Five years and four days ago, law firm Stoel Rives sent out an email informing its partners it would be moving its flagship office to the Park Avenue West Tower, an ambitious downtown Portland skyscraper then under construction by developer Tom Moyer.
The announcement came a month after Lehman Brothers filed for bankruptcy, in the middle of a financial meltdown. Unbeknownst to Stoel Rives, or anyone else at the time, the Great Recession had begun. Work eventually stopped on the tower in 2009, and Stoel Rives pulled out of its lease in 2010.
But on Friday, the leaders of the state’s largest law firm once again set about notifying partners it would move into Park Avenue West, now set for completion in 2015.
“This represents a strong commitment to Portland, the state and its economy,” managing partner Bob Van Brocklin told The Oregonian. “We’ve been in the same building for 43 years. We don’t do this every day.”
Stoel Rives’ willingness to sign a lease and throw its weight behind the project — for the second time — was key to convincing lenders to jump-start the long-stalled development, in the process ridding Portland of a fenced-off eyesore in the middle of downtown.
In the four years since work stopped, Moyer’s TMT Development has sparred with adjacent landowners over the dormant construction crane. The crane finally came down in 2011 as Moyer’s granddaughter, Vanessa Sturgeon, who had taken over management of the TMT, promised to resume construction in 2013.
A family dispute also spilled into probate court as other descendants of Tom Moyer, who was diagnosed with advanced Alzheimer’s disease in July 2010, argued Sturgeon had improperly diverted money from other Moyer properties in an effort to build Park Avenue West. That case ended with Sturgeon ordered to partially repay some of the disputed funds and the appointment of a new trustee for a family trust.
Through the distractions, Sturgeon said she had her eye on big leases that would turn over in 2015, and she shopped the project around to lenders who would provide a loan contingent on finding a tenant.
With Stoel Rives back on board as an anchor tenant, PCCP LLC, a California-based real estate finance firm, and the Ohio Public Employees Retirement System agreed to provide a construction loan. The amount was not disclosed Friday.
Also key to securing financing was TMT’s plan, first reported by The Oregonian in July, to convert 15 floors to high-end apartments, and bring the tower’s total height to 30 stories. (Plans originally called for 33 stories, including condos, but the tower was downsized to 26 in response to the economic downturn.) The first two floors would be devoted to retail tenants.
“We’ve been very bullish on the Portland market, and on the multifamily side especially,” said PCCP senior vice president Erik Flynn. “You’ve got a really strong anchor tenant with good, local roots, and the sponsor (TMT) speaks for itself.”
The revised proposal still needs city approval, but TMT can start construction under its existing permit for the 26-story version of the tower, a city planner said this week.
“The apartment market in Portland is so hot right now, and it’s been trending really well over the last few years,” Sturgeon said.
Stoel Rives will take 131,000 square feet and nine of the 13 floors dedicated to office space, downsizing from its 11-floor lease it had agreed to in 2008. The firm, which today employs 138 attorneys in Portland, has downsized in head count and, like many firms hardened by the recession, learned to be more efficient with its space.
Still, the lease is one of the largest in Portland history, second only to wind turbine maker Vestas’ 133,258-square-foot lease of the former Meier & Frank warehouse in the Pearl District in 2010, said Tom Usher of brokerage Cushman & Wakefield. Usher, along with Cushman & Wakefield’s Dan Swift, represented Stoel Rives in the Park Avenue West lease.
And the move comes with an eye toward recruiting new talent for the law firm.
“It’s important what kind of workspace people come into every day,” said Wally Van Valkenburg, managing partner of the firm’s Portland office, ticking off key features: natural light, windows that open and close, environmentally friendly features and access to transit and bicycle facilities.
“All of those are particularly important to our young lawyers and people we’re trying to recruit.”
TMT is billing the tower as the most environmentally friendly building in Oregon. It’s pre-certified for LEED Platinum, the highest level offered in the U.S. Green Building Council’s rating system. It’s expected to reduce potable water usage by 40 percent from a typical building of its size, in part by harvesting rainwater into a 40,000-gallon tank, and cut energy costs by 32 percent.
The reset may also be a boon to the broader Portland marketplace, helping lure companies and investment to the region, said Mike Wells, Portland managing director at brokerage CBRE.
“We get a project that’s been stalled by the Great Recession back underway,” Wells said. “For people outside the area who come to the market and see movement, and not a hole in the ground with some rusty rebar, that’s a really good thing.”