Read the entire article here on the Portland Tribune website

Coveted Pearl property ripe for lofts, offices or other development

By KRISTINA BRENNEMAN
The Portland Tribune
Issue date: Fri, Jun 10, 2005

The U.S. Postal Service is looking at the value "” and future redevelopment "” of its 8-acre site in the heart of the Pearl District.

Spokesman Ron Anderson said the Postal Service is assessing the 715 N.W. Hoyt St. property and facility to determine the highest value and best use of the property, which extends from Northwest Broadway west to Northwest Ninth Avenue and from Northwest Lovejoy Street south to Northwest Hoyt Street. He said there's no time frame to have the study completed.

"There's no urgency," Anderson said, "but obviously there are lots of things going on in Northwest Portland and it was important to have the property assessed. We felt it wise to have this valuation of property done at this time."

District Manager Dallas Keck, who oversees Oregon and Southwest Washington operations from his Northwest Portland office, proposed the study. The U.S. Postal Service's internal facilities staff in Denver is handling the project.

The prime piece of property has been considered for everything from a major league baseball stadium to upscale loft housing. More recently, 24-7 postal truck deliveries have been the bane of the Pearl's urban sleepers.

In the past, postal managers shrugged off complaints, and vowed to keep the post office where it has been located since June 1962, but the booming development that's occurred in the Pearl has helped them change their mind.

The Multnomah County Division of Assessment and Taxation has set a real market value on the post office and surrounding property of $96.82 million, but local developers say the site would sell for much more, and likely be turned into condominiums, retail stores and offices.

"Anybody would like to get their hands on it," said Homer Williams, who developed multiple buildings in the Pearl District. "I've always thought it was a great site for a baseball stadium, or for Portland State (University) to expand. It (the post office site) would be a great addition to the neighborhood."

The Port of Portland's corporate property and development manager Bill Bach said the postal service has made inquiries on additional land near the Portland International Airport. The post office already leases 10 acres that it uses for loading and an airstrip.

"They're looking at something fairly soon," he said. "Like FedEx and other air carriers, they have to have a modern facility. Long-term, they need to do something."

In the past, postal managers shrugged off complaints, and vowed to keep the post office where it has been located since June 1962, but the booming development that's occurred in the Pearl has helped them change their mind.

The Multnomah County Division of Assessment and Taxation has set a real market value on the post office and surrounding property of $96.82 million, but local developers say the site would sell for much more, and likely be turned into condominiums, retail stores and offices.

"Anybody would like to get their hands on it," said Homer Williams, who developed multiple buildings in the Pearl District. "I've always thought it was a great site for a baseball stadium, or for Portland State (University) to expand. It (the post office site) would be a great addition to the neighborhood."

The Port of Portland's corporate property and development manager Bill Bach said the postal service has made inquiries on additional land near the Portland International Airport. The post office already leases 10 acres that it uses for loading and an airstrip.

"They're looking at something fairly soon," he said. "Like FedEx and other air carriers, they have to have a modern facility. Long-term, they need to do something."

Maury, based on my reads here, I would say the USPO site would need to be purchased (by a governmental agency) as a single lot in order to save it from condo and apartment development. Just thinking about the economics of the site, the Pearl District developer types seem to be in the driver seat on buying the site since the return on the investment seems greatest and the Feds will want the most cash possible. The airport PO location will not be cheap.

What happens at the Blanchard site will be the clue on which site is favored. This is because the timing for the USPO site decision could be as long as 5 to 10 years. The Blanchard site will be rezoned in the next 1 to 3 years.

I could be wrong and the city, the developers, and the Feds could speed it up since the Pearl is growing faster then expected.

That fact alone spells a high price for the land under the main post office. The cost of the land at Blanchard will be half that. Guessing of course, am I.

BB

The federal government doesn't need to sell the land at the USPS site any more than they need to sell any of the other land that they own. So in theory, if our esteemed local congressional representatives intervened, then the land could be given, leased, etc. to the city, or to the Port of Portland, for the stadium. Who knows, maybe they could do a land swap for land near the airport. Nobody would blink an eye and the land costs would be virtually zero.

On the other hand, if the school district were to pull any kind of below market sale of their land at Blanchard, everyone would go crazy since the school district is short of funds and they would be giving away one of their few large assets (the feds have land everywhere that they could sell, on the other hand).

I could be wayyy off on this, but that's one reason that I think that USPS could or would be much more feasible than Blanchard.

I don't see the Port of Portland swapping land with the Feds for land downtown that has nothing to do with port activity. They are involved in some real estate work (the Cascade Station project that was basically put on hold by 9-11 and the recession of 2001) but why would the port be interested in NW Portland. Their HQ is there but they lease space I believe. I don't see an advantage for them.

And why would the school district mess up in the way you suggest? It seems almost like looking for the worst possible decision you could make.

Every scenario needs to stand on it's own with no one feeling like they are being taken lightly or undervalued.

The third party that comes in and purchases or leases the site (USPO or Blanchard) must be looking out for their stakeholders.

BB

My point is simply that the Feds do not need to sell the land at the USPS site, while the school district would need (maybe want is a better word) sell or lease their land.

All I'm hearing is that the land cost would be much higher at Blanchard... I don't know exactly why... I'm just speculating, actually. In theory, the market rate for land should be higher in the Pearl District then anywhere on the east side of the Willamette... but I'm not sure if we're dealing with a free market situation here.

I have to say I agree with TCL. It is interesting that the government is publically considering moving the Postal Facility when, in the past, they have stated they are fine being at that location. I bet both Senators Smith and Wyden are probably working, behind the scenes, to get this done. The mail handling facility should be closer to the airport...they are becoming much more competitive with Fed EX and UPS.

The Blanchard site is also being considered for high rise condo development. I think the Lloyd Center area is in for huge changes in the coming years.

The Post Office site would be an amazing site for MLB. Sell PGE Park to developers to help with the development. Redevelop Lincoln High School football field for a MLS facility like they have in Carson, CA.

One other point regarding Blanchard versus the Pearl:

Successful downtown stadium project have traditionally come in one of two forms, at the beginning of a neighborhood renaissance (Denver) or in the middle to latter stage of it (Baltimore). To me, Blanchard would represent the former, Pearl the latter.

My question is this --- can the city sustain the South Waterfront development, Burnside Bridgehead, and Blanchard at the same time? I would say no. I think Blanchard is probably 10-15 years away from gaining any real traction (I hope I'm wrong and that it happens much sooner).

And, by the way, the Pearl is not going to suffer if the USPS site turns into a baseball stadium. There is still a TON of development and redevelopment opportunities all around the Pearl... just go east to Old Town, just get the one way streets set up along Burnside and Couch, and go North from Lovejoy. USPS may be "coveted" as the article says, but it isn't like that is the last great plot of available land in that area. Not by a longshot.

I'm curious on this "rumor" that everyone says the Blanchard site "costs" are high. Where did this come from? Where is this analysis? What is it based on? What assumptions are being used, if any?

When I look at Blanchard I see cheaper land cost; better site prep since the land falls away to the North and creates the first base line naturally; open access to the property from three sides (MAX on the west is restrictive) for construction assets; cheaper costs for mass transit and freeway access.

I don't see an issue of Portland being unable to support growth in the South Waterfront (OHSU and riverfront condo driven); Burnside Bridgehead/OCC/Lloyd Center residential towers for more cost conscious investors and service types; the Pearl /River District is driven by location and the arts; and the Lower Albina District driven by the Rose Garden/Stadium plus low costs and being the new Pearl once the west side costs slows everyone down. My point would be that each area has advantages.

That said, I just read a City of Portland planning document on the "North of Lovejoy" area and it mentions the USPS site as better for something other then grid development. Maybe my pyramid idea for Gateway (Winter Olympic HQ and Media Center) back in the 80's will move to Lovejoy and Broadway. Think large footprint thirty story landmark building with hanging gardens.

Still unsure why the city would want the pain of 82 days every year dealing with gridlock in NW Portland for a stadium at the USPS.


BB

Well the documents on this site say the "replacement value" for USPS is set at $55 million, and their source is the Port of Portland. To me that looks like the prelude to some sort of assumed land swap. But I'm not an urban planning guru so I don't know. Land acquisition costs are not shown for Blanchard.

Aside from what we have discussed before, there might other considerations --- what infrastructure would be needed at USPS versus Blanchard? (downtown has parking garages on almost every block, while Blanchard has the Rose Quarter lot and a few surface lots and that's it). What revenue would they be able to generate from the "baseball district tax" at each site? What site do the owners, politicians, business leaders, etc. want?

Boomer, I agree that the transportation infrastructure is better at Blanchard but I think that USPS will be more palatable once the light rail lines along the existing bus mall are put in place.

Question for you folks about these land costs. I saw the $55 million cost associated with relocating the USPS site, and since I know nothing about the Portland commercial real estate market, I can't even venture a guess as to how good an estimate it is. But if for some reason land values went up significantly, say an extra $10-15 million for acquisition and relocation, how would the finance plan accommodate it? The plan indicates that a few million is fairly trivial, but as we've seen in Florida, $15 million in today's money can be difficult to come by.

By the way, thanks for the plug TCL. There's an Oakland Estuary planning meeting I'll attend next Monday, where I think I'll find out more about the development there.