Three obstacles for the NE Portland lot where Trader Joe’s fell through

Trader's Joe's on MLK: Old Town Brewing Co.
A lot where the Portland Development Commission and Majestic Realty Co. once envisioned a Trader Joe’s grocery. After the grocery store pulled the plug, the next plan will have to confront certain challenges. (Casey Parks/The Oregonian)

Elliot Njus | enjus@oregonian.comBy Elliot Njus | 
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on February 05, 2014 at 7:08 AM, updated February 05, 2014 at 7:12 AM

Trader Joe’s decision to abandon a proposed store in Northeast Portland raises the question of what comes next for the vacant 1.79-acre parcel it would have anchored.

Given the furor over the proposed retail development, which development officials saw as a slam-dunk, the Portland Development Commission’s next move is likely to be a little slower and involve a “holistic community discussion,” as a commission spokesman put it Tuesday.

A 2012 appraisal calls a mixed-use development including both retail and housing the ideal use for the site, and some opponents have demanded a housing component. But any such project is going to have to confront a few obstacles.

GisWrapServlet.pngCity maps show a combined gravity main (purple line) splitting the Northeast Portland lot.City of Portland

An underground pipe awkwardly splits the site lengthwise.


Because it has to be accessible to repair work crews, a combined sewer-stormwater main bisecting the lot limits how development can be configured.

The main can be covered up by parking or a driveway, but buildings would have to be arranged to avoid it. So would any kind of underground or structured parking.

That becomes problematic, especially when combining the housing sought by neighborhood activists and the destination retail store sought by nearby business owners. A large store — like a grocery — is going to demand a lot of parking when it’s sharing with residents of the housing units, said Robert Black, a real estate broker with NAI Norris Beggs & Simpson.

Combining housing and major retail brings plenty its own challenges and costs, but a big one is that the pipe limits underground parking options and could add to the cost of construction.

Martin Luther King Boulevard still isn’t in demand with apartment developers.

Though thousands of apartments are under construction in Portland, it’s mostly midsize buildings that are — as neighbors will attest — concentrated in certain pockets of the city.

Despite low vacancy rates and high rents, apartment developers remain relatively risk-averse, and the Northeast Martin Luther King Boulevard corridor has attracted virtually none of the market-rate apartment-building frenzy. (One notable exceptionburned down in a five-alarm fire last August.)
“Mixed use is a challenge in that location. Frankly, a huge mixed use project — which is what this would take — would be a challenge in the Williams corridor,” said Portland developer Mark Desbrow, drawing a comparison to the red-hot North Portland street a few blocks west. “There’s a lot of apartment construction going on right now. You’d have some concerns about building into the market with all this new product coming in.”

Meanwhile, the amount of funding for subsidized housing developments the corridor is limited, Black said.  

The Portland Development Commission owns the land.

Though the PDC has shown it’s willing to subsidize a desirable developmenton the MLK site by selling the land at a discount, its public-service mission limits options available to potential developers.

If, for example, the PDC requires future development include a destination tenant like a grocery store, the developer is left with a smaller pool of potential tenants and therefore more risk.

“When there’s a public-service requirement, that skews the market value,” Desbrow said. “You’re trying to build for profit, but you need to back into your profit. What you can produce on that property is different than the open market.”

The flip side is that the PDC can offer subsidies for what it sees as desirable development, just as it offered to subsidize the Trader Joe’s-anchored development by selling the lot valued at $2.87 million to developer Majestic Development Co. for just $502,160.

PDC spokesman Shawn Uhlman said that post-Trader Joe’s, it’s too early to say what type of development might come next.

“The idea of commercial or retail has long been envisioned for the property,” Uhlman said. “Whether you want to call that a restriction or a priority, that’s what’s been envisioned.”

— Elliot Njus


About - Tom Ramsey, local Realtor

Local Portland Realtor with 10 years experience specializing in residential sales and investment property. Tom Ramsey Oregon Real Estate Principal Broker John L Scott Real Estate Phone: 503-481-0501
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