Design students from around the world recently reimagined the ODOT blocks in Portland’s Central Eastside Industrial District.

Mackenzie partnered with NewSchool of Architecture and Design in San Diego for an integrated design studio. It drew more than 80 participants, including about 20 students from Kuwait and Saudi Arabia who collaborated virtually.

The ODOT blocks presented students an opportunity to learn about urban analysis, site selection criteria for resilient urban development, design parameters, and design methods and tools. The students based their proposals on real client needs and constraints within Portland’s municipal code, and received input from Mackenzie and Beam Development.

“Through direct experience with projects such as the ODOT blocks, students get to demonstrate their knowledge and understanding of integrated design and are better prepared to enter architectural practice that is defined by complex relationships throughout the community,” stated Daniel Deutsch, studio coordinator and head of architecture programs at NewSchool of Architecture and Design.

The ODOT blocks comprise three vacant parcels – formerly owned by the Oregon Department of Transportation – along Southeast Water Avenue. Prosper Portland purchased the land for $2.485 million.

The Daily Journal of Commerce reported in April 2020 that Prosper Portland’s board voted to authorize negotiations with Beam Development for a ground lease and a disposition and development agreement for one of the three vacant blocks. Beam would also have exclusive development rights for the other two blocks.

The students’ completed design work will be shared with the client, Mackenzie’s marketing director, Jan Mason, said.

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It’s been more than a year since Beam Development was chosen by Prosper Portland to develop the ODOT blocks, a series of three vacant parcels along Southeast Water Avenue in the Central Eastside.

The developer and the economic development agency say the project is still moving forward despite some delays and economic headwinds.

“It’s going well, albeit it’s going slower than we would like,” said Brad Malsin, principal of Beam Development. “T��� process of getting through all of the details with Prosper has been slow going, but we are making progress.”

Beam is operating under a memorandum of understanding with the agency while the two sides negotiate a development and disposition agreement. The experienced Central Eastside developer was chosen to lead the ODOT blocks project in May 2018.

On Wednesday, Prosper Portland’s board approved a resolution authorizing agency staff to seek state reimbursements for infrastructure that would be extended to the site. The Industrial Site Readiness reimbursements administered by Business Oregon would be used to compensate for conveying utilities, conducting environmental remediation and making street improvements for the industrial office site.

Prosper Portland staff estimated the agency could seek $13 million to $17 million in state reimbursement funds.

The ODOT blocks comprise three parcels formerly owned by the Oregon Department of Transportation that were purchased by Prosper Portland for $2.485 million. The properties total 2.19 acres and are located along Southeast Water Avenue between Madison and Taylor streets.

Plans call for commercial buildings on each block of about six stories with industrial and creative office and “maker” space for entrepreneurs. The nonprofit Innovation Quadrant is on board to take office space in the first building, Malsin said. The group’s space needs are to be determined, but will likely fall in the 10,000 square foot to 15,000 square foot range, he said.

“Our ideas center around a hub of ground-floor manufacturing and prototyping that would potentially be an adjunct to the IQ’s headquarters,” Malsin said. “It could be used collaboratively for the IQ as well as other makers and designers that could share that space.”

The project team includes architecture firms Hacker Architects and Mackenzie, and Colas Construction.

“We’re all still together,” Malsin said. “We all still are excited about the project. We are looking to continue to identify the opportunities that are unique to the Central Eastside and unique to that site.”

As plans for the ODOT blocks shuffle along, other Eastside office projects are poised to beat it to market, including Beam’s own District Office, a 72,000-square-foot project developed in partnership with Urban Development + Partners. 7 S.E. Stark from Harsch Investment Properties is nearing completion with approximately 70,000 square feet of office space, and 5 MLK from Gerding Edlen will bring about 120,000 square feet of office space to market early next year.

“I would definitely say that we are very aware of what is coming on the market in our district,” Malsin said.

ODOT Blocks would be built in phases, and timing would depend on tenant interest and other market factors. Malsin suggested he would proceed cautiously.

“I’m not feeling the love for (speculative) office at the moment,” he said. “Would I do one block? Maybe. Would I do three blocks? No.”

Malsin added: “It’s a moment in time to be as responsible and cautious as you can be.”

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Beam Development is looking to build a trio of industrial office buildings to further cement the Central Eastside Industrial District‘s future as a home for creative jobs.

Beam was selected in May by Prosper Portland as preferred developer for the ODOT blocks – three parcels along Southeast Water Avenue. The Oregon Department of Transportation retains the western portion of each block.

Beam Development founder Brad Malsin and his son, fellow principal Jonathan Malsin, said they envision each block holding one building. Two would be mid-rise buildings, likely topping out at six stories. The ground floors may become hubs for light manufacturing or “maker” space, and be topped by five floors of creative office space.

Each building would include up to 5,000 square feet of ground-floor retail space, likely for food and beverage. Each building is allowed to have up to 5,000 square feet of traditional office space, according to zoning under the proposed Central City 2035 plan; the City Council is slated to adopt the plan this week.

The middle building may include structured parking that could be owned by Prosper Portland, although plans for the ODOT blocks are in an early stage.

“We feel there’s that opportunity to work to the benefit of the city, to the benefit of the district, to the benefit of the businesses and the community at large,” Brad Malsin said.

Developers are flooding the Portland market with office space in response to strong employment growth. Construction crews were building more than 1 million square feet of offices during the first quarter of 2018, according to Jones Lang LaSalle. And new proposals keep coming, such as Platform – planned as a half-block building with seven stories of offices. That project from local developer Project^ recently received rave reviews in its debut before the Portland Design Commission. Meanwhile, Intrinsic Ventures of California envisions two potential creative-office buildings for the Lower Division neighborhood.

Rents for new construction have risen and pre-leasing has been strong. The Towne Storage building, converted into offices via an adaptive reuse project, fetched a local record $630 per square foot when it sold in April to CBRE Global Investors.

Beam Development will look to lease space in the ODOT blocks to a mix of large and small companies, the executives said. The firm hopes to lease the space to employers, and perhaps avoid adding to the surge of co-working space from fast-growing chains such as WeWork and CENTRL.

Beam seeks to differentiate from other office projects being delivered, Jonathan Malsin said. Industrial or manufacturing space could give users access to lab equipment or machinery.

Parking will play a major role in ODOT blocks development. Prosper Portland, in its request for proposals, asked for twice as much parking as office space. Beam’s proposal falls short of that, but the developer is looking to contribute a significant number of spaces.

“We are motivated to try to solve some of the parking constraints in the district at large,” Brad Malsin said. “I can’t tell you how many spots we’re going to be able to offer and what’s going to make sense, but we certainly want to address the fact that there’s a major parking shortage for the foreseeable future.”

Hacker and Mackenzie are on board to design the project. Colas Construction will serve as general contractor. It’s possible the three buildings will be built in phases, Jonathan Malsin said.

The buildings may be designed with mass-timber frames and concrete diaphragms and cores, he said.

The blocks are along Water Avenue between Taylor and Madison streets. The developable parcels are 34,809 square feet, 34,862 square feet and 25,601 square feet, respectively.

Prosper Portland paid $2.485 million for the ODOT blocks. ODOT acquired the properties decades ago as part of the right of way for Interstate 5. The state agency will retain those portions of the property for the foreseeable future, a spokesman said.

ODOT considers the site useful for managing water runoff from I-5. And it could come in handy if the agency at some later date decides to widen I-5.

“That’s always a possibility,” ODOT spokesman Don Hamilton said. “T���re’s nothing in the works on that right now.”

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Beam Development will take the lead in developing three vacant blocks in the Central Eastside Industrial District.

Prosper Portland officials said in a board meeting Wednesday that Beam was the successful respondent to a request for proposals that was issued in December. Prosper Portland and Beam will negotiate a memorandum of understanding and a disposition and development agreement for work on the 2.19-acre site.

All three blocks’ western portions are owned by the Oregon Department of Transportation and are not part of the project.

Beam, an experienced developer in the fast-changing industrial neighborhood, assembled a team including Colas Construction, Mackenzie and Hacker. The proposal was chosen from among five responses. Of those, four were from local firms, said Lisa Abuaf, Prosper Portland’s development manager.

Beam principal Jonathan Malsin said he wants to better link Southeast Water Avenue with the Eastbank Esplanade on the Willamette River.

“T��� ODOT blocks really right now (are) a barrier to the esplanade, so this is really an opportunity to work with our architects and our landscape designers to actually pull people down to the esplanade, which is an amazing public access point or public amenity,” he said.

The project is likely to include office space and structural parking, along with a small amount of retail space, Malsin said.

The blocks are along Water Avenue between Taylor and Madison streets. The developable parcels are 34,809 square feet, 34,862 square feet and 25,601 square feet, respectively.

The blocks are zoned for industrial office use. The zoning, part of the Central City 2035 plan, limits retail uses to no more than 5,000 square feet on each site.

The Central Eastside has exploded with office projects recently. Malsin said part of his pitch to Prosper Portland was Beam’s willingness to work with small tenants.

“We’re really open to flexible floor plans that can break down to really granular rent roles that allow small businesses an opportunity to come into our spaces,” Malsin said. “We’re not singularly focused on credit tenants that have established high levels of credit that really kind of precludes a lot of local entrepreneurs from getting into the Central Eastside. And that strategy’s been really successful for us. Our portfolio’s full.”

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A team of Portland State University students has unveiled its ideas for developing more than 4 acres of land near the east bank of the Willamette River.

Prosper Portland is preparing to issue a request for qualifications from developers to build on the property. The agency in November agreed to purchase 2.19 acres along Southeast Water Avenue, and lease an additional 2.18 acres, from the Oregon Department of Transportation.

The ODOT blocks, as the properties are known, are in one of the hottest areas for development in all of Portland.

Developers have rushed into the neighborhood with projects such as Killian Pacific‘s Goat Blocks, Clay Creative and Clay Pavilion, Capstone Partners‘ Custom Blocks and Beam Development‘s 811 Stark building.

For office projects, the Central Eastside Industrial District offers an evolving neighborhood with some of the city’s hottest restaurants, bars and coffee shops, proximity to downtown and plentiful transportation options.

Zoning in the area is restricted to encourage office and light-industrial uses. As part of Portland’s 2035 Comprehensive Plan, zoning limits retail spaces to 5,000 square feet per site and allows a new category: industrial office use.

The zoning seeks to preserve the district for use as an employment center, said Debbie Kitchin, who served as co-chairwoman of the Southeast Quadrant Plan committee and is a board member of the Central Eastside Industrial Council.

“We just don’t have much availability of land for that type of development,” said Kitchin, who was speaking as an individual.

The CEIC pushed for the zoning to preserve an employment center and resist turning it into another close-in neighborhood given over to housing and retail.

“I think we came to a good compromise for the Central Eastside,” Kitchin said. “T���re are already areas that are zoned for residential and retail,” concentrated around the East Side’s bridgeheads.

The city is also interested in adding to its property tax rolls. Under ODOT ownership, the parcels generated no property taxes for the city.

PSU graduate students were asked to evaluate development possibilities for the three blocks owned by Prosper Portland. They presented their proposals at a NAIOP Oregon meeting held Sept. 21 at the Multnomah Athletic Club.

The three Water Avenue blocks owned by Prosper Portland are individually 34,800 square feet between Taylor and Salmon streets, 34,800 square feet between Salmon and Main streets and 25,600 between Main and Madison streets.

The PSU students were asked to weigh in on the ODOT blocks as an academic exercise. Ultimately, a developer will come up with a separate proposal for the site.

The students unveiled a concept for what they called the Portland Innovation Center, consisting of two massive buildings joined by a sky-bridge. The two buildings would consist of the five-story Idea Factory and nine-story Perch. The latter building would have industrial office and “maker” space of floors five through nine. Floors two through four would consist of a parking garage with ramps in a central atrium that would be removable in case demand for parking slackens in the future.

A Dutch-style “Woonerf” – a narrow street that’s friendly to bicyclists and pedestrians – would run beneath the sky-bridge.

The student proposal met with some skepticism amid encouragement from a panel that included developers Kira Cador of Rembold and Brad Malsin of Beam Development.

One of the students, Andrew Crampton, acknowledged that sky-bridges are typically discouraged by city regulators.

“In Portland, establishing a sky-bridge is a herculean task,” Crampton said.

A sky-bridge at the site would maintain existing view corridors and break up an imposing “superblock feel,” Crampton said.

The zoning allows for a 3-to-1 floor area ratio (FAR) and a 1-to-1 bonus. The students said to make the project work, the site would need a FAR of more than 5-to-1. The students said the buildings would be filled with long-term tenants.

But long-term leases can be difficult to fill, said Paige Morgan, an executive vice president at Jones Lang LaSalle.

Malsin added that he had filled Central Eastside leases in part by using creative leasing structures.

“A lot of early-stage companies are not going to sign 10-year leases,” he said.

The panelists’ criticisms were fair, said Jamison Loos, one of the students.

“I’m glad that the panelists agreed that our proposal reflected the Innovation Quadrant and (Central Eastside Industrial Council’s) goals,” he stated in an email message. “Prosper Portland will ultimately decide what gets built, but the right development will align the interests of the city with key stakeholders in the business community.”

The choice of developer will be key to successfully building on the site, according to Loos.

“T���y’ll need to find the right developer who understands the context and can bring their own creativity to site-specific challenges,” he said.

Prosper Portland paid $2.485 million for the ODOT blocks. The state agency is retaining 94,000 square feet on the western portion of the parcels for future construction staging.

The PSU students also evaluated development options for two downtown parcels near the university. The first is a 0.69-acre property at 424 S.W. Mill St. The existing tenant, St. Michael the Archangel Catholic Parish, is interested in moving into a new building and adding development on the parcel. The existing church dates to 1901 and is made of unreinforced masonry.

“Currently, the church lacks the capital to seismically upgrade the building,” said Dawson Marchant, a PSU student on the downtown team.

To finance a new church, the students proposed to sell part of the property for hotel development.

The other parcel is a 0.92-acre lot bordered by Mill and Market streets and Fourth and Fifth avenues. The property is one of the last surface parking lots left in south downtown.

The students proposed a senior housing development on that parcel, which is owned by Willing Co., a foreign real-estate investment group. (The students cheekily referred to their concept for the twin parcels as the God-Willing Development Plan).

Industry experts on the NAIOP panel questioned several aspects of the students’ development proposal, including their concept to demolish the church, a historic landmark, in favor of a new building. The professionals also questioned whether the senior housing project would work if it’s subject to Portland’s inclusionary housing rules.

“T��� long-term value is not there,” Cador said. “I know your investor is looking for a low-risk project. I think this is a high-risk project.”

Editor’s Note: This story has been corrected from an earlier version that misattributed a quote from Andrew Crampton to another student.

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