Security Properties is moving forward with its superblock project at the site of a former PepsiCo bottling facility near Northeast Sandy Boulevard with a focus primarily on housing.

The Seattle developer recently requested a pre-application conference with Portland Bureau of Development Services staff to discuss zoning at the site.

“Most of the property is likely to be housing, but there’s likely to be significant amounts of both retail and office,” said John Marasco, chief development officer at Security Properties.

Security Properties bought the 4.7-acre property encompassing four city blocks from PepsiCo in August 2017 for $27 million, according to public records. The property encompasses four city blocks off of Sandy Boulevard between 25th and 27th avenues.

Security has forged a financial partnership with a Chinese firm, Beijing Jade Investment Group, for the project.

The property has 1.2 million square feet of developable area. The floor area ratio, which governs possible building heights, for the site is 5-to-1.

Marasco said he’s unsure how many housing units the property could support.

“We’re doing our homework to figure out how we want to allocate that density,” he said.

The superblock site is likely to be developed in phases, Marasco said.

“We really like how that neighborhood’s developing,” he said. “Because of the size of the property, we thought it would be a good idea to plan something where we could develop some of it now, and continue to develop it as the neighborhood continues to gentrify.”

Retail development in the Northeast Portland corridor and quick access to downtown will be attractive to future tenants, Marasco said.

Security Properties has shown an ability to develop big projects in Portland, including the Heartline mixed-use project in the Pearl District and the 24-story, 337-apartment Press Blocks tower set for Goose Hollow that has received the City Council’s blessing.

Security has worked with Mithun, a Seattle architecture firm, on each Portland project. Mithun is involved in the PepsiCo project as well, but Marasco said there’s a chance other architecture firms could be brought in later to design individual buildings.

Marasco, who grew up in Portland, said Security Properties has kept a close eye on growth here.

“It’s a market we’ve followed for quite some time,” he said. “It’s seen a lot of growth and has a lot of momentum, and we’re excited to be part of the new growth there.”

Since buying the property, Security has agreed to a lease-back arrangement with PepsiCo to give the soda bottler time to move its operations.

The proposal may be the first development subject to Portland’s Mixed Use Zones Project and Map Refinement Project as part of the 2035 Comprehensive Plan.

Developments of 2 acres or more can be awarded bonus height in exchange for providing affordable housing and public open space as well as adhering to other design guidelines.

Security Properties is the first developer to come to the city with a large-site project that would be subject to the master-planning process, said Marty Stockton, a city planner.

“We don’t have a lot of 2-acre sites in the city,” she said. “They’re pretty rare.”

Marasco said he’s eager to learn more from city staff.

“We’ve got a lot of questions because I think it will be the first project that’s gone through the master plan that would be subject to rezone,” he said.

Editor’s Note: An earlier version of this story inaccurately stated the development would be subject to the Central City 2035 Comprehensive Plan. The project site is outside the Central City.

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A Seattle-based developer plans to build up to 1,200 housing units at the site of a PepsiCo facility bottling plant off of Sandy Boulevard, in Northeast Portland.

Security Properties recently announced it purchased the 4.7-acre site from PepsiCo. The property’s size gives the developer the flexibility to respond to changing markets during a build-out phase that could last several years.

“In general, we think the property provides an opportunity for a pretty wide variety of uses,” said John Marasco, chief development officer at Security Properties.

Housing is a likely focus for the developer, which has built several projects in Portland.

“The housing, we think, is a no-brainer,” Marasco said. “That’s what we do. We’re a housing developer, primarily.”

Security may reintroduce streets within the superblock to encourage movement within the property.

“We will re-establish what used to be a circulation grid there so we can break that site into smaller chunks,” Marasco said. “I really think we can create a village off of Sandy that will be cool.”

The property is located at 2505 N.E. Pacific St., just off of Sandy Boulevard. The purchase price was not disclosed and has not yet been recorded in Multnomah County records.

Developers such as Guerrilla Development, Koz Development and Urban Development Group have brought more apartment units to Sandy Boulevard, a broad corridor that was long associated with industrial businesses and auto shops. As much of Northeast Portland has gentrified with luxury apartments, Sandy Boulevard has increasingly attracted developers’ attention as an underdeveloped street.

Marasco said Security expects Portland’s multifamily housing market to continue to be buttressed by strong job growth. Also, more residents are renting homes rather than buying them, boosting demand for apartments, he said.

A boutique grocery store is a possibility for the property as well, he said. A Fred Meyer store and a New Seasons store are within a mile of the property.

Offices are another possibility, Marasco said. The site is not far from what’s becoming an office corridor in Portland’s Central Eastside. The PepsiCo site’s proximity to Providence medical facilities may make health care offices an attractive use, he said.

PepsiCo’s use of the site had become increasingly incongruous with its neighbors. Complaints about the truck traffic from outbound soda deliveries have grown louder, and the value of the land has grown along with Portland’s bustling market.

Also, the site is smaller than most of PepsiCo’s modern distribution facilities, which tend to be 10 to 15 acres.

“The facility in general – even though it’s significant at 5 acres – it does not represent their model for distribution,” Marasco said. “You put that together with what the market’s doing in Portland, it provides an opportunity for them to realize a significant value on that property.”

The fate of a mid-century modern office building has not been decided, Marasco said. The building, designed by Scott & Payne, was included in the city’s 1984 Historic Resource Inventory as a significant example of “Fifties modern” architecture.

“We haven’t studied it in any detail, but we agree it’s a cool building,” Marasco said. “Again, a development of the size we’re talking about, there certainly could be a spot where it could be relocated – or maybe it stays where it is. So we’re going to take a hard look at how that can be incorporated in the site.”

The development stands to be the first project to go through a large-site master plan after implementation of the city’s Central City 2035 plan, which is scheduled to be adopted by the City Council early next year.

Security Properties is interested in moving quickly. If permits can be secured, the firm plans to begin construction in the first quarter of 2018, Marasco said.

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A Seattle-based developer is betting heavily that Sandy Boulevard will be the choice of a new generation.

Security Properties Inc. has closed on the purchase of a 4.7-acre Northeast Portland tract that has been used since the 1960s as a PepsiCo bottling and distribution facility, the developer announced Thursday. It plans to redevelop the superblock site offering market-rate and affordable housing, offices, retail space and other product types during the next several years, the developer stated in a news release.

The redevelopment would use the city of Portland’s Large Site Master Plan guidelines.

“We look forward to creating Portland’s next dynamic urban village through the city’s newly adopted 2035 Comprehensive Plan,” said John Marasco, chief development officer at Security Properties, in a prepared statement. Marasco was not immediately available for comment.

Security Properties is partnering with Beijing Jade Investment Group as its initial financial partner for the project. The sale price was not disclosed, and was not yet available via Multnomah County’s online property records.

“We’re excited for this partnership as well as the opportunity to create a thoughtful, amenity-rich community that further contributes to Portland’s urban development,” Beijing Jade Investment Group Vice President Xiaorong Zhai said in a prepared statement.

Security Properties will serve as master developer of the PepsiCo property. The company is in the process of interviewing architects to begin conceptual design for the multiphase redevelopment project.

The nearly 5-acre site offers a large canvas for development. In a public notice for an early assistance meeting with the Bureau of Development Services to discuss zoning, Security Properties revealed it’s considering four to five mixed-use buildings on the site, potentially including parking, retail, housing, offices and senior housing.

Sandy Boulevard is a key Northeast Portland arterial road that has retained a gritty character while other corridors such as Williams Avenue and Alberta Street have gentrified.

“We see Sandy becoming Portland’s next great boulevard, and this Large Site Master Plan will play a significant role in its continued transformation,” Gus Baum, director of development at Security Properties, said in the news release.

Sandy Boulevard’s width and lack of pedestrian-friendly design has proved an obstacle for some projects. Yet developers have begun to bring amenities to the corridor. Guerrilla Development‘s Kevin Cavenaugh has built projects including restaurant-focused building The Zipper and office project New New Crusher Court to Sandy Boulevard.

Based in Seattle, Security Properties has expanded its presence in Portland with the Peloton Apartments on North Williams Avenue and Heartline in the Pearl District. Security is also the developer of a 250-foot-tall residential tower in Goose Hollow on the Press Blocks site. That project recently received design approval.

Editor’s note: 91ĘÓƵ photographer Sam Tenney contributed to this report.

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Is Sandy Boulevard the next street to attract developers’ interest?

A new proposal on the Northeast Portland street could represent a tipping point for the commercial corridor, as large out-of-state firms follow the footsteps of smaller projects from local developers.

Security Properties of Seattle is eyeing a PepsiCo bottling facility at Northeast 27th Avenue and Sandy for redevelopment. The company has requested an early assistance meeting with the Portland Bureau of Development Services to discuss zoning rules at the site, 2505 N.E. Pacific St., according to a public notice.

The project is in the very early stages, but the public notice gives a hint at what the Seattle developer is considering: “Demolition and redevelopment of Pepsi distribution facilities with four to five mixed-use buildings. Potential uses include parking, retail, housing, office and senior housing.”

The 4.7-acre property is a superblock encompassing four city blocks. Since the early 1960s, it has been the site of a massive PepsiCo bottling and distribution facility.

A Security Properties spokesman, Ed McGovern, referred questions to PepsiCo. Jen Ryan, a PepsiCo spokeswoman, said “there’s no deal at this point” for the property. The Multnomah County Assessor’s Office had recorded no recent sales of the property, given a $13 million market value by the county’s assessor.

If it goes forward, Security’s development would follow in the footsteps of smaller projects from the likes of Kevin Cavenaugh, whose Guerrilla Development has developed several new construction and renovation projects along Sandy Boulevard.

Cavenaugh said he was not surprised a major developer is considering investing on Sandy.

“I kind of expect it,” he said. “It’s not just me, but any architect or developer that pioneers a street is going to do a lot of heavy blocking for folks that follow. I can’t get upset with what state developers are from. I only look at what they’re going to do to criticize.”

The PepsiCo facility was built in 1962 based on a design by Scott & Payne. The vaulted design was included in the city’s 1984 Historic Resource Inventory as a significant example of “Fifties modern” architecture.

Security Properties is not new to Portland. The Sandy Boulevard development would follow on the firm’s involvement in the Oregonian Press Blocks project. Security is the developer of a planned 250-foot tall tower in Goose Hollow that would have approximately 340 apartments and ground-floor retail space. The City Council on Thursday rejected an appeal filed by the Goose Hollow Foothills League over the height and appearance of the tower.

Historically, Sandy Boulevard has been a commercial corridor where Portlanders go to buy cars and get them repaired. The street extends from inner southeast Portland up to parallel the Columbia River before ending in the far reaches of northeast Portland near Troutdale.

Cavenaugh said he was excited to hear senior housing is in consideration for part of the product mix at the PepsiCo site.

“There’s a whole heck of a lot of studios and one-bedrooms going in the close-in Eastside,” Cavenaugh said. “The neighborhood’s feeling homogenous.”

Sandy’s width poses issues for any developer, Cavenaugh said.

“There are some big, wide boulevards in Portland that are just made to move cars through and are never going to be pedestrian-friendly,” Cavenaugh said. That includes Foster Road along with Sandy, he said.

The busy street poses a design challenge. At New New Crusher Court, Cavenaugh’s 17,900-square-foot office development at 2450 N.E. Sandy Blvd., Cavenaugh addressed the busy street by turning the building inward. The offices face a central courtyard.

“That’s a response to Sandy,” Cavenaugh said.

If Security Properties chose, the developer could replicate something similar on a much larger scale at the PepsiCo facility, with buildings of different uses facing a center. It’s not clear if Security has hired an architect for the Sandy Boulevard proposal. For the Press Blocks project, Security Properties used Mithun, also of Seattle.

Cavenaugh said the choice of architect “matters a lot” for large projects like that proposed at the PepsiCo superblock.

“The projects that I’m most disappointed on in town are hulking monoliths,” he said. “Usually when you talk about superblocks and out-of-state money, you don’t get granular answers to design problems. So that’s my fear, but I’m still hopeful.”

As Security Properties considers developing the PepsiCo site, other developments are moving ahead. Fairfield Development of San Diego was issued a commercial building permit Aug. 1 for a six-story building with 206 apartments over ground-floor retail. Parking is provided in an underground garage. The permit values the project at $22.17 million. Construction has begun on the project at 2865 N.E. Sandy Blvd.

The San Diego developer did not respond to a message seeking comment.

Cavenaugh, who typically raises relatively small sums from local investors, was attracted to Sandy Boulevard in part because it was affordable.  “I tried to buy something on Mississippi for a long time,” he said. “I was too late. I can’t afford Alberta or Division.”

The PepsiCo superblock neighbors Cavenaugh’s development The Zipper, completed in 2015 at 2713 N.E. Sandy Blvd. The 8,000-square-foot building hosts Wares restaurant, Seven Virtues Coffee and other eateries.

Cavenaugh said he put an offer on the PepsiCo property years ago, but now admits the project would have been out of his league.

Another Guerrilla Development project on Sandy aims to rent affordable apartments without government subsidies. The project at 2510 N.E. Sandy Boulevard is on the site of a car repair shop. It would have 88 apartments, with 40 percent of those provided at below market rates. The project’s design has been approved, and Cavenaugh had planned to go in for permits last week. He’s still seeking investors and a builder.

“Pricing is through the roof,” Cavenaugh said.

Auto dealers aren’t going to forget about Sandy, either, but the used Cadillac lots of yesteryear are yielding to modern tastes. A three-story Lexus dealership, with another underground level, has been proposed for 3075 N.E. Sandy Blvd. The Lexus dealership is being designed by Mackenzie.

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