In an age where people can work from anywhere, few choose downtown Portland.
This was evident from a July study by ECONorthwest, which has yet to be finalized, and showed that on certain days there were 55% fewer workers downtown than before the pandemic. estimates that it will take until 2034 for office vacancy rates in downtown Portland to drop below the ideal range of 10%.
One result of the hollowing-out downtown is a drop in bookings for the city’s top hotels. Last week, wweek.com reported that the swanky Benson Hotel in downtown Portland is suing for the loss of a corporate client who booked his 300 rooms for the month.
now WW I learned that three luxury downtown hotels (including the city’s flagship Hilton) are in foreclosure proceedings with the bank that issued the mortgage.
Proceedings like this are the first signal that the emptiness in downtown Portland has reached a critical stage.
Property owners are angry. Greg Goodman, a company that owns a hodgepodge of properties downtown, calls the vacancy rate a “full-blown disaster” and says city leaders are “doing nothing about it.”
But most businesses with downtown offices don’t need their employees to move back.
Portland General Electric’s 900 downtown employees can work remotely as needed. Once downtown, he lived in two huge buildings, where he had 1,900 Standard Insurance employees, as well as 600 of his NW Natural employees.
Environmental consulting firm ClearResult recently downsized a 60,000-square-foot waterfront office building at 101 SW Main Street to a 5,000-square-foot meeting room in the same building. WW It “has become a role model for other companies looking to reduce their environmental impact.”
According to the latest estimates, the downtown office vacancy rate is 26%. However, the actual number may be higher.
David Squire, executive vice president of real estate broker Newmark, estimates a much higher percentage of office space is leased but not used. He says these spaces will show up in vacancy rates within the next two years as his five- and 10-year leases expire.
“There are vacancies. Frankly, the more important numbers to look at have to do with office occupancy,” says Squire. “It’s much, much lower.”
Squire Brokerage has a number of buildings that are 99% leased on paper but only 40% occupied. Many of these leases expire within 24 months. “This is a conversation going on at every business downtown,” he says.
City leaders are sweating these numbers. 2 weeks ago WW Mayor Ted Wheeler plans to introduce an ordinance to the Portland City Council that will waive one-off fees for a minimum of 15 years for developers who agree to convert office buildings into reasonably priced apartments. reported that there is
But experts say those fees are just a fraction of what it would cost to convert an office into a residential space.
Squire says mayors must do more if they want to encourage conversion.
“We can’t do it without the city’s subsidy. Numbers just don’t work,” says Squire. “Office space glut has been around for years. Has Portland stuck a toe? Absolutely.”
The outflow of renters from downtown office space puts building owners in an impossible bind. Either reinvest more capital and refinance the loan, or enter a foreclosure and hand over the keys to the bank.
If there’s one industry that offers a glimpse into the future of office buildings, it’s hotels in downtown Portland.
last week, WW Created by Benson executives, WW“Too many homeless and crazy people running around. Suffice it to say, I’m furious!” wrote an executive.
investigation of court and property records by WW We found three hotels to be more alarming than Benson. The bank holding the mortgage is preparing for foreclosure.
Apex Real Estate Partners owner Nathan Sasaki says their fortunes are the result of a derelict downtown.
“If we don’t do something about downtown, there will be a surprising number of foreclosures,” says Sasaki. “We haven’t started feeling the pain yet. Banks are trying to get these properties off their foreclosure list. But eventually they have to.”
Portland Hilton and Dunway Hotel
921 SW 6th Ave. and 545 SW Taylor St.
Together, the Portland Hilton and its partner building, Dunway, have 782 rooms. Together, they make up the largest hotel in the city. The Hilton has 21 meeting rooms and 22 floors. Duniway underwent a major renovation just five years before him and was renamed after pioneering newspaper editor Abigail Scott his Duniway. It boasts a two-story cocktail bar and his 11th-floor lawn game balcony.
But both are about to be auctioned by the bank that holds the mortgage.
The 22-story Portland Hilton and the adjacent 20-story Dunway were both built in 1962. The hotel is owned by an institutional investor, an institution that pools funds to invest in the property.
In 2020, a judge placed both hotels in trustees after defaulting on mortgage payments to the bank. is a neutral third party that participates in
Acquired Property Records WW It shows the bank putting two properties up for sale at a court auction on September 13th.
Records show that the building’s owner owes the bank more than $270 million. Those same documents provided a glimpse of what happened the day the lender issued notice of the sale of the building. refused.”
750 SW Alder Street
Dossier’s lender entered non-judicial foreclosure proceedings earlier this year after the building’s owner defaulted on mortgage payments from March 2021 to May this year, according to real estate records.
The building itself was originally built in 1999 but reopened as Dossier in 2017 after extensive renovations. The hotel is decorated with local art and a chandelier hangs in his ballroom for events. Regular guests are offered discounts at Knot Springs, which the hotel bills itself as “the city’s social wellness club.”
The property will be auctioned on November 29 at the “front steps inside the main entrance of the Multnomah County Courthouse.” Records show that the building’s owner owed the lender $8.7 million as of his May.
Provenance Hotels, the parent company of the affiliate that owns Dossier, was previously owned by Gordon Sondland. A Texas company recently acquired Provenance this summer. Sondland currently serves as a director of the parent company.