Building Oregon 2007: Feature
Developer Tom Moyer’s proposed 35-story tower in
downtown Portland will be the fourth-tallest building in
Oregon.
Image courtesy of TMT
Development.
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Going higher
Market conditions push skylines to new heights.
By Jon Bell
Ron Barber, one of the principals at BBT Architects, has had
his mind on architecture in Bend for quite some time. His firm,
after all, is now in its 30th year in the city.
So he’s got a pretty good perspective of what’s
going on in Bend these days. And when he says things are
looking up, well, that’s exactly what he means.
“The last few years, developers seem to be going up
higher than they used to — and down lower for
parking,” Barber says. “In the past, you’d go
up three levels with a building. Now they’re up at five.
I guess the price of land has gotten to the point where it
financially makes sense to go up. You just wouldn’t even
think about that in the past.”
While adding a couple stories to a three-story building may
not seem like a huge step up, it is nevertheless a new
development in Bend. At least two major mixed-use developments
— one in downtown and one in the Old Mill District
— are topping out at five stories and including
underground parking, an amenity that in the past has proven
cost-prohibitive.
Market conditions are fomenting changes to other Oregon
skylines as well, most notably in Portland.
Early this year, Portland developer Tom Moyer announced that
the time was right for a new tower in downtown. To be known as
the Park Avenue West, Moyer’s latest addition to the
Portland skyline — he was also behind the Fox Tower and
1000 Broadway — will rise 410 feet on a half block of
downtown to become the city’s fourth-tallest
building.
The $150 million, 35-story building will include 85
residential condominiums, office space and three floors of
retail. There are also to be 350 underground parking spaces
that are likely to be linked to another of Moyer’s
underground lots under construction across the street.
The Park Avenue West announcement came just as class A office
vacancy rates downtown fell below 6%, the lowest it has been
since 2000 and a prime benchmark that often signals a stronger
demand for space. As vacancy rates fall, rents rise and
competition for available space increases.
In addition, as rents rise, the gap between what it costs to
rent existing office space and the rental rate it takes to
cover — and merit — new construction begins to
narrow.
“What’s happening is that vacancies are pushing
down, rental rates are going up, and the gap is starting to get
skinnier and skinnier,” says Patricia Raicht, senior West
Coast research manager for Grubb & Ellis.
The Mercato in Bend is a five-story project.
Image courtesy of BBT
Architects.
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Colliers International reports that the cost of producing new
office space, such as the Park Avenue West building, requires
rental rates between $30 and $35 a square foot.
A market report from Grubb & Ellis shows that the class A
rental rate in downtown Portland rose from $22.66 a square foot
in 2005 to $23.80 per square foot at the end of the fourth
quarter of 2006. The report also found that the rental rate in
one downtown office building, One Main Place, rose over the
past 18 months from $19.50 per square foot to more than
$25.
SUCH RATE INCREASES HAVE BEGUN TO ADD a little luster to the
prospect of new construction.
“The market for office is pretty strong,” says
Vanessa Sturgeon, president of Moyer’s TMT Development.
“Vacancy rates are down, rental prices are up, and
really, with our location, mostly anytime would be a good time
to build because it’s such prime downtown
property.”
Sturgeon says that TMT is also planning another building for
Southwest Broadway and Columbia, but details on it are not yet
available.
While conditions downtown have begun to ripen for some new
office projects, they’ve yet to sweeten up enough for
others. At least three other planned towers — One
Waterfront Place, 100 Columbia and First & Main —
remain in the starting gates, yet unable to secure the anchor
tenants that most developers prefer to have lined up before
breaking ground.
In Bend, one of the country’s fastest-growing
metropolitan regions, population growth, real estate
appreciation and a limited amount of developable land within
the city’s urban growth boundary have spurred the rise of
taller buildings.
In the decade between 1996 and 2006, the price of land in
downtown Bend jumped from $25 a square foot to $400. That alone
has been enough for developers to consider adding more stories
to their buildings, even if that means tussling with the city
and neighbors over height restrictions.
“What’s driving it is the land value,” says
Barber. “They have to get more square feet on these lots
to make it pencil.”
A DENSER, MORE URBAN STYLE OF LIVING is also behind the trend.
Two of the most notable five-story developments in Bend are
large mixed-use projects incorporating retail, office space and
residential condominiums.
One, Franklin Crossing, is in the heart of downtown and
features all three components, including eight top-floor luxury
condos. The other, a $45 million, 350,000-square-foot
development known as the Mercato, is scheduled to break ground
in Bend’s Old Mill District later this spring.
Designed by BBT Architects and developed by the Trono Group
LLC, the five-story Mercato will be a European-style
marketplace with ground-level retail and restaurants, office
space and 54 residential condominiums. Part of the appeal of
the condos will be their expansive views out over the city and
to the mountains.
“A few years ago, living in downtown in a condo above a
parking garage or a restaurant, you just didn’t hear
it,” Barber says, noting that a conditional use permit
was required for the higher building.
BBT also designed a four-story office building under
construction for Clear Choice Health Plans in Bend. The only
way to get the required parking to fit on site was to go up a
little higher than other buildings in the area — an
exception that again required a conditional use permit.
Such building scenarios are likely to repeat themselves as
Bend — and even Redmond — continues to grow.
“I think if you talk to any architect in the area,
they’ll all tell you the trend is going up instead of
out,” Barber says. “I don’t see it changing.
It seems like all the architects, all the engineers, all the
contractors are busy and the developers are still developing.
We haven’t seen any slowdown.”
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