The Central Question: Can industry, ambition and development mix in Portland's … – OregonLive.com
Mike Redmond looks out the bay doors of his woodworking business in Southeast Portland and feels besieged.
Across Southeast Taylor Street, on what many Portlanders knew as “the goat blocks,” a planned development will soon bring 250 apartments, a grocery store and a hardware store. The city is narrowing the street between Redmond’s Creative Woodworking NW Inc. and the new housing by a few feet to accommodate the building, but a few feet might as well be a mile when maneuvering big trucks in tight quarters.
On the other side of the carpentry shop, there’s a busy bike boulevard — a daily headache that forces Redmond’s 14 employees to navigate seven forklifts amid a torrent of commuter cyclists.
Redmond moved his business to the Central Eastside more than two decades ago for cheap land and the proximity to customers and downtown. Now he says the city is slowly suffocating him.
“The city doesn’t want us here,” he said. “I have to decide where I’m going to go when I can’t get my trucks in here anymore. Our plan was to stay here, but how can we?”
City leaders want to maintain the district’s long history of providing middle-class jobs. But they’re also considering changes that could invite in the manufacturers of the knowledge economy — programmers, marketers and designers, and other makers of less tangible products.
The question is whether that leaves room for people such as Redmond.
His block is Ground Zero for all this change. In this corner of the Central Eastside industrial sanctuary, near the popular Southeast Belmont corridor, the march of development threatens to make running his business untenable, he says.
The change and the challenges that come with it are so dramatic that Redmond is considering fleeing the familiarity of the east side of the Willamette River for Northwest Portland or elsewhere in the region. Other longtime employers near his shop see the same potential fate for their businesses as the city decides what the next 20 years of development will look like.
But the real estate investors active in the neighborhood defend its evolving nature. They say the idea of an industrial sanctuary — a zone created to protect manufacturers and industrial businesses from encroachment — doesn’t make sense in a 21st-century economy.
“When do you stop letting an area grow based on its past?” said real estate broker Craig Sweitzer. “It’s impossible to stop. You can’t control it.”
The Central Eastside seems designed to fade into the background.
Most of the Willamette River’s downtown bridges pass over the heart of the neighborhood before making landfall. The neighborhood’s warehouses are poorly marked, and most of its businesses only serve other businesses. So for a generation, few Portlanders have had any reason to visit.
The district developed as an industrial enclave in the late 1800s, when railroads connected Willamette Valley farmers to distributors in Portland, and from there to the rest of the region.
It retains that agricultural backbone in the form of wholesale trade companies such as Pacific Coast Fruit and new food manufacturers such as Olympic Provisions. It’s home to several craft distilleries and coffee roasters, including Stumptown.
It has also grown a set of manufacturers, wholesale trade companies and distributors. Redmond’s clients at Creative Woodworking are builders and contractors; he also has suppliers and vendors nearby, including Oregon Tile and Marble, Hall Tool and East Side Plating.
But those manufacturing, trade and distribution jobs are in decline — and being replaced.
The Central Eastside is now in vogue with buzzy tech companies and creative firms looking for an edgier neighborhood than downtown or the Pearl. Some of the newcomers have a manufacturing bent. Nutcase Helmets, for example, sketches and designs prototypes for stylish head-protectors out of the Ford Building, a former Model T assembly and distribution plant on Southeast Division. The final products are made in China.
Other firms produce less tangible goods; they develop software, websites or marketing strategies. Investors are buying warehouses to build out space for these companies, along the way testing the boundaries of what the city zoning code allows.
Viewpoint Construction Software is renovating a 60,000-square foot building across the street from its headquarters on bustling Southeast Water Avenue. As it expands, the company footprint is crossing from an employment zone into the industrial zone — even though most of its employees are desk workers.
Expansion in the technology and creative sectors have made the district a job-growth powerhouse. Smaller firms are looking for affordable real estate where they can settle and succeed quickly but still have access to central-city amenities.
Developers suggest the city’s definition of “industrial user” should change, at least in the Central Eastside, to meet the needs of a modern economy.
Brad Malsin arrived in the district about 13 years ago. It was desolate, he said, full of aging warehouses.
“I think people really kind of disregarded it,” he said. “Maybe I wasn’t smart enough or informed enough to recognize the challenges.”
So he bought one of the warehouses. His Beam Development ended up as a pioneer among developers in the Central Eastside, where his repurposed Eastbank Commerce Center — a 1923 furniture warehouse — now hosts 45 businesses, including ClarkLewis restaurant and a hair salon.
It’s a model being replicated elsewhere in the neighborhood and prompted the creation of what the city calls an “Employment Opportunity Subarea,” where the industrial-sanctuary rules are relaxed and landlords can bring in a broader array of tenants. Viewpoint’s new building falls within this section of the district.
On one hand, the district’s grit is part of its charm, Malsin says. But he’s convinced that the computer programmers working in his buildings can live in harmony with industrial neighbors. He wants that zoning flexibility expanded to other parts of the district.
“The reality is it’s going to change,” Malsin said. “Either we work together to accommodate the change and make compromises, or a lot of people get hurt.”
Walt Pelett opened City Liquidators in a Central Eastside warehouse in 1977 and has built his portfolio to seven buildings totaling 390,000-square feet, each painted cream with red trim. They’re packed with anything and everything Pelett thinks he can buy cheap and sell for a tidy profit. The store has a sea of recliners and bed sets, plus aisles of knick knacks, dishware and prints of famous artwork.
Just about the only things not for sale are the buildings. Yet they have become magnets for developers who want to partner with Pellet to redevelop his warehouses.
“He’s like a young debutante,” said Emma Pelett, his daughter. “Everyone wants to take him to the ball.”
The Central Eastside mostly escaped the gaze of City Hall for years, particularly after the district was designated an industrial sanctuary in 1980. But now it’s in the spotlight as officials plan for the next two decades.
Opening more of the area to office jobs would provide an eastside relief valve for a tight downtown office market. That could help the city woo more tech and creative jobs, such as those that have boosted the economies of the Pearl District and Washington County.
Those kinds of jobs pay well and employ more people in less space compared with warehouses and factories. That means infrastructure improvements, such as the new MAX Orange light-rail line to Milwaukie and the completed Portland Streetcar loop, have greater impact.
“We can increase employment density in the Central Eastside,” said Troy Doss, Portland’s chief city planner in the district. “We don’t want to do it on the back of existing industry.”
In fact, draft concept maps released last week show the city is considering expanding the less restrictive zoning rules that helped Malsin’s Water Avenue buildings take off to other parts of the district. That could bring more retail and offices elsewhere in the Central Eastside.
New rules would encourage taller buildings with industrial businesses on the ground floor, an effort to preserve those types of occupants while adding more technology and software jobs on upper stories.
While city leaders see new firms as potentially compatible with the neighborhood’s existing occupants, they haven’t warmed to the idea of dramatically increasing how much housing can be built.
The potential for more residents, more than almost any other potential change, worries Redmond and other industrial business owners. They fear newcomers will complain about loud noises at odd hours. Redmond already moved his business once — into the Central Eastside industrial sanctuary — to escape noise complaints.
City leaders are considering a policy that precludes nuisance complaints from industrial users. New occupants would be warned that noise and odors are to be expected when they settle in an area zoned and planned for industrial use.
But some developers see opportunity for residential growth in the Central Eastside.
“It will continue to be more of a residential area,” said Ott Gaither, construction manager for the recently completed East 12 Lofts, which sits just east of Redmond’s shop and where studio apartments rent for $1,095 and up. The building’s website promotes bars and restaurants within walking distance, and acknowledges the neighborhood has “veered a bit from its blue collar beginnings.”
The Central Eastside is a rare oasis of middle-wage jobs in the center of the city.
The district provides about one in 10 of the city’s manufacturing and wholesale trade jobs, the kind policymakers covet because they provide living-wage work without high education requirements.
But those jobs have been slipping away, even in the Central Eastside. About 1,100 disappeared between 2002 and 2011, replaced — or perhaps displaced — by specialized jobs that pay higher salaries in the professional and technology sectors. The other big gain has been in low-wage food service work.
“There’s all this very high-wage growth,” said state workforce economist Christian Kaylor. “But where can we put these blue-collar folks?”
Ultimately, Kaylor said, the real-estate market likely won’t support an industrial sanctuary in the city center. Industrial firms have other, cheaper options in the metro area, and property in the Central Eastside will only get more expensive.
Redmond said he’s routinely fending off buyers who covet his centrally located 33,000-square-feet of concrete slab. Redmond said he’s been offered $5 million from an investor who wanted to build an indoor sports center or a wine tasting room.
He could take the money. But he says he’s not interested in selling. He’s trying to grow his business and take care of his employees.
“What does that do for my other 14 guys?” he said. “What does it do for my four kids?”
The Central Eastside became popular among industrialists because it was cheap yet close to downtown. It became the central city’s pantry and tool shed — out of sight, but available at a moment’s notice.
Today, the Central Eastside is just as popular among a different crowd, and for similar reasons. The neighborhood now boasts coffee shops, tap rooms and restaurants. It’s become a destination rather than a wrong turn.
Dana Hinger and Sara Tunstall couldn’t see moving Spooltown, their 16-person sewing shop, to the industrial enclaves in Swan Island or out by the airport.
“That’s not who we are,” Hinger said. “That’s not where our clientele is.”
But where Walt Pelett could once assemble an empire, and Mike Redmond expand his footprint twofold, competition is already making the neighborhood a tougher nut to crack — before any of the zoning changes take hold.
“We had to fight tooth and nail to get in, because it’s where the brewery-slash-ad agency-slash-whatever wants to be,” Hinger said. “I don’t know where you’re supposed to put light manufacturing if not where it’s zoned for it.”
Spooltown left North Williams Avenue because of high rent, and Hinger said she has no illusions: The company is once again at the mercy of the market and a rapidly changing neighborhood. She expects to be forced out of Spooltown’s 5,000-square-foot industrial space within the next five years.
The space, she notes, would make for a nice tasting room.
— Elliot Njus and Andrew Theen