At nine or 10 stories – depending how you count the original mezzanine – the Woodlark Building was one of Portland’s early skyscrapers. When its ribbon was cut in 1912, “one of the most modern and complete buildings of its kind.”

Next door is the equally illustrious Cornelius Hotel, which, over its 108-year life has served as an upscale hotel, a gay bathhouse and a fire-scarred vacant building.

Now, workers are fusing the two historical properties into a 150-room hotel for the ownership trio of Arthur Mutal, NBP Capital and Provenance Hotels.

“They want a nice hotel that also respects the unique history of the buildings,” said architect Christian Robert, principal at R&A Architecture, one of the architects employed for the project.

Owners kicked around a number of ideas for the past couple years, including various combinations of office, multifamily and hotel. They also purchased the nearby Sullivan Building and other adjoining parcels.

Robert said the design team had to “fight for every inch” to update the buildings and still abide by preservation guidelines. Certain materials and building technologies considered out of touch with the original historical era – including exposed brick in the lobby – were nixed in design development. To maximize space, the team created unique mezzanine and junior suites that employ the historic ceiling heights.

The project will have two restaurants – one for formal dining and a smaller tavern in the Cornelius building’s northern portion, the original entry lobby of the hotel.

Design-wise, there are a lot of cooks in the kitchen. Firms are under contract for room design and the design of the ground-level bar area that wasn’t included when the project went through permitting. And after the first construction permits were obtained (which took more than a year), R&A took over construction administration from the project’s initial architect, MCA Architects.

MCA has stayed on as architect of record.

“These are very old buildings,” MCA partner Dan Gates said. “There’s a million things about this project. It’s very complicated.”

Combining two buildings that have non-aligning floors is no easy task.

“None of the floors actually match up, so we solved it by providing a different stair length at each level,” Robert said.

Another major task is bringing Woodlark and Cornelius up to seismic code. The Woodlark is a concrete building. The Cornelius has some steel columns in the center, but is basically a wood-framed building with exterior walls made of unreinforced masonry (URM).

To achieve uniformity, the contractor, LCG Pence, is employing shotcrete with a fiberglass mesh to stabilize the URM from within. Other advantages include requiring less space to apply, and allowing the team to retain more of the historic URM.

In a way, tying two buildings together provides structural support, Robert said.

“It’s like you have two feet to stand on,” he said.

R&A project lead Richard Destin said it’s an honor to bring old artifacts back to life. And it’s exciting to work on a wood high-rise, he added, at a time when emerging mass timber products are de rigueur.

“Under current code, none of it would be allowed,” he said.

The Woodlark

Cost: $30 million

Architect: R&A Architecture

Architect of record: MCA Architects

Contractor: LCG Pence

Expected completion: spring 2018

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Portland’s hotel industry is in the midst of a booming expansion that is raising concerns that developers are arriving late to a long period of economic growth.

A Travel Portland tally of the hospitality development pipeline shows 2,728 rooms on the way. If built, the hotel developments would expand Central Portland’s room count by 35 percent by 2020 – an amount that one hotelier warns will be a “shock to the system.”

“I worry about the market’s ability to absorb the supply medium-term,” said Bashar Wali, president of Provenance Hotels, which owns several boutique hotels in Portland. “Long-term, the supply momentum is going to slow down. It doesn’t make sense anymore.”

Projects including the $50 million, 204-room AC Hotel Portland have opened in recent months, yet more hotel developers are looking to jump in with proposals that have yet to enter the city’s design review hearing process, according to stakeholders.

Brisk hospitality business in Portland is being supported by strong population and job growth. Portland hotels were 82.3 percent occupied in March, up 4.1 percent from March 2016, and 74.4 percent for the year, according to research firm STR.

As average daily rates and occupancies showed impressive strength, hotel groups began rushing into the market. National brands including Hyatt, Hampton, Hilton, Marriott and Radisson all wanted to be in Portland. That supply is on track to be added to the market in the next two to three years.

The flood of new rooms is prompting some people to question whether developers could overbuild. Already, signs suggest that some hospitality chains are looking to exit the market. The Porter Hotel, part of Hilton’s Curio brand, is on the market, Wali said. The 299-room hotel, under construction at 1355 S.W. Second Ave., hasn’t even opened.

“That was another indication that says to us the market is definitely turning,” he said.

Provenance is evaluating the offering, but so far, it has been unable to come to terms with the developer, The Widewaters Group of Syracuse, N.Y.

“I don’t know if we’ll get to where they want to get in terms of pricing,” Wali said.

The Widewaters Group did not return a message seeking comment.

Even as some companies are looking to reduce their exposure to Portland’s hotel market, others are considering getting in. Plans for an 11-story, 171-room hotel at Southwest 10th Avenue and Alder Street in downtown’s West End were revealed in April public notices. The project is from Graves Hospitality, based in Minneapolis, and design firm DLR Group‘s Portland office.

The property, home to a number of popular food carts and a surface parking lot, is owned by the Goodman family.

Benjamin Graves, president and chief operating officer of Graves Hospitality, visited Portland on Tuesday to meet with city officials, food-cart operators and others near the proposed project site.

“We’re hearing what everyone’s wants and needs are in the neighborhood, and hopefully we can do something the neighborhood can be proud of,” Graves said.

Graves said he’s interested in accommodating the food carts at Southwest 10th Avenue and Alder Street as the hotel proposal goes forward.

“That’s definitely something that we’re considering and exploring at the moment,” he said.

Graves Hospitality develops, owns and manages hotels across the country. The company works with several major hotel brands, and is a preferred developer for Moxy, a Marriott brand.

Graves said he’s interested in bringing a hotel to Portland, but the project on the Goodman family lot isn’t set yet.

“We’re just in the exploration phase, but we’re spending real time, energy and money in this process,” he said.

New projects must contend with costs for land and construction that have grown along with the economic cycle. Yet for a prospective developer such as Graves, Portland’s strong fundamentals continue to beckon, and costs remain below those for comparable West Coast markets like Seattle and San Francisco. Prices for steel, for example, have moderated and are below year-ago levels.

“From a relative perspective, if you’re looking at other markets, cost to build in Portland is still achievable,” Graves said.

Portland’s hotel development pace is similar to those in other fast-growing cities, and more growth is supportable, Graves said.

“We don’t think there’s a bubble right now,” he said. “I don’t believe Portland’s as frothy. There are markets we feel could use some breathing room – New York comes to mind.”

For developers and investors, a project’s success depends in part on when they intend to sell. Developers looking to flip a hotel project in the next few years may be in for a tough exit, Wali said.

“If you are a short-term investor for private equity, any of the traditional Wall Street investors, your hold horizon is typically three to five years,” Wali said. “We’re in the fifth, sixth year of our run. You’re now starting to come into the market. It’s going to take you two to three years to build, and if you’re going to hold for another two to three years, your contemplated sale of the asset to realize your returns is essentially at the bottom of the next cycle. If you don’t think it through that way, and your intent is to flip, you’re going to be hurt on your exit.”

Graves Hospitality holds its properties for five to 25 years, Graves said.

“It really is just a function of market conditions, our partner and how we feel about the marketplace itself,” he said.

Another new proposal calls for demolishing an existing quarter-block building at 600 S.W. Fourth Ave. to construct a 15-story, 215-room hotel. SERA Architects was listed as the applicant for an early assistance meeting, but the meeting was canceled. The identity of the developer was not listed, and the architect did not return a message seeking comment.

By far the largest hotel in the pipeline is the Hyatt Regency due to be built near the Oregon Convention Center. The hotel, expected to open in late 2019, will bring 600 rooms to market. How that hotel will affect others is among the most important questions looming over the local hospitality industry.

The Hyatt Regency may draw primarily from special events held at the Convention Center and nearby Rose Quarter. Only time will tell if the hotel creates its own demand, or as Graves said, “if it’s just going to suck demand from the existing hotels.”

Airbnb and competing services add another wrinkle.

“Airbnb is essentially the equivalent of an 1,800-room hotel in the market, day in and day out, competing with us,” Wali said. “Anyone who thinks Airbnb is going away has their head in the sand, because they’re not going away.”

In today’s hotel market, local and national developers alike are pushing boutique brands.

Provenance is expanding downtown with construction of the Woodlark Hotel at Southwest Ninth Avenue and Alder Street and a renovation and rebrand of the Westin, built in 1998 at 750 S.W. Alder St., into a new offering called Dossier.

Woodlark construction has been slowed by issues in the historic buildings. The project combines the Cornelius Hotel, built in 1908, and the Woodlark Building, an office and retail building built in 1912.

“It would be a lot easier if it were ground-up (construction), but that’s not what we do,” Wali said.

The Woodlark is now on track to open in spring 2018. The hotel will offer 150 rooms and an East Texas-meets-Portland restaurant from Doug Adams, the chef at the well-regarded Imperial restaurant in Provenance’s Hotel Lucia. Another bar is also planned.

Dossier will relaunch in August with 205 rooms.

Hotel developers are focused anew on drawing in customers with attractive lobbies, restaurants and other ground-floor amenities as distinguishable features.

“I can’t tell you that the guest room at my hotel is better than the guest room at the Hampton Inn,” Wali said. “Everybody has a comfortable bed and great Wi-Fi and a great shower. We think what really creates the experience now is it’s all about the public spaces, the social spaces, the restaurant, the bar. We’re spending a lot of money, focus and effort on those to give a true Portland experience, elevated.”

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Opponents of funding plans for a $197.5 million headquarters hotel construction project near the Oregon Convention Center are still fighting to put them before voters.

Paige Richardson, a Lake Oswego-based spokeswoman for the Coalition for Fair Budget Priorities, on Friday filed suit in Clackamas County Circuit Court alleging that Metro would violate state statutes by constructing the 600-room hotel without a public vote.

“The legal issues could be resolved today if Metro and the county took this to a public vote,” said Sandeep Kaushik, a Seattle-based spokesman for the coalition. “I think that’s what the law requires.”

The lawsuit argues that Metro does not have the right to “construct” facilities without a public vote.

“Clearly they are participating in the construction of a convention center hotel,” Kaushik said. “They are directly involved in the financing of it. They are the driving force.”

The coalition, which includes Provenance Hotels and the Portland Hilton and Executive Tower, also appealed a Multnomah County decision that found the county had acted within its administrative rights when it approved $60 million in Metro-backed revenue bonds for the project.

Plans call for paying for part of the project with $78 million in public financing, including $60 million in Metro-issued revenue bonds. Debt service will be paid by transient lodging tax revenues generated by the hotel. The remaining $119.5 million will be paid by the developer – a joint venture of Minneapolis-based Mortenson Development Inc. and Chicago-based Hyatt Hotels Corp.

Hyatt will purchase the hotel from Mortenson upon completion in early 2017, according to a term sheet executed this past fall.

Metro is still in separate negotiations with Mortenson on a development agreement and with Hyatt on a room-block agreement that would set aside about 500 rooms for certain convention events. Terms of the agreements have not been finalized.

Project backers say the plan has a broad support base that includes hotels, tourism operators, other Lloyd District businesses and construction companies. They also say a 2012 market impact study, backed by Metro and conducted by Strategic Advisory Group, found that a hotel with rooms blocked for convention business would increase the likelihood of conventions being booked at the Oregon Convention Center by 79 percent. That would improve business throughout the tourism industry, according to the study.

The lawsuit is a “campaign tactic (and) not a sound legal debate,” Metro Council President Tom Hughes said in a statement.

“This is the second unfounded lawsuit filed, not by hotel owners, operators or workers, but by paid lobbyists,” he stated. “By attempting to tie the project up in court once again, after losing the first legal challenge outright, this is nothing more than a delay tactic funded by a small and vocal minority.”

Kaushik acknowledged that the legal challenges could make it difficult for Metro to sell bonds for the project, and stall construction.

The coalition also could put the funding issue on the November ballot, he said.

“I think it would be difficult to issue bonds given that there’s a significant legal hurdle,” he said. “We intend to fully pursue our legal avenues at this point.”

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