Developers go for untapped young buyers
561-unit condominium sale boosts business in South Auditorium
Paul and Jenny Holden moved to Portland this year and the two of them, in their 30s, were looking to buy a home. Their daughter, Henna, is 18 months old, and they've been trying to get back to Portland and family for about five years, said Paul, a telecommunications manager.
The Holdens have found their new home. It's a condo, close in, with a streetcar stop nearby and MAX almost as close for the ride to Paul's office in the Lloyd Center.
The Holdens are young, and they like the city. But they're not moving to the Pearl.
The family has purchased a condominium unit on the 18th floor of Harrison East, one of three towers in a complex that sits near Keller Auditorium downtown. The cost? An un-Pearl-like $220,000, considering they're on the 18th floor with a great view.
As of October, the Holdens will be able to tell people they live in the South Auditorium District. And then they can explain where that is - between the south end of downtown and Portland State University. That area nobody seems to walk to.
Since their construction 40 years ago, the three high-rise buildings now called Harrison but originally known as Portland Center Apartments, catered to an older clientele.
Harrison's developers are converting all those apartments to condos. And its new owners, as well as a number of the city's other developers, are betting that the Holdens will soon be joined by hundreds of other young couples and singles.
Last week, developer Gerding/Edlen Development Co. released plans for a new 16-story tower at 1700 S.W. Fourth Ave. - three blocks away from the Harrison - to be called the 1700 building. Most of its units will be priced at less than $300,000, according to developer Mark Edlen.
In addition, two more large residential developments are being planned for sites within two blocks of the 1700. Quietly, the South Auditorium District is being transformed.
Developers are betting that the condo market hasn't dried up at all; it's just that the untapped buyers are younger and not able to afford Pearl-like $400,000 prices.
Burnside's Civic was a model
Edlen said his plan for lower-priced condos in South Auditorium was greatly a result of his experience developing the Civic, the 16-story residential tower next to PGE Park in Southwest Portland.
The Civic, slated for completion in summer 2007, has already sold 93 percent of its units. The average age of the buyers, Edlen said, is 31. Three-quarters of the Civic's 261 condos sell for less than $350,000.
'We've left behind a pretty big swath of population of first-time buyers and younger buyers,' Edlen said of Portland's downtown housing market. Those are the people, Edlen is betting, who will purchase the hundreds of new condominiums coming on the market in South Auditorium, as long as the prices stay low enough.
And, Edlen said, bringing younger, less wealthy condo owners into Portland's central city will have an enormous impact on the city itself. For his part, Edlen said he can't wait to see how the Civic's residents change their West Burnside neighborhood.
'It's going to be interesting a year from now,' Edlen said. 'They're young buyers, and I think they will hit the sidewalk and I think they will own that neighborhood. Older people walk around the drug dealers. These youngsters will kick them out. I think it will be one of the more interesting social and anthropologic experiences in the buildings I've created.'
But what about renters?
The Harrison is notable for more than the price of its condos. In fact, it represents the largest single sale of condos - a total of 561 - ever seen in Portland.
'That's a lot of units to go from apartments to condos in one fell swoop and hitting the market in short order,' said Jeff Joslin, land-use manager for the city's Bureau of Development Services.
Larry Remmers, manager for the real estate group at Wells Fargo in Portland, said he doesn't think the risk for Harrison's development team is that great, primarily because the developers have saved money by converting existing apartments to condos rather than building from scratch.
'They (Harrison condos) are at a price point that is going to be very attractive to a lot of people,' Remmers said. One-bedroom units in Harrison start at $180,000. Two bedrooms run about $270,000. Penthouses can cost more than $600,000. The development team bought the three buildings for $77.5 million.
But Remmers said there is likely to be an indirect backlash resulting from taking 651 rental units off the market at one time - a ripple effect on rentals throughout the city. The result, Remmers said, will likely be higher rents and less choice, with more renters competing for fewer available apartments. Long term, he said, the result will be more pressure on developers to build new apartment units.
Drawing energy to quiet spot
South Auditorium, the first urban renewal project undertaken in Portland, has always been more about urban enclave than energy.
Street traffic among the neighborhood's towers has been restricted by the closing of Southwest Second Avenue and Montgomery Street. Instead of traffic and retail destinations, the area between South Auditorium's high-rise buildings consists mostly of quiet, heavily shaded walkways connecting three public parks - two of them, Lovejoy and Pettygrove, are practically invisible from the streets of the neighborhood.
South Auditorium was designed to shield its residents from the bustle of downtown, Joslin said.
'Not everybody's looking for the Pearl,' he said. 'The ambience, the atmosphere, the level of sound and activity, the retail opportunities. Those are not universal values.'
Besides, South Auditorium is due for change, Edlen said. There are no plans to add ground-floor retail to Harrison's towers, or to remove the berms that separate the towers from public access. But Edlen said a little bit of the Pearl District's street energy could make its way into South Auditorium by way of the neighborhood's western edge, which borders Portland State University. The new towers there, including the 1700, Edlen said, will be built with ground-floor retail shops and restaurants.
'What we'd like to see happen up there is vitality introduced to those neighborhoods,' Edlen said. 'A big part of our task is, you go over to PSU and there's 15,000 students running around over there. We want to draw energy from PSU down into those three parks.'