Portland’s tallest tower, the Wells Fargo Center, and an adjoining building are undergoing an extensive renovation.

General contractor Turner Construction is engaged in a complex series of abatement, demolition and renovation work to modernize the lower floors of the tower occupied by Wells Fargo as well as the entire Exchange Building (formerly the Data Processing Building) on the eastern portion of the two-block site. The two buildings are linked by a fourth story sky-bridge (over Southwest Fourth Avenue) that also is undergoing renovation – including the addition of a large mid-span skylight.

In addition to removing tons of hazardous materials used in construction of the two buildings, which opened in 1972, crews are performing both structural and aesthetic upgrades.

Ground was broken in January, and completion is expected in January 2020.

“Asbestos is in the building, so a lot of work is going on around that,” said Jessica Hartwell, a Turner Construction project engineer assigned to the tower portion of work. “A lot of our scope is getting rid of that, so we’re stripping everything back to structure and then moving all the way forward. It’s in the elevator shafts – every piece of steel in the building.”

The tower’s main entrance also is being overhauled; a new glass and steel canopy bearing the Wells Fargo name is being installed. New glazing is being installed up to the third story.

Outdoors, new precast concrete seating and landscaping will be added to an existing sunken plaza.

“We’re going through the (tower) basement, which used to be safety deposit level, called SD, through level four, which used to be a complete mechanical core,” Hartwell said. “Basically the entire purpose of the renovation is to provide more amenities for tenants.”

The Exchange Building is receiving more extensive work, including the removal of a drive-thru and much of an existing terrace that wraps around the ground floor. Meanwhile, new interior space is being created with construction of a new third floor above the second level. Walls there are being pushed outward to match the rest of the building and eliminate former outdoor amenity space.

“Basically, this used to be a building full of offices for Wells Fargo, and we’re just basically wiping it clean – just shelling it out,” said Brodie Bricker, Turner Construction superintendent for the Exchange Building work. “We’ve built out the second floor. It used to be a mushroom shape, and we’ve added a perimeter and a second-floor deck, which is a concrete-on-metal deck tied into the existing perimeter columns.”

Doing so, he added, is moving the walls out 32 feet to the perimeter of the building and adding thousands of square feet of usable space on levels one and two.

“It used to be an exterior, paved hangout area – a usable amenity space – but nobody really used it,” Bricker said. “It was a double height outdoor space, so this job has kind of taken that space back.”

Atop the Exchange Building, a new landscaped deck and amenity space is being constructed out of a former rooftop mechanical room.

West of West and SERA Architects designed the project. Lincoln Property Co. is the building manager.

The post 47-year-old Portland landmark receiving renovation appeared first on Daily Journal of Commerce.

Wells Fargo has sold the 40-story Wells Fargo Center in downtown Portland to an affiliate of Starwood Capital Group, the bank announced Tuesday.

Terms of the deal were not disclosed.

Wells Fargo plans to lease back space and continue to anchor the building, which will retain its name, the bank said in a news release.

Wells Fargo announced in June the listing of the tower at 1300 S.W. Fifth Ave. At the time, Wells Fargo was leasing out more than 40 percent of the 689,840-square-foot building to other tenants.

The bank has also signed an agreement to lease space at 23175 N.W. Bennett St. in Hillsboro starting Jan. 1, 2018. The company will operate a retail banking call center in the building. It can accommodate up to 900 employees, and Wells Fargo plans to relocate some employees there.

Wells Fargo plans extensive renovations at the Hillsboro site, and will start moving employees in during summer 2018, the bank announced.

Portland office space sales have repeatedly reached new highs per square foot in recent years. The current record holder on a per-square-foot basis is Pearl West, which sold in July for $87.5 million, or $563 per square foot.

The post Wells Fargo sells downtown tower appeared first on Daily Journal of Commerce.

A cohort of prime office properties for sale is setting new expectations for high-end commercial real estate in Portland.

A parcel including two superblocks and an aging office building in the North Pearl District is for sale and is expected to fetch an aggressive price, industry insiders say. The Wells Fargo Center is on the market and could go for more than $200 million. And Wieden + Kennedy‘s Pearl District office building is also for sale, and is expected to earn a healthy premium on the $65 million it sold for five years ago.

Taken together with the sale of the former Oregonian building earlier this year for $95 million, the high-dollar listings will soon test how valuable Portland office property has become.

In some cases, the listings are pricing out local investors who believe the real-estate cycle has reached maturity, and prompting head-scratching among locals who see little value in matching the fast-escalating values placed on Portland properties by major out-of-state firms.

“Either I’m really, really wrong, or they’re really, really wrong, but it’s a new normal,” said Noel Johnson, a principal at Portland developer Cairn Pacific.

Institutional buyers can be more aggressive on their pricing, said Buzz Ellis, managing director at Jones Lang LaSalle.

“They will tend to see growth in our market,” he said.

Several office properties for sale are likely to fetch record or near-record prices in coming months.

The remaining portions of the Con-way master plan site represent a unique opportunity for developers. The properties, offered by Eastdil Secured, include two 200-foot-by-400-foot superblocks, two smaller surface parking lots and a retired 129,148-square foot Con-way office building. The total developable area spans 6.7 acres of highly valuable urban infill in the fast-emerging Slabtown area.

The office building is being offered separately from the vacant blocks, and is under contract. The office is viewed as a repositioning opportunity that could yield $500 per square foot when it’s eventually resold.

The blocks are along Northwest 21st and 22nd avenues, and three of the four blocks are bounded by Raleigh Street, which is envisioned as Slabtown’s commercial corridor.

The parcel, now owned by XPO Logistics, is regarded as particularly valuable because it is not subject to Portland’s inclusionary housing requirements. Developers could conceivably complete build-out of the entire 17.49-acre Con-way site without including a single affordable housing unit.

Portland’s Bureau of Development Services issued a zoning confirmation letter to an attorney representing XPO Logistics on June 6. The letter confirms the entire XPO site is subject to zoning according to rules in effect on April 24, 2012, when the site’s master plan application was filed. That’s long before the city’s inclusionary housing regulations went into effect earlier this year, and before a package of mixed-use zoning regulations that were approved last year by Portland’s City Council.

A property that is not subject to inclusionary zoning may be worth three times as much as a comparable property that is subject to the affordable housing requirements, Johnson said.

Eventual buyers of Con-way properties could opt to build office, multifamily or retail space, or spaces featuring a combination of uses.

XPO Logistics is accepting “best and final” offers on the site, and is seeing strong interest.

“It’s just a good signal of a really bullish market right now,” Johnson said.

The area is booming with office development, including the 300,000-square-foot Field Office development from project^, and the rehabilitation of the Leland James building by Cairn Pacific and Capstone Partners.

For the office market, the sale of the Oregonian building at 1320 S.W. Broadway was a new watershed moment. The sale valued the renovated creative-office building at approximately $540 per square foot, a record for Portland office space. The buyer was Credit Suisse, through a Delaware-based limited liability company, Portland 1320 Broadway Real Estate Holding LLC.

The building had been subject to a thorough renovation by the previous owner, Urban Renaissance Group of Seattle, with a design by Allied Works Architecture.

A Credit Suisse spokeswoman declined to comment on the bank’s investment in Portland’s market.

Several factors are pushing office properties to record valuations. Average asking rents rose to $28.04 per square foot during the first quarter, with Class A office space in Portland’s Central Business District fetching $34.94 per square foot, according to Jones Lang LaSalle. Office vacancies were unchanged at 9.4 percent.

Office properties for sale are likely to fetch eyebrow-raising prices. These include Wieden + Kennedy’s Pearl District corporate headquarters at 224 N.W. 13th Ave. The owner, J.P. Morgan Asset Management, has placed the property on the market, and is being represented by San Francisco-based brokers of Eastdil Securities.

The 190,151-square-foot building last sold for $65 million, or $342 per square foot, in 2012. It’s likely to fetch even more this time around.

The 109-year-old building was renovated in 2012 in another Allied Works-designed project.

“It’s really a quite remarkable building,” Johnson said.

Wieden + Kennedy will continue as the main tenant in the building, a spokeswoman for the advertising agency said. (The building is also home of the Bluehour restaurant).

The listing of the Wells Fargo Center looms over the Portland office market. Earlier this month, the bank announced it would sell the full-block, 689,840-square-foot building – Portland’s tallest skyscraper. The listing includes the tower and podium.

The bank leases approximately 40 percent of the building to other tenants. Wells Fargo plans to lease space back from the building’s eventual buyer. The company will also move employees to other locations in the Portland-metro area.

While some locals see Portland office space as increasingly unaffordable, it still represents a value compared to San Francisco or Seattle.

“Those markets have seen similar strong rent growth,” said David Hill, senior managing director at Newmark Knight Frank in Portland.

One sign to watch: when companies begin forsaking Portland’s office market for cheaper properties elsewhere in the West.

“Does Portland get to the point where people are looking at Boise or Salt Lake as a more affordable option?” Hill said. “We haven’t seen any evidence of that yet.”

The post Investors cashing in on offices appeared first on Daily Journal of Commerce.