Portland developer bullish on plans for 35-story downtown tower, five-star hotel
September 28, 2018
Walter Bowen, CEO of BPM Real Estate Group, is attempting to pull off a 35-story, five-star hotel, office and condo building on the site of one of Portland’s most popular food cart pods late in the development cycle. Asked if that tall task is feasible, one local, longtime real estate pro said if anyone can do it, Bowen can.
“He’s had two huge home runs in a row,” the insider said. “How can you not believe he can pull it off?”
Those two home runs were the Pearl West office building — one of the first speculative office buildings to come out of the Great Recession — and Broadway Tower. The former filled up quickly and sold last year for a then-record-setting price of $87.5 million, or $562.83 per square foot. The latter is still under construction, but it’s all but full with a Radisson RED hotel and, in one of the biggest office lease coups of the year, Amazon, which took nearly 85,000 square feet.
Now Bowen is teeing up for his most ambitious downtown project yet. Planned on a property owned by the Goodman Family’s Downtown Development Group at Southwest Ninth Avenue and Southwest Alder Street, it comes at a time when other developers are showing some hesitation, when thousands of new hotel rooms and millions of square feet of office space are already in the pipeline and when Portlanders are riled up about new development erasing the charm of their city.
Bowen shared some perspective with the Business Journal this week on how he’s going to pull it off.
Talk around town is that we are late in the current development cycle and that some developers are pulling back. You seem to be taking the opposite perspective. Why are you so confident still in a large-scale project like this? Market demand, great location and the right project at the right time are keys to a successful real estate development. While the office sector might be in the 8th inning (with the potential of extra innings) of the current cycle, we continue to be bullish on high quality, well designed, newly constructed office space in Portland’s urban core. We did both Pearl West and Broadway Tower on a speculative basis. Pearl West opened the summer of 2016 at 85 percent occupancy. We are currently 80 percent leased at Broadway Tower with only two full floors remaining. We believe Broadway Tower will open up this fall north of 90 percent leased.
What’s the thought behind the product mix in this project? Portland is one of a few major cities that does not have a luxury, five-star hotel. Our planned 35-story tower provides a (roughly) 250-key hotel, 175,000 (square feet) of Class A office space and (about) 148 high-end, for-sale residential condominiums. Demand for five-star hotel space is much less dependent on economic cycles. The only higher-end condo project under construction in the urban core is the 153-unit Vista North being developed by Hoyt Properties. Our lowest floor of residential space is on the 21st floor, which is the highest floor of the Vista North. Vista is already 50 percent sold and delivers three-and-a-half years before the completion of (the Ninth and Alder) tower. Providing a five-star hotel and co-branded high-end residential units meets demand with little competition from other projects the size or scale of our 950,000 gross-square-foot tower.
While vacancies have slightly increased in downtown Class A office due to newly completed office buildings, we firmly believe demand will remain strong and we will be one of only a few newly constructed office options in the spring of 2022 in the central business district. We are in talks with several companies that would “pre-lease” a large portion of the office component of the Block 216 tower.
Bottom line: We are delivering a unique product to Portland. Attracting young, millennial talent is a priority for employers. This will be the first office/hotel/residential tower in the city. We’re creating a place for really smart people, for entrepreneurs to live and grow their businesses in downtown Portland.
Will you be pursuing any kind of tax credits or incentives for this project? We have assumed no tax credits or other government incentives for this project.
Do you plan to hold onto Broadway Tower or sell it as you did with Pearl West?There are separate office and hotel components. Both the office and hotel will be near-term holds.
Some fear that the hotel market here is becoming oversaturated. There’s also a lot of new office space coming online, many of it not leased yet. Does that concern you at all? While Portland is seeing an unprecedented number of hotel keys being delivered to the market, our hotel will be the only five-star luxury product with sky-level outdoor pool, restaurant and bar facilities. Portland will continue to grow from a town to a city and will continue to attract businesses looking to expand in a region that provides a well-educated and talented workforce and quality of life second to none in the country. The highest quality, best located hotel and office buildings always outperform the overall market.