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Lured by livability, the eastside’s office building market blooms

Posted by on October 9th, 2013 at 10:20 am

Leonard Barrett, project manager of the remodeled 80,000-square-foot Eastside Exchange
office building at NE 3rd and Couch, is a big fan of the view from the rooftop patio.
(Photo © M.Andersen/BikePortland)
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Portland’s self-image as an economic laggard has never looked more out of date than it does right now in the longtime industrial district on the Central Eastside.

And the rising appeal of low-car-friendly life on Portland’s eastside grid is busting an even older stereotype: that getting a good-paying job means heading west.

“A lot of the talent, especially that a lot of these young tech companies already have or are going after as they grow, tend to live on the east side, and appreciate the culture and the types of amenities found on the east side,” said Leonard Barrett, project manager for Beam Development‘s new Eastside Exchange building.

The building, a onetime ice cream cone factory, just remodeled and opened 80,000 leasable square feet of so-called “Creative A” office space: high unfinished ceilings, big windows, shared public spaces — and lots and lots of bike, foot and transit commuters.

“We’ve been really surprised by how low the demand for parking spaces has been,” Barrett said. (The building, expected to house 350 or more employees, has 126 on-site parking spaces.) “I think you always go into this kind of thing worrying that demand is too high, that you haven’t had enough. We haven’t seen that thing here at all. … Cascade Energy is going to have over 100 people here, and they only have 33 spaces.”

Another early tenant, Trapit, has 30 employees and is expanding from Beam’s Eastbank Commerce Center. Their parking space request: two.

“They say that about half or two-thirds of their company either bikes, runs, walks or rollerblades to work,” Barrett said.

Beam has been a big part of the central eastside’s transformation since 2002. The Eastbank Commerce Center, a remodeled furniture warehouse, set the mold for Portland’s central eastside (now officially branded as “Produce Row,” named for the area’s former role warehousing the Willamette’s agricultural products) as the city’s next hotspot for office workers.

The Eastside Exchange building, center with tower, will
anchor hundreds of new offices and apartments
proposed for the “Burnside Bridgehead.”

Ten years ago, it might have seemed crazy: The region’s economy had been scraped raw by the decline of the U.S. wood-products industry. The tech boom (then almost entirely in the Washington County suburbs) had gone bust. And with all the region’s public transit focused on its downtown and no room for suburban-style auto parking lots, how could the relatively underserved eastside bring in enough workers to fill these new offices?

Then a few things turned in Beam’s favor. Responding to city investments like the Eastbank Esplanade, Portlanders started biking to work in big numbers — a perfect solution to the eastside’s transportation shortage. Fed by a surge of educated workers choosing to move to Portland, the tech sector rebounded, both in Washington County and Portland proper. And the rise of telecommuting and collaborative work gave a new importance to Beam’s specialty: making weird old spaces cool.

“To stay relevant as an employer, you have to create places where people really want to be.”
— Leonard Barrett, Beam Development

“To stay relevant as an employer, you have to create places where people really want to be,” Barrett said. “We try to do a really good job of curating our retail and food and drink tenants, and I think we’ve done a pretty good job with Bunk Bar, Clarklewis, Boke Bowl and Olympic Provisions.”

Finding the perfect restaurant or bar is so important to a modern office building, Beam believes, that it’ll leave spaces empty or sign sweetheart deals in order to boost the building’s long-term appeal as office space.

The Water Avenue Commerce Center, an earlier Beam
project, helped show Beam how important bike
commuting has become to startup companies.

“We’ll take an extra six months, an extra year, 18 months to find the right restaurant tenant,” Barrett said. “Maybe even if it’s not as good of a deal. We have to put more tenant improvement allowance, but we just think they’re going to nail it, and it fits with the identity of the building and it’s going to be the type of place that everyone’s going to love to be.”

With 70 indoor bike parking spaces and conversations in the works about using a massive outdoor covered bike parking structure that’s proposed next door, Beam’s team — including Barrett, 27, who bikes to work regularly himself — is putting big emphasis on bikes not just because they like them personally but because, for the Central Eastside, bikes are bringing prosperity.

The Eastside Exchange will offer larger average spaces than Beam’s other eastside office buildings, in part because the crop of startups incubated in the Eastbank Commerce Center and Water Avenue buildings are outgrowing their spaces as they become significant Portland employers. For Barrett, it’s like watching a new way of doing business take root and grow.

“We work with a lot of companies that start with two or three people, and then are 10, and then are 30,” Barrett said. “We’re pretty close to the people in the buildings and really kind of have our fingers on the pulse of what’s going on.”

— The Real Estate Beat is a weekly column. Read more here.

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Scott
Guest

I always look forward to the Real Estate Beat every week. Thank you!

Is there a photo of the exterior of the building that is not taken from the (wonderful) roof deck?

Oliver
Guest
Oliver

I heard that this building used to house the Phillips Co. for whom the Phillips head screw is named. Can anyone verify?

BIKELEPTIC
Guest

Though actually READING. Oops. And going to Beam’s Portfolio; the building is on Water and Yamhill. Not 3rd and NE Couch.
http://beamdevelopment.com/portfolio.

I didn’t think there was any high-end development going in on 3rd in the produce district. As it would be a great bank and make so much sense to bring in res or biz development, it would push the existing businesses out to where it’s cheaper; east county, St Johns, etc. They would also have to change the existing infrastructure to make it actually possible to traverse. I work occasionally down that way towards MLK/Hawthorne and since the streetcar was put in I avoid MLK and take 3rd. It’s a clusterf*ck down there with all the fork lifts, moving vans/trucks, blind corners, etc. Not bike commute friendly on NE 3rd.

Oregon Mamacita
Guest
Oregon Mamacita

I believe that Produce Row is zoned commercial- no residential. Apartments are being wildly overbuilt (real estate bubble) so we don’t need residential down there. We need jobs! I hope that the job base stays diverse, because high tech craters once a decade.

BIKELEPTIC
Guest

I assume this is the building he is talking about as there is only 1 building on NE 3rd and Couch. https://maps.google.com/maps?q=NE+Couch+and+3rd&hl=en&ll=45.523834,-122.662724&spn=0.001013,0.002309&sll=45.523834,-122.673404&sspn=0.008103,0.018475&hnear=NW+Couch+St+%26+NW+3rd+Ave,+Portland,+Multnomah,+Oregon+97209&t=m&z=19&layer=c&cbll=45.524014,-122.662724&panoid=OXm13eMowLAIBN3NVzJDKw&cbp=13,267.78,,1,-6.9

It has sat empty for years. Back in 2008 it was used for a political campaign offices. In 2009 the 1st floor was used as a winter warming shelter for people experiencing homelessness. The most annoying part about that was it was during the beginning of the building of the construction of the blunder which is the Burnside Couplet. After that it’s been sitting empty until they did some remodeling and cosmetic remodeling last/this year. This may not be the building he’s referring to, but it’s the only one on 3rd & NE Couch. The other one across the street is an apartment building.

AndyC of Linnton
Guest
AndyC of Linnton

Where are the ice cream cones made now?

Chris I
Guest
Chris I

China.

DNF
Guest
DNF

I’m a little disturbed that the displacement of existing jobs and workers is being ignored in this article.

The Eastside industrial area isn’t full of empty buildings, and there are a lot of working class jobs there. By essentially turning it over to “Creative A” tenants, we’re seeing more gentrification and displacement at work.

Since many industrial areas are on the outskirts of town, and/or are poorly served by public transit and bike infrastructure, you’re actually increasing the transportation burden on many of those who are least able to afford it, and in essence turning that benefit over to the comparatively wealthy “creative class” – another example of money trickling upwards.

V$
Guest
V$

This. We were looking at manufacturing space earlier this year and it was so difficult to find in the price range that manufacturing can pay. Freaking gentrifiers need to stop partitioning off 5,000 square foot buildings and ripping out all the industrial hookups! Why do you need your trendy web development company to be wired for 220?

maccoinnich
Guest

The buildings mentioned in this article were vacant before being converted to their current uses.

confident but concerned
Guest
confident but concerned

I’ve worked in one of Beam’s buildings on Water Ave for several years and love the combination of creative/tech and industrial businesses in the area — both types seem to be going strong. There are many buildings still entirely devoted to light manufacturing, industrial material wholesalers, warehouses and food distribution. I don’t get the sense that one type of business is displacing the other so much as filling in the empty spaces. I hope that is the case, and that we can preserve this nice balance.

On the other hand I do NOT want to see residential housing incorporated into this neighborhood. This is a noisy area with trucks loading and unloading all the time and trains screaming by. It’s one of the few areas in the central city where it’s okay to make a mess and lots of noise, whether that happens to involve manufacturing or flamenco dancing. (Go Stomptown Collective!) As soon as you bring apartments and condos in, we turn into another Pearl District.

MaxD
Guest
MaxD

Does anyone know if if a n/s bike route under I-84 has ever been considered? A cool route could be 2nd north of Stark, and Water south. This could connect to a bunch of the bridges, and get people in inner SE across 84. Getting across the tracks is a pretty serious obstacle, but doesn’t seem impossible. The route could climb up the bank to Lloyd, connect to Rose Quarter, new developments along Multnomah, future Sullivan Gulch Trail, future NP Greenway Trail.

Terry D
Guest
Terry D

I do not think it is on anyone’s radar currently since a bridge. Over the tracks would be needed. The push is for a 7th avenue overpass. The space for that connection to water is there and could be added to the Sullivan’s Gulch trail if built, but it was not included in the 10% design plans.

confident but concerned
Guest
confident but concerned

I work in one of Beam’s buildings in this area and enjoy the bike commute, especially the Esplanade portion. One connection that really needs improvement: If you turn off the Esplanade onto Salmon, you hit an extremely rough stretch of pavement with railroad tracks embedded at an awkward angle. Turning left onto Water is challenging with parked cars blocking visibility. I feels safer taking the sidewalk to the Water/Taylor intersection and then crossing. But the sidewalk itself is a narrow obstacle course of broken concrete, random sign poles and a sagging chain link fence.

Not sure who manages these surfaces, but a little love would go a long way here… This is a connection popular with people who work here as well as visitors to OMSI and the Esplanade.

BURR
Guest
BURR

Most light industrial and commercial development is now occurring in the Columbia Corridor, which was rezoned in the 1980s and has better access for trucks, as well as better proximity to rail and air terminals.

The CEID is a dinosaur and, with its prime inner city location, gentrification is probably inevitable, especially once the new bridge opens.