Crane construction adds to Pearl District's building boom
The Business Journal of Portland - April 7, 2006
by Wendy Culverwell
Business Journal staff writer
When the hammering stops at The Crane Building later this year, an old warehouse will emerge as a new office building with apartments, penthouses and an upscale seafood restaurant.
Six months after Guardian Management LLC acquired the historic Pearl District building as the real estate management company's new corporate headquarters, reconstruction is in full swing and a major tenant has agreed to lease a sizable chunk of the ground floor for a seafood restaurant.
Moana Restaurants LLC, a subsidiary of Auberge Resorts, will lease 8,500 square feet on the main floor, with an option to eventually buy the space.
The new restaurant, the 20th in the Auberge portfolio, is slated to open in early 2007. The company has upscale restaurants in numerous California resort destinations and operates the Paragon restaurants in Portland, San Francisco and Seattle.
At the Crane Building it will operate a 319-seat restaurant with formal and informal dining areas, banquet rooms and a retail fish market.
"Portland just doesn't have any hip, cool fish places," said Tom Brenneke, owner and president of Guardian Management.
Brenneke said the restaurant will compete with Jake's Famous Crawfish, which is nearby. Jake's is owned and operated by McCormick & Schmick's Seafood Restaurants Inc. and has been in business more than 110 years.
Guardian bought the Crane Building after outgrowing its Johns Landing office. The 70-person office moves in December.
Brenneke said the company scouted numerous locations all over the Portland area once it made the decision to leave Johns Landing.
Brenneke ultimately decided to "stay put" in Portland and settled on the Crane Building, at the corner of Northwest 14th Avenue and Irving Street. Neighbors include the new REI store and The Irving Street lofts.
Built in 1910 for the Crane Plumbing Co., it had been the home of American Rag for many years before Guardian acquired it in October.
Transforming an aging, 90,000-square-foot structure into a modern office building is a daunting physical challenge. Making it work financially is arguably tougher, Brenneke said.
To fortify it against future earthquakes, for example, engineers created a central core tied by metal rods to the rest of the structure. The old brick walls may rattle and roll, but the structure will stay put.
The seismic work accounts for $2.5 million of the $23 million budget to acquire and renovate the building.
To make the numbers work, Guardian renewed its listing on the historic registry, which qualified it for federal tax credits, and extended its listing with the state, which freezes property taxes for 15 years.
Although the building will be turned into a condominium complex, that can't happen for five years because of the federal tax credits, which defray up to 20 percent of the development costs.
The main floor will be given over to retail, the restaurant and a lobby for residents. Guardian will occupy the second and third floors. The fourth through sixth floors will house apartments and two penthouses are being constructed on the roof. They will be available for sale immediately since they aren't part of the historic structure.
The units, 3,000 and 2,200 square feet, will be marketed for $650 to $750 a square foot -- a price Brenneke said is competitive in light of the $900-plus commanded for penthouses in some of the Pearl District's newest buildings.
Guardian was formed in 1971 and manages more than 200 properties with 500 employees in six states. It specializes in multifamily properties in Alaska, Idaho, Montana, Oregon, Texas and Washington.
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