When the developers Capstone Partners and Premium Property USA bought the two-block site in the Central Eastside around Southeast 10th Avenue and Main Street, they were doing what comes naturally to developers: Following other developers into a hot space with a solid story to tell.
They are redeveloping the old home of the Custom Stamp and Manufacturing plant. This consists of two grey buildings between Southeast Salmon and Belmont Streets and between 10th and 11th Avenues, the kind of grey boxes ignored except for their on-street parking spaces.
The goal is, as Capstone puts it, to turn them into "a new high-end creative office/tech and artisanal food and beverage maker hub to be known as Custom Blocks."
Custom Stampings once made metal parts for ships, cranes and trailers, down to as small as dog tags. Any steel part that needed the immense pressure of hydraulic presses could be made there. Custom Stamping's former owners Dave Stoudt and his partner Gloria retired in 2016 and sold the property to Cushman. (Stoudt's father started and grew the business in 1963 after working at East Side Tooling and Die Works.) The Stoudts also sold a building two blocks north to Ecotrust, which became Redd. This should become a food and nonprofit hub by the end of 2017.
Now crews managed by Fortis Construction are gutting the place. The few machines that are left will be kept as conversation pieces in the new office space. On a recent morning the mulchy smell of sandblasted Doug Firm beams mingled with the earthy aroma of roasting coffee from Coava Coffee's new space, kitty corner from the Custom.
The buildings were built between the 1930s and the 1950s. At one point the southernmost building hosted a Ford dealership, with a ramp up which spectacular gas-guzzlers were driven to be displayed on the second floor.
Brad Carnese is a Senior Director at the real estate services firm Cushman & Wakefield. He represented owner/operator Custom Stamping in the disposition. Walking around the buildings, Carnese pointed out the unique selling points that caused the developers to pull the trigger after years of keeping their eyes peeled for a "cool, authentic project in the Central East Side," as he put it.
"What's unique to the campus are the tall ceilings, the clear spans, the natural light and the large floor plates — most warehouses around here have lots of columns or low ceilings."
The bow string trusses of the south building are impressive, and the mezzanine and roof top will provide space for two features that are hot now: roof decks and a crow's nest or large glassed-in office or meeting room. "It'll probably be a killer conference room," he says.
The north site (1240 S.E. Main St.) has a series of structures that can be knocked through and turned into a restaurant, pub or taproom, or other food preparation spaces. They will have common facilities such as bike lockers, and a 2,500 square foot fenced in parking space and delivery areas. The property is everything on the block except for New Deal Distillery and Tasting Room.
"The buildings had very good bones, structurally they are in good condition for 1930s to '50s vintage."
Carnese added that even though the roofs are in good shape, they will be replaced and the new diaphragm will tie to the cinder block walls, which is enough of a seismic upgrade to survive the coming Big One.
All electric and mechanical will be upgraded, skylights reopened and energy efficient operable windows added. The fact that the glass line is low is deemed a good thing: it means more light comes in, and the inhabitants are visible from the street. The sight of factory workers in overalls lurking in the dark will give way to plaid people sitting at multiple screens late into the night.
The shell permit is due on April 1. The two-block complex will offer a total of 72,000 square feet of office space. Occupancy is expected by November 2017. Carnese said it is all the same to him if the new tenants are one big company or an array of small ones. He did say they are in talks with one publicly traded company but could not disclose the name.
"We expect it will be software folks, engineering," he said. "Stamping only had seven employees by the end. We believe it will become a job center, with hundreds of new jobs. It's the new urban industrial, but instead of making parts for trucking, they'll be making something on their desktops."
He points out that the team is tight: Capstone, Fortis and Scott Edwards Architecture have all done adaptive reuse projects, and the latter two have experience in the Central Eastside.
Capstone is currently renovating the Conway Leland James Center in Slabtown, adding a floor a new façade, for creative office space and ground floor retail.
The Central Eastside has had some landmark developments during the last decade. Before the Great Recession, there was the East Side Exchange (with the then-hip restaurant Clarklewis). Then there was Viewpoint Software's building by the Hawthorne Bridge, and Clay Creative's work for Simple where the burned-down Taylor Electric building was. Beam Development had their Burnside Bridgehead and the Eastside Exchange, and PacTrust and Venerable Properties remodeled the old Washington High School (adding the music venue Revolution Hall.)
"We're four to five years into the latest wave of adaptations, and with the City's 2035 comprehensive plan, in 2018 there'll be an overlay allowing for creative office to be zoned in more of these warehouses."
This is what companies — and their workers — are demanding. "They want the old growth timbers, the recycled materials, they want authenticity. And proximity to bike paths and public transportation. As well as the housing, that's where a lot of the Millennials, the intellectual capital, reside, on the east side. And this is hitting the sweet spot, places like this and the Goat Blocks." It's really just market forces. "Developers are just meeting the demands of the marketplace."
He adds that it helps that downtown office vacancy rates are under 5 percent, and opening an office in Portland costs about a third what it does in Seattle or San Francisco.
"People still see value in Portland. It's where the engineers want to be, where the Millennials want to work and play, and the Central East Side has some of best bars and amenities."
To the southeast sits another auto parts company, with a funky wooden fence along the north and west side of the lot. Carnese says he's heard it's for sale, and fully expects them to raze all the buildings but the parts building, which has "good residuals" which include "a good glass line."
The fenced parking lot immediately to the west of the south Custom Blocks is also owned by Capstone. Carnese speculates they will wait it out until there is demand, probably for a midrise (three or four story) creative office building. Or perhaps the big tenant will need to expand and the "campus" will grow.
It could happen in a couple of years. "People are quite bullish about Portland."
How far into the complete de-industrialization of the Central Eastside does he think we are?
"I'd say we're in the third or fourth inning, as far as growth in the commercial market," he says. "There are a lot of single level buildings that will be adapted, or infill parcels that may get scraped, as development takes place over the next 10 to 15 years."
The money for all that, he says, is coming in "from all over the globe. Pension funds, family capital (such as Premium Property USA), high net worth individuals, you name it."