Zidell family moves from heavy metal into mixed use development in tony South Waterfront.
When Jay Zidell announced his family is getting out of the barge building business two weeks ago, it was a big, steel nail in the coffin for old Portland.
The South waterfront site around the west end of the Ross Island Bridge was once home to ship breakers owned by the Zidell and Schnitzer families. While the Schnitzers have gone full bore and donated much of their adjacent parcel of land to Oregon Health & Science University, for the Collaborative Life Sciences building and the Knight Cancer Institute, Zidell Marine Corporation has one more barge to build before they shut up shop in mid 2017. Then they will focus on real estate, through ZRZ Realty Company, which is run by Jay Zidells nephew Matt French.
Shipbuilding gave way to barge building, which has given way to jogging surgeons and dental students on race bikes. The next part of the plan is to clean up the site of the long, blue barge building where the barges are made and fixed. This would complete the clean up of the rest of the 33 acres the Zidells own. That land makes the Zidell family the largest owner of undeveloped land in South Waterfront. These 33 acres are a subset of South Waterfront, which is 120 acres and is bounded by the river and Interstate 5. This in turn is a subset of the North Macadam Urban Renewal District, which totals 420 acres.
Once Tilikum Crossing opened and OHSU signed on to build three more buildings, ZRZ sped up its process. It doesnt hurt that the Portland real estate market is hot right now and the urban renewal district expires in just nine years 2025.
Transporation hubbah hubbah
Public dollars have poured into South waterfront in the last decade. From a desolate breakers yard, it has become a transportation hub, with freeway, MAX, Streetcar and bike access all converging at the foot of the Tilikum Crossing. This has made it into a desirable area for development.
Being an urban renewal district, the Portland Development Commission agrees to borrow money against future property taxes to make a patch of flood plain habitable, adding roads (such as Bond Avenue), sewer, parks and the greenway along the river. Bond Avenue is part of Phase 1 of the Development agreement with PDC and is happening right now. The Portland Bureau of transportation expects the work to go out to bid on Bond Avenue North of Porter by the end of the October.
In the PDCs Development agreement of June 2015, the city promise $23.7 million so long as 1.5 million square feet of mixed-use development is built in the South Waterfront by 2025. After 2025, the PDC will still be collecting property taxes, to pay off the infrastructure or use it for some other project, but the area reverts to normal status and Zidell and any other land owner or developer is on their own. No new tax breaks, no more tax increment fund.
In an interview in the Zidell offices at 3121 S.W. Moody Ave., which will be torn down to make way for a bigger office building on what is called Block 4, Jay Zidell and his real estate consultant Tom Henneberry sat down to talk about their plans.
They called the 2001 master plan more of a vision document. The master plan that Henneberry is coordinating should be complete by the end of 2016.
One of the big takeaways from the vision process in 2001 was the family has a strong desire to control as much as we can of what happens on our land and to own as much of it as possible, said Zidell. Its too big to own everything, as much as I would like to. But we view ourselves as long-term owners.
Its the same thinking as the Goodman family has about its downtown parking lot empire: if you have a great plot of inner city land that could one day be worth billions, hang on to it.
Zidell says selling land is giving up control, unless you carefully select partners to sell to. They pride themselves on not doing spec buildings. Rather, they have contracted Noell Consulting of Atlanta to do a market study to see how much residential and retail the area can support. ZRZ is constantly courting tenants for its future office spaces.
Jay Zidell is president of the real estate arm, ZRZ. He has two sisters, one who works for Zidell and one in Palm Springs who does not. His son is not in the business, but his nephew Matt French is managing director at ZRZ and oversees the development. Zidells grandkids are age five and nine months.
Asked if they would inherit his real estate holdings one day, he said I certainly hope so. And the one thing he is fighting for in this whole transition from rusty metal to gleaming steel? Just getting it right, I guess.
When asked if he knew what he wanted to see on the land, Zidell answered candidly, Not with any clarity, which is why were going through the master plan now.
Thomas Henneberry, who came on full time as Chief Operating Officer in May 2016, is used to working with families with land to develop. He spent thirty years working for the Richard Jacobs Group in Cleveland, Ohio, developing their retail shopping centers, office buildings and hotels. After that he was briefly in Columbus Ohio with another family, then it was off to Washington, D.C. and a public company, Forest City Ratner Companies, controlled by the Cleveland-based Ratner family.
Ive always had a career run by families who are interested in long-term ownership of real estate projects. In D.C. it was a similar property, the Navy Yard annex, 42 acres, an old industrial property on the river which was developed for mixed use.
Portland can be like D.C.
The D.C. site has 5.5 million square feet of entitlements, which means 5.5 million square feet could be built there. We had a marina, developed residential, retail and office, and did a lot of open space and parks.
Essentially, this is what Portland can expect at South waterfront, just north and south or the Ross Island Bridge. And at least one hotel, he adds.
Henneberry jokes that hes been meeting with the citys various bureaus, A cast of hundreds, about sewers, parking, traffic and more.
Geraldene Moyle, Senior Project Manager at the Portland Development Commission is the project manager keeping that cast at the table.
She points out that since the City doesnt own the land, like it did at Burnside Bridgehead or Centennial Mills, the Zidell process should go smoothly. Its all about matching the infrastructure with the buildings being built.
This DA was agreed last summer but they are now working on a new master plan, and the city bureaus are participating, so we anticipate an amendment. The timing
may change, she says, but the code wont.
The makers are coming . . . maybe
Zidell says that as soon as the last barge is built, that space will be repurposed into retail and or creative office space. The slipway is currently a grubby chute with giant rails down which barges slide into the river. There the Zidells want to see an activation of the water, with a dock for boats, kayaks and paddleboards.
Portland differs from Washington, D.C. in a few key respects: D.C.s population is 5.5 million people, the site was not already zoned whereas South Waterfront is, and the waterways in D.C. do not have so many building restrictions, and are more polluted. The biggest difference is height. D.C. is very height resistant, here is very height-friendly, says Henneberry.
What about the tall condos-turned apartments that stood as a monument to the great recession? Henneberry doesnt expect they will be building that tall any time soon. So has he factored in a recession? He laughs.
You dont work a market crash into the plan. These are countrywide things, international things. You plan for nice, steady growth, you look at the statistics of job growth, you talk to economists, the universities, see what their plans are, talk to the city, how they are planning We are in an incredible location here, its like no other in many, many cities. You are poised for that growth and if the economy is strong you get it.
As OHSU goes, so goes the neighborhood. Zidell calls OHSU a wonderful neighbor. They have 17 million square feet of entitlement between the hill and South Waterfront, and theyve built 12 or 13 million of that. Theyre a great neighbor.
The master plan is very much under wraps right now. The Zidells are saying they want to attract people who work in the area OHSU is Portlands biggest employer and want to live close to work. For parks, Zidell says Quiet is one of our concepts. But also active recreation, sport courts and bocce ball, to attract more active people.
He rules out any future heavy industrial activity on the land.
One thing we looked at about three years ago was the whole cottage industry of the maker community.
The Zidells have invited culture on to its temporarily blank slate before now: drive-in movies, foodie events like Friday Night Feast, Cavalia the horse circus. Has anyone approached them trying to site a museum or cultural attraction, in the style of OMSIs adaptive reuse of the old power station?
To say a museum or a music hall is coming is probably a step were not prepared to take right now.
It'll be strictly business.
The Zidell Companies
1913: Russian immigrant Sam Zidell set up the Zidell Machinery and Supply Company in Portland selling equipment and supplies to the region's expanding industrial base.
1946: Sam Zidell's son Emery founded the Zidell Ship Dismantling Company, later Zidell Explorations and dismantled a total of 336 ships in 30 years.
1960: Emery Zidell founds Zidell Marine, barge maintenance and construction, to build barges from recycled steel.
2016: Zidell Marine and Tube Forgings of America headed by Emery's son Jay.
ZRZ Realty Company, headed by Jay Zidells nephew Matt French.