industrial land if a more consistent remediation method could be created.

“We have hundreds of brownfield lots in the Columbia corridor and several large brownfield lots in the Portland Harbor,” he said. “These sites are ideally suited for industrial usage, yet are being rendered useless by the city.”

Metro has met with both groups and says it is trying to come up with a solution.

“The discussions so far have gone smoothly, but both groups have made it clear that something needs to be done,” Jordan said.

Metro staff is looking at potential industrial sites north of Hillsboro that could be included, as well as some smaller parcels near Sherwood and Tualatin. But staff is also working on a way to make sure any additional land doesn’t fall into the trap that Collier and the CCA are concerned about.

“We want to instill some functional plan changes,” Jordan said. “If we do include some large-lot industrial land, we want to make sure it’s preserved to be used for industrial businesses for years to come.”

Metro staff is recommending putting stipulations on any industrial land that would be included. One stipulation would be that the land couldn’t be divided up, so it could be used by large industrial companies in the future.

The other stipulation would be that the land could only be used by private industrial businesses, not public entities. This would avoid what’s happened in Happy Valley, where the North Clackamas School District and North Clackamas Parks and Recreation District moved onto the town’s one large-lot industrial site, said Jordan.

Jordan also recommends that Metro should have a process where industrial land could be added to the urban growth boundary without having to go through the entire expansion process. Thus, if a business was looking for land and an accommodating site couldn’t be found, Metro could find urban reserve land to be included.

“Industrial business is a big part of the region’s economy and we understand that,” he said. “But we need to come up with an agreement that helps everybody’s interests.”

The Metro Council will make a decision on the urban growth boundary expansion by the end of the year. In the meantime, Jordan is visiting industry, environmental and community groups to determine their needs. He will make a final recommendation in October before the council officially starts discussing the matter.

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The National Association of Industrial and Office Properties has requested industrial lands that would be included in the possible expansion of the urban growth boundary.

The NAIOP, a regional commercial real estate development association, made the request to regional government Metro during a meeting last week with Metro’s chief operating officer Michael Jordan and Metro councilor Katherine Harrington.

Jordan scheduled the discussion after recommending the Metro Council consider expanding the UGB modestly by the end of the year, the state deadline to submit UGB expansions for the next five years.

In the first draft of his recommendations, Jordan included only 300 acres of large lot industrial land, all of which was in North Hillsboro.

“Our folks expressed strong concern about how important of a decision this is for our industry,” said Kelly Ross, executive director of the Oregon chapter of NAIOP. “As always Metro was very attentive about our concerns.”

NAIOP is in the process of putting together a formal request for other lands around the metro area that it would like to see included in the UGB expansion. The organization hopes to have the document out by the beginning of next month.

In the meantime, Jordan and Metro staff are on what he called a traveling road show to get input from citizens, municipalities and industry groups about their needs for land.

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