Construction of a 25-story tower in Portland’s West End is due to begin in early 2020 after the development team received a substantial investment from a Chicago-based group.

Cresset Partners and the Goodman family will be equal partners in a large-scale opportunity zone fund to kick off Eleven West. The mixed-use building planned at Southwest 11th Avenue and Washington Street will hold 222 multifamily units, 116,000 square feet of office space and 7,900 square feet of retail space.

The building will be a sister structure to Twelve | West, which was completed in 2009 and fetched $206 million when it was sold to Greystar Real Estate Partners in July 2018. Both projects were designed by ZGF Architects, with Gerding Edlen serving as developer.

Eleven West was approved by the Portland Design Commission in October 2017, but construction was delayed while the Goodmans sought financing.

The Goodmans hired Newmark Knight Frank in San Francisco to attract an opportunity zone partner. The firm found Cresset.

Critics say opportunity zones haven’t met their intended purpose of sparking investment in impoverished areas. Instead, across the nation, opportunity zone funds have presented investment opportunities in areas much like Portland’s West End – one of the hottest and most expensive real estate submarkets in Oregon.

Greg Goodman, president of Downtown Development Group, said if not for opportunity zones, Eleven West would have been the receiving end of a 1031 exchange – a tax treatment that allows investors to defer paying capital gains on real estate sales. Instead, state, county and city governments will receive taxes from the Eleven West project, he said.

“The state will get a big tax check they wouldn’t have otherwise gotten,” Goodman said.

Opportunity zone rules also encourage investors to hold onto properties for longer terms to fully realize tax advantages.

“It allows investors to take a longer-term approach and not be worried about building into an overbuilt market,” Goodman said.

Another opportunity zone fund is being used to attract investors to the 35-story Block 216 project in downtown Portland. That fund is managed by Baker Tilly Capital of Philadelphia.

Also, Sturgeon Development Partners is using an opportunity zone fund for a hotel project in Salem and possible future development projects.

Construction of Eleven West is slated to begin in late January, with Turner Construction serving as general contractor, Goodman said.

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In the past few years, a growing influx of new tech workers and residents has helped transform the city of Portland.

This population growth and demographic change has, in part, allowed the Goodman family and its Downtown Development Group to begin to put into action a series of development moves, including its ambitious . It calls for 11 new buildings, including five high-rises, on downtown properties near the Willamette River between Washington and Burnside streets. One of the first projects is 230 Ash – a modest, six-story mixed-use building, but much more is planned by Downtown Development Group – one of the oldest development firms in Portland.

For instance, preliminary plans have been formed for Downtown Development Group to work with a local, unidentified engineering firm on a net-zero building at the intersection of Southwest First Avenue and Pine Street.

“It will be like the Bullitt Center in Seattle,” Downtown Development Group co-President Gregory Goodman said, referring to the commercial building that opened in 2013 and was certified as a “living building” by the International Living Future Institute. The six-story, 52,000-square-foot structure uses solar panels and other green features to produce more electricity than it uses over the course of a calendar year.

Meanwhile, talks with an outside developer, Gregory Goodman said, have been ongoing about a possible project at the west end of the Morrison Bridge on Block 40, as well as another on a half-block site that currently serves as a parking lot just south of the Pine Street Market.

“We’ve had interest from people, but we don’t know what we’re going to do with that half block yet,” he said. “We were thinking a heavy-timber office building or maybe more housing, or a hotel? We’re trying to sort through all of that now. We’ve definitely had a lot of interest in other sites.”

Also, on Wednesday, the city received a proposal for a 33-story tower and podium building to be constructed on the full block owned by the Goodmans that is bounded by Southwest Ninth and 10th avenues and Washington and Alder streets. The project would include 750,000 square feet of office, hotel and residential space above ground and four and a half floors of underground parking.

The block is home to the largest collection of food carts in the Portland area.

One project that has moved along is Eleven West, which received approval from the Portland Design Commission in December 2017. ZGF Architects has designed the project for developer Gerding Edlen. The site is Southwest Washington Street, between 11th and 12th avenues. Plans call for a 24-story building featuring 7,900 square feet of retail space on the ground floor. Floors two through seven will hold 110,000 square feet of office space, while floors eight through 24 will hold 222 luxury apartments averaging 980 square feet each.

In addition, there will be four floors of below-grade parking accommodating up to 260 vehicles. A 7,900-square-foot rooftop amenity space will round out the project.

At 290 feet tall, Eleven West is intended to be “an iconic structure for our city in the west end,” Downtown Development Group co-President Mark Goodman said.

It’s also intended to mirror the Twelve West building finished in 2009 less than a block away. That building, rated Leadership in Energy & Environmental Design platinum, also developed by Gerding Edlen with Downtown Development Group as the largest investor.

“(Eleven West) has the benefit of two things,” Downtown Development Group Vice President Matthew Goodman said. “It has a proxy across the street that has performed very well. And, second, like any development, you learn from the things that went well, and we have the benefit of hindsight in having the parcel across the street and in the West End more generally. I don’t know if there’s a better location to be building that product right now.”

Currently, the project remains stalled because of needs for permits and full financing. In regard to the latter, Downtown Development Group is looking for a sizable financial partner, Matthew Goodman said.

“We want to be equity holders,” he said. “It’s an equity race, and we are trying to shop our partnership equity. With Twelve West we capitalized with a handful of families, but for this we’ll be looking for one large, potentially institutional investor. We’re kicking off the process and are hoping to have it wrapped up by the end of the summer.”

Eleven West, when it is finished, will join a surging West End replete with new office and hotel space. Projects include:  new six-story office building at Southwest 12th Avenue and Morrison Street; an 11-story, 179-room Moxy Hotel designed by DLR Group for a quarter-block parcel along Southwest Alder Street between 10th and 11th avenues; and a 15-story, 220-room Hyatt Centric hotel being built by Mortenson Construction on the same block at the corner of Alder Street and 11th Avenue.

“Look at the West End in the last year and it’s amazing,” Mark Goodman said. “It’s really got quite a there-there energy.”

Market conditions may soon change, he noted. But with interest rates still at historic lows, this may not be quite so important to investors and developers. This is, in part, what gives continuing impetus to projects like Eleven West.

“You have to acknowledge we’re toward the end of a development cycle,” he said. “But also key is that the cost of money is still historically cheap. Where you look at it from our perspective, where you look at holding it for many cycles, it’s more important to have low cost of funds than to directly develop into the right cycle.”

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Incoming tenants are busily signing leases for space in Menashe Properties‘ new office building in Portland’s West End.

Turner Construction, which served as general contractor for the development, has opted to take the sixth-floor penthouse for its corporate office. Turner has agreed to lease approximately 9,750 square feet, Menashe Properties principal Jordan Menashe said.

CENTRL, a co-working company, has taken the second and third floor and part of the first. On the ground floor, CENTRL offices will be integrated into the lobby.

Blue Star Donuts will have a sizable doughnut shop on the ground floor, after vacating its nearby location in the Twelve West building.

Apercen Partners, a California-based tax consulting firm that caters to wealthy clients, has signed a lease for the fifth floor. The fourth floor of the building at Southwest 12th Avenue and Morrison Street is still available.

The 62,381-square-foot building is the second major development by Menashe Properties after the Canopy by Hilton downtown hotel. The office building, which doesn’t have a brand name yet, was designed by LRS Architects.

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Gerding Edlen‘s Eleven West project largely earned praise before a packed hearing at the Portland Design Commission on Thursday. While commissioners liked the overall concept, they did feel it needed some fine touches before it would meet design guidelines.

“I think your analysis and presentation on context and how you drew from that is exemplary,” said Commissioner David Wark.

The main problems commissioners had with the design were with what they considered an overuse of features — balconies, a swimming pool and decks – that extended from the facade of the 24-story building.

“The building has so much positive going on with it,” said Commissioner Don Vallaster. “The only issues I would have are some of the articulation needs to be clearer, simpler and stronger.”

When completed, the building at the corner of Southwest Washington Street and Southwest 11^th Avenue will stand 291 feet tall. It will have 7,500 square feet of ground-floor retail space, and 110,000 feet of office space on the second through seventh floors.

The design by ZGF Architects also includes 222 market-rate apartments along with a roof deck and an outdoor pool.

“This is an important building for us as a firm because it’s next door to us,” said Gene Sandoval, a partner at ZGF Architects.

Sandoval said Eleven West was designed to complement Twelve West, which sits across the street. The latter building was designed by ZGF Architects and houses the firm’s offices.

For Eleven West, ZGF designers used a combination of refinished aluminum plate panels, a board-form concrete base and insulated windows to create a bronze facade to distinguish the project and compliment the Portland skyline.

The building owner, Downtown Development Group, also wanted a variety of balconies and an outdoor swimming pool to extend from the building’s eighth level, 150 feet in the air.

The high number of features extending from the building didn’t sit well with several of members of the Design Commission, however.

“(Twelve West) is a really clear building,” Vallaster said. “I think everybody has admired the simplicity and clarity of it. (Eleven West) could take up a little more of that.”

Another sticking point, in Wark’s opinion, was a lack of canopies. The city’s design guidelines encourage the use of canopies to enhance the pedestrian experience. However, Commissioners Vallaster and Andrew Clarke had few problems with the lack of canopies.

“Adding canopies would hurt the clarity of the first floor,” Clarke said.

While members of the Design Commission focused on the building materials and amenities, public testimony focused on a call for more trees and the fact that the views of murals on two neighboring buildings would be obscured or covered. Eleven West will cover up a horizontal mural of a woman’s face near Southwest 12th Avenue. Designers did leave a small cutout so that the Capax Infiniti mural on Southwest 11th Avenue is still visible, but neighbors weren’t appeased.

“The mural is beautiful, but it is designed to be seen from a distance,” said Lindsay Armstrong, who lives in the neighboring Carlyle Building on Southwest 11th. “I feel cutting a little notch for it, (which) may only encourage loitering, is the equivalent of viewing the Sistine Chapel in a closet.”

Although the Design Commission sent the project back for revisions, the consensus from members was that the building could pass at its next appearance before the group on Oct. 19 with fairly minor adjustments.

“It’s an excellent project at this point, but it does need some editing and simplification,” Wark said. “Some of the greatest strengths of the (Twelve West) are the restraint(s).”

In other Design Commission hearing decisions on Thursday:

• Commissioners sent the proposed five-story, 86 residential-unit Glisan Street Apartments project back to C2K Architecture for further revisions. The project will also include 750 square feet of ground-floor retail and 22 parking spaces. Commissioners said the project, which is owned by Second City Real Estate, needed changes to the bay articulation, the base of the building and the garage area. The project will return to the Design Commission on Oct. 19.

• Commissioners sent 11^th & Clay, a SERA Architects project at the corner of Southwest Clay Street and Southwest 11^th Avenue, back for further revisions.  The Housing Northwest development at 1110 S.W. Clay St. will stand 16 stories and will include a retail unit and a 259-unit student housing group. The project will return to the Design Commission

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