With so-called “Old Portland” disappearing amid a construction boom, some developers are now striving to make connections to properties’ pasts.

This is particularly true for adaptive reuse projects. One prominent example can now be found in Northwest Portland, where crews are stripping out the interiors of three large warehouses that until early last year housed Cenveo‘s Graphic Arts Center.

Now, general contractor R&H Construction is busy updating the campus – now named The Hopper – to serve as a hybrid commercial/industrial facility for project partners Winkler Development Corp. and Watumull Properties Corp. LRS Architects carried out the design work on the campus, which dates back to the mid-1960s.

“We knew,” Winkler Development Corp. principal Jordan Winkler said, “that we were going to take what was obsolete functionally, obsolete physically … and turn it into a modern industrial campus, and that’s what we’re setting out to do. It’s touching almost every surface here.”

The three buildings sit on 5.3 acres of property at 2000 N.W. Wilson St. Together they total more than 167,000 square feet, primarily open space. Tens of thousands of square feet of office space also will be created to potentially diversify the tenant base.

The first tenant will actually be R&H Construction itself. The contractor will set up its shop in 34,000 square feet of Building B, which sits in the middle of the block along Northwest Wilson Street between 20th and 21st avenues. That space will be used to store equipment and perform maintenance on vehicles and other gear. R&H also will occupy some 18,000 square feet of Building C to accommodate management, project engineers and other support staff.

“I would call it industrial chic in its existing state,” R&H project manager Kraig O’Connor said. “We are very much going to let the tilt walls talk a lot, but we’re going to paint them up. And for our office space, we’re certainly going with a stucco look and a big, pretty dramatic storefront. We’re really letting just the warehouse elements lead.”

A towering cyclonic paper separator that once was used to recycle waste paper from the Graphic Arts Center’s printing operations dominates the campus from its perch atop Building A. It’s known colloquially as a hopper, Winkler said.

“We just thought it was cool, so we kept it and named the building after it,” he said. “I wanted to name the building ‘The Cyclone,’ but it was deemed too aggressive.”

This particular building would probably best suit a retailer or other commercial tenant, Winkler added, mainly because it sits on the corner of the property most visible to passing foot and vehicle traffic.

For now, construction is being carried out in phases. Building B is already complete and in operation. Building A is next. It has been cleared, repainted and given a complete seismic enhancement featuring steel backing and other fixtures to better secure the roof and foundation to the concrete tilt-panel walls. All of the campus buildings will undergo similar upgrades.

“Primarily we’re looking at dealing with out-of-plane loading,” O’Connor explained. “So we’ve done a lot with steel, strong backing, we’re really trying to focus on diaphragm strengthening, so there’s been nailing and strapping of the roof and tying the diaphragm to exterior walls to get the load down to the ground.”

Winkler also sees plenty of room for growth in the neighborhood. For starters, two large planned transportation projects will bring significant changes. One calls for realignment of the Interstate 405 off-ramp at Northwest Vaughn Street. This would shunt drivers north to Wilson Street and past The Hopper to allow access to the huge Con-way Blocks development slightly south.

A second project, Winkler said, could potentially bring the Portland Streetcar much farther north than at present. That also would provide greater connectivity with the rest of the area.

“It’s not at all finalized,” he said, “but in every alignment I’ve seen it stops either at or very close to this property.”

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Watumull Properties Corp. saw an opportunity at a printing plant in Gresham that the longtime owner was looking to unload. In many ways, it was a typical Watumull investment.

Watumull purchased the 13.6-acre manufacturing site at 17401 N.E. Halsey St. for $5.75 million from R.R. Donnelley and Sons, an Illinois-based printing company that opted to close the plant last year and lay off 113 workers.

It was the largest sale of an individual industrial building in Portland for the year to date. Watumull rebranded the property as the Halsey Corporate Center and selected CBRE as leasing agent.

“We hope to use part of it for distribution and part of it for manufacturing,” said J.D. Watumull, president of Watumull Properties Corp.

The property off of Interstate 84 adds to the company’s growing real-estate portfolio in the Portland area. Watumull Properties, founded in 1914, owns dozens of properties in the Portland market.

“We are very pleased to be able to acquire such a well located industrial property so close to I-84 to add to our growing real-estate portfolio in the Portland metro area,” Watumull stated in a news release announcing the deal.

Operating from an office in a luxurious waterfront district in Honolulu, the fourth-generation family firm has quietly become one of Portland’s largest property investors.

The company typically buys properties and holds them for the long term, earning income from lessees. Watumull still owns the first Portland property it purchased, a building in Heintz Industrial Park on Riverside Way in Northeast Portland.

The company has benefitted from a long run for industrial property. Rents have risen steadily in recent years as shipping companies, fulfillment centers and general industrial users bid up locations near population centers and transportation corridors.

Watumull Properties is careful not to overextend in the booming market, Jaidev “J.D.” Watumull, the company’s president,  said.

“We always like to think we’re cautious,” he said. “It’s been a long expansion period. You always need to be conservative.”

Watumull is the grandson of the company’s founder, Jhamanda, who hailed from India, and son of Gulab, who also leads the family company. J.D. Watumull’s son Jared is also active in the family business and regularly visits Portland, brokers said.

The Watumull business empire started out as a chain of Hawaiian retail stores before transitioning into real-estate investments. The family is well known in Hawaii for supporting a variety of charitable causes and arts organizations.

Robert Niehaus, a longtime Portland commercial broker, said he’s done “dozens and dozens” of deals with Watumull Properties since the 1980s. The Watumulls invest in industrial, office and retail properties – in that order of priority. They have not delved into the residential market in Oregon. Another guideline: The Watumulls are interested only in investment properties within an hour’s drive of Portland International Airport.

“Their model is to offer cash, typically without a financing contingency,” Niehaus said. “Brokers love it and sellers love it.”

He added: “Their model is a quick look and a quick close. So they’re ideal for brokers and sellers. For that, they like a premium on the cap rate.”

The capitalization rate, or cap rate, is a ratio of a property’s value or sale price to the income generated by the property. A high cap rate implies a low purchase price relative to the owner’s revenue on the property.

Watumull Properties primarily invests in three markets: Hawaii, Portland and Denver. In Portland, the company has established a large footprint.

“I enjoy working with them because they’re in tune with the market and can move quickly,” said Cara Nolan, first vice president at CBRE. “That says a lot. Sometimes – but not always – with some of the larger ownerships, they can’t jump on opportunities as quickly as Watumull.”

Nolan, who is representing Watumull’s Gresham property, said the company’s hands-on family leadership is an asset.

“It could be a 2,000-square-foot lease deal or a $15 million sale – you’re still talking to the same decision makers,” Nolan said.

Watumull pulled off one of Portland’s biggest industrial deals of 2016 in September, when the company purchased the Crosswhite Industrial Park, at 6461 S.E. Crosswhite Way, from Crosswhite Enterprises for $20 million, according to a Jones Lang LaSalle report. The off-market transaction equated to $75 per square foot, and came at a 7.5 percent cap rate. The 267,000-square-foot facility was fully leased by Precision Castparts.

Watumull Properties has diversified geographically throughout the Portland metro area.

“They’ve invested in pretty much all our submarkets,” Nolan said.  “Vancouver, Northeast, close-in Southeast. They’re in Sunset Corridor. They’re in Southwest. The type of product they have runs from smaller, flexier-type spaces to 350,000-square-foot manufacturing facilities.”

As industrial demand has grown, vacancies fell to 3.5 percent and asking rents rose to $0.58 per square foot.

Much of the demand for industrial space in metro Portland is driven by e-commerce. Amazon is backing the largest industrial development in recent years with plans for an 855,000-square-foot fulfillment center at Troutdale Reynolds Industrial Park near I-84.

Watumull made a splash earlier this year when the company announced a joint venture with Winkler Development to create The Hopper in Northwest Portland. The project aims to transform 167,000 square feet of industrial space on 5.3 acres at 2000 N.W. Wilson St. The site is a former Cenveo Corp. printing plant.

The project, adjacent to Slabtown and the Pearl District, is being marketed as an urban campus for a possible tech tenant. The property could be used by a single tenant or multiple tenants for a range of industrial or office uses, according to brokers.

Unlike many Watumull properties, The Hopper includes a retail component. The space will be configured to attract a “destination retail” outlet.

Cushman & Wakefield is representing the property. Senior director Brad Carnese declined to comment. But in a prepared statement, Carnese said Portland’s “invigorated economy and growing commercial real estate markets remain propelled by a slew of companies wanting to expand or position themselves in the Portland market, which we believe bodes well for the timing of this new job center.”

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Industrial rents in the Portland-metro area rose 18 percent in 2016, according to research firm Jones Lang LaSalle.

JLL‘s report underscores the tight market for industrial space amid the e-commerce boom, as firms needing shipping and fulfillment centers compete with other industrial users.

Asking rents increased to $0.59 per square foot on average, up from $0.50, according to JLL.

“Despite significant new deliveries hitting the market in 2016 and 2017, vacancy is expected to remain at historic lows, putting additional pressure on rents in the coming quarters,” JLL stated.

For new construction, rents are being firmly quoted at $0.55 per square foot, with office surcharges at $0.90, according to JLL.

Several industrial projects are in development or under construction around the metro area. In early February, Winkler Development and Watumull Properties Corp. announced The Hopper in Northwest Portland. The project will have 167,000 square feet of industrial space on 5.3 acres at 2000 N.W. Wilson St., the site of a Cenveo Corp. printing plant.

Projects totaling more than 3.5 million square feet are under construction; they include Capstone Partners‘ PDX Logistics Center III and Specht Development‘s Vista Logistics Park in Gresham.

Against this backdrop, Realty Marketing/Northwest is offering at auction two Sheridan parcels totaling 24.25 acres. The manufacturing complex at 888 S.E. Sheridan Road has two sites – one with 112,540 square feet on 13.66 acres, and the other with 102,000 square feet on 10.59 acres.

The properties near Spirit Mountain Casino were built in 1973 and 1978 and need some minor repairs, according to the marketing and auction firm.

The properties can be purchased individually or combined. The bulk published reserve price is $3.1 million, or $14.44 per square foot. Sealed bids are due March 8.

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A Northwest Portland printing plant is closing, and the property will be repurposed into a modern industrial campus.

The redevelopment, called The Hopper, will total 167,000 square feet on 5.3 acres at 2000 N.W. Wilson St. The site currently holds a Cenveo Corp. printing plant.

The property is scheduled to be ready for occupants in the third quarter of 2017.

The Hopper is a partnership of Winkler Development and Watumull Properties Corp. Cushman & Wakefield‘s Portland office is marketing the property.

James Winkler purchased the property for $7.5 million in November 2015 via a limited liability company, according to city records.

The area sits between fast-developing Slabtown, where Cairn Pacific and other developers are transforming the neighborhood with a mix of uses, and the eastern edge of the Pearl District. The property is within the Portland’s “industrial sanctuary” area and is zoned for general industrial (IG1) uses, limiting its redevelopment potential. Additional economic incentives and benefits are available because of its location in the city’s e-commerce enterprise zone.

Neither Winkler Development nor Connecticut-based Cenveo Corp. responded to calls seeking comment.

The property will become “a tremendous job center in the heart of Portland,” Cushman & Wakefield senior director Brad Carnese stated in a news release.

The property could accommodate a single-user headquarters or up to three tenants, according to the release.

Adding to The Hopper’s functionality, the building has heavy, three-phase power throughout, flexible clear heights ranging from 18 to 31 feet and more than 200 parking stalls.

The project’s name derives from a piece of manufacturing equipment in the building’s southwest corner that will remain after redevelopment.

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