There's no shortage of parking along Milwaukie's sleepy Main Street, and the most activity you'll see on an average weekday is a Dark Horse Comics employee trotting back and forth from one of the company's office buildings to another.
But Milwaukie, just seven miles south of Portland, is going through a sea change. Metro has picked the city's downtown as a prime spot for a new town center, and leading the charge are developer Tom Kemper of KemperCo and architectural partner Myhre Group Architects. They're the team behind North Main Village, a series of row houses and ground-floor retail spaces on Main Street.
Just last week, the Kemper-Myhre team was selected to build 10,000 square feet of retail space, 6,000 square feet of office space, 76 town homes and 80 residential parking spaces directly across the street from North Main Village.
Kemper, who says he's "built some really strong relationships with the city of Milwaukie," hasn't always found success when working with the public sector. His plans for North Portland's Killingsworth Station fell through after costs skyrocketed and the Portland Development Commission changed its development criteria midstream. The collapse of that project, however, hasn't stopped Kemper from jumping back into public-private partnership waters once again.
DJC: For the Milwaukie Town Center, the criticism from architecture writer Randy Gragg is that it doesn't incorporate Dark Horse Comics.
Tom Kemper: We spoke with Dark Horse. It's been months. I knew that this project was coming down the line so we spent some time talking, and our initial concept, and what we sort of pitched Dark Horse was to give them a condominium in the new building in exchange for other property that they had in Milwaukie. Talks didn't really proceed.
You have to understand, (Mike Richardson, founder of Dark Horse) is a very clever guy. He bought a lot of very key pieces of downtown Milwaukie at prices that are a fraction of what the values are today. So it's difficult for him to step up to a $250 to $275 per (square) foot condominium in a new building. If you want 10,000 (square) feet, that's a lot of money, and he's looking for 25,000.
DJC: Do you plan on talking more with him?
Kemper: Yes, now that we have the nod on the transaction.
DJC: How much will the town homes go for?
Kemper: I hope a lot. One of the interesting things about this building is we're planning to do a concrete podium and do stick frame above that. The Milwaukie market isn't going to carry $500 per square foot. It's just not.
DJC: Well, the condos going there will be somewhere between $235,000 and $295,000. You can basically buy a condo in Portland proper for the same amount, so how do you lure people to Milwaukie?
Kemper: Well, if you bought a condo in Portland proper for that amount, it would be a lot smaller.
DJC: At the time that these will be finished, the condo market won't be booming like it has in the past.
Kemper: Remember, people aren't going to sell them for less than they cost.
DJC: What I'm getting at is, how are you going to get people to move to Milwaukie?
Kemper: It's a 10-minute drive from downtown Portland with great bus service into Portland. The city will be doing the waterfront park in the next couple years and turn it into something pretty amazing. If you're on the second or third or fourth floor of the town homes, you'll have a phenomenal view of the city. Milwaukie is going to dramatically change within the next five years; you just watch.
DJC: What do residents think about the fact that you're single-handedly changing the entire look of Milwaukie?
Kemper: One of the people on the selection committee is a dear friend who I got to know very closely because she was a former community development director at the city of Milwaukie, so I worked with her very closely putting together North Main Village. She hated the architecture for the town homes. I was like, "Alice (Rouyer), I don't know what to tell you." The architecture is actually really close to The Hawthorne (a project on Southeast 34th Avenue in Portland on which Kemper was a partner). People either love it or hate it.
There's always going to be people that throw rocks. They'll complain about the architecture. The issue is: What's the consensus? What do most people think?
DJC: That leads me to my next question. Town centers seem like the next big development. Metro is embracing them. Builders are building them. Is it going to get to a point where it's almost like McMansions? Like McTown centers?
Kemper: Well, I guess there is an element of McMansions at Villebois (Costa Pacific's planned subdivision in Wilsonville), but you also are going to have a much higher density than the normal McMansion deal. You'll have town homes. You'll have condos and rental too. Look at Orenco Station that Costa Pacific did. When Villebois gets built out it'll resemble more like Orenco than a suburban deal.
DJC: Do you ever worry that what you build, especially with North Main Village right across the street, is going to make downtown Milwaukie bland?
Kemper: No. I think just the opposite. The idea is to pump people into Milwaukie. One of the questions that came up when the selection committee interviewed our team was: You're not rented on your retail at North Main Village; aren't you worried about retail in the new development? What I said was, "What I want you to do is go back to early Pearl days and remember all the buildings that were up. People were there, but the storefronts were empty." The idea is to get a whole bunch of people to move into that area and the retail will follow.
DJC: That's the "if you build it, they will come," theory.
Kemper: Well, in the case of retail, that is true. The trick is getting the bodies there. I did finish a lease for a restaurant at North Main Village, so we're already starting to see that happen.
DJC: Now, Milwaukie Town Center is going to cost from $18 million to $20 million. How much of that is public funding?
Kemper: Zero. There's no public funding. We may be getting a deal on the land if our pro forma comes out really well, but there's no public money going into that deal.
DJC: That's risky.
Kemper: We intentionally did a stick frame building over a (concrete) slab, and we were very conservative about what we think we can get for those dwellings. We're pretty confident that we can pull it off.
DJC: When will you see your return on investment?
Kemper: When we've sold out the leases on the retail.
DJC: Not the residential?
Kemper: Well, you do have to have both.
The trouble with Killingsworth
DJC: With Killingsworth Station, you were working with municipalities, agencies, residency groups, all these different hands in the cookie jar, and it didn't work out for you. Was there fear on your part that this will be the same?
Tom Kemper: You have to understand, Killingsworth Station was a very difficult transaction. That's a very long and kind of difficult story for me.
We went into that transaction giving PDC what they wanted, which was a very high-density deal that included rental and ownership. It had structured parking, even. And, we were up against some very tough neighborhood associations.
The problem was I had already created a bunch of relationships which made it difficult to proceed based on the new criteria. Then construction costs went through the roof from $1.4 million to almost $4 million. PDC didn't want to put up the money, and there was this issue with prevailing wage.
Based on all of that, I said, "I don't like doing this." My preference is to back out of a deal if it's not going to go well. So that's what I did.