Portland real estate recovery hung up on jobs, rents, politics
September 11th 2012
Portland's commercial real estate recovery is being hampered by a lack of new jobs, the vaunted "Portland process" and a lack of a united public-private vision for the region.
Portland's leading real estate executives touched on a wide range of topics during a commercial real estate roundtable, organized Tuesday by the Portland Business Journal.
Owners and operators report Portland area office rents are roughly equivalent to where they stood a decade ago. Vanessa Sturgeon, president of TMT Development,Jordan Schnitzer, president of Harsch Investment properties, and Jim Mark, president of Melvin Mark Companies, all cited rental rates as one of the chief challenges facing their real estate development and investment firms.
Developers such as Barry Cain of Gramor Development and Joe Weston of Weston Investment Co. fault Oregon's lengthy permit review system, saying the cumbersome and costly cost to secure permits hinders progress and drives off out-of-area builders and adds uncertainty and costs to projects.
Weston said he also worries about the proliferation of apartment projects bringing no parking and tiny units to Portland's inner neighborhoods. It's a recipe for a bubble followed by a collapse, he said.
Jeff Myhre, principal with Myhre Group Architects, said it can take four months to have a planner review his work.
He proposed borrowing a Canadian approach, using registered and certified architects to sign off on building plans, sparing city permitting departments the work.
Schnitzer offered a faux motion to adopt that approach immediately for Portland.
Mark said Portland invites too much community buy-in through a "kumbaya" process that draws dissent and takes so much time it can cause developers to miss windows of opportunity.
"You would see massive construction right now if you could improve the process," he suggested.
Weston agreed. One of Oregon's most successful real estate investors and developers, Weston said Portland's neighborhood associations have shifted from their original advisory role to one of policy maker.
"I'd like to go to one of their meetings and say, 'I don't see your name anywhere on the deed,'" he said to loud applause.
Interesting enough, few executives cited financing as a major roadblock to a full recovery.
Ken Griggs, president of Norris, Beggs & Simpson Real Estate Finance, said his office increased its loan output in 2011 by 74 percent and is tracking for another 20-plus percent gain this year.
"There's a lot of capital. It's finding projects that suit the lender," he said.
The Business Journal will report in depth on topics raised during the roundtable in a special real estate section Sept. 28.