Is it any wonder that such an ugly "renovation" is having trouble attracting renters? There was a picture with this article that named the architect, but now I can't find it. That guy should have his license revoked.
The original structure was really cool and was begging for creative re-use. Instead we get this suburban-office-park bullsh*t.
Martin Luther King Jr. Boulevard development project is delayed
Portland's urban renewal agency delays a loan payment on the Heritage Building to halt foreclosure
Thursday, June 26, 2008
RYAN FRANK
The Oregonian Staff
Portland's drive to remedy years of neglect along Northeast Martin Luther King Jr. Boulevard hit another bump Wednesday.
The Portland Development Commission, the city's urban renewal agency, had to further delay a developer's loan repayment to halt a possible foreclosure on a key MLK project.
The Heritage Building's developers couldn't find enough tenants to satisfy their first lender, so the PDC acted to clear the way for a new bank loan. Nearby, another PDC-subsidized building, King's Crossing, also has been slow to attract tenants.
The fact that retail and office tenants haven't jumped into the new buildings raises questions about whether the PDC and developers have missed the market.
Between Broadway and Rosa Parks Way, MLK has struggled for decades with crime, plywood-covered windows and grassy lots. The problems have been most acute between Fremont and Alberta streets, where the boulevard has never recovered from damage done during 1960s-era race riots.
In recent years, the PDC's strategy has focused on commercial "nodes." The theory is the city would use low-interest loans and grants to renovate key blocks, then watch private investors follow.
The city has had some recent successes.
The Vanport Square project near Killingsworth Street has attracted 14 buyers for 16 office spaces. Henry V Events filled an empty building with green offices. Nike opened a factory store on the boulevard's south end.
The Heritage Building and King's Crossing, though, showed what types of office spaces are more difficult to rent.
Most of the MLK demand comes from smaller renters, such as day care centers, gyms, nonprofit groups and restaurants, said Estee Segal, a PDC senior project coordinator. The city and brokers say MLK's most popular office size is about 1,000 square feet.
But the Heritage Building and King's Crossing built larger spaces. Both projects finished last year but are only about half leased.
The Heritage Building's shortage of tenants landed it in default.
The developers were required to attract enough tenants and rent to cover their mortgage payment as of Dec. 31, but they didn't make it. That led the Albina Community Bank to put its $1.9 million loan in default. Its action prompted the PDC to declare city loans totaling $2.45 million in default.
Albina Bank has scheduled a July 22 foreclosure sale. The developers, led by Eric Wentland, hope to get a new $2.1 million loan from Bank of the West to avoid foreclosure and pay off Albina.
The developers still must sign up more tenants to qualify for the new loan. "We have every reason to believe this will be fixed in the next 90 to 180 days," Wentland said.
Even with their struggles, the Heritage Building and King's Crossing have helped change MLK, said Michele Reeves, a Windermere commercial real estate broker who's worked on the boulevard and briefly worked on the Heritage Building.
"If you look at those couple of blocks compared to five years ago, it looks like a whole different area," she said.
But it's common, Reeves said, for pioneering developers with speculative buildings to struggle until the private market sees the potential and is willing to pay higher rents.
Ryan Frank: 503-221-8519;
ryanfrank@news.oregonian.com; blog.oregonlive.com/frontporch