From the DJC:
Sale of Cyan/PDX sends a clear signal
POSTED: Thursday, December 3, 2009 at 05:03 PM PT
BY: Nathalie Weinstein
Gerding Edlen’s creed of 20-minute living was exemplified in Cyan/PDX. The building, which offers modest-sized apartments near Portland State University and alternative transportation, was designed to show that people can live small and sustainably, while enjoying the perks of an urban setting.
Developer Mark Edlen still believes in the 20-minute neighborhood, but his dream of replicating multifamily, urban infill projects within Portland is on hold.
“We saw a downturn coming (before the recession),” Edlen says. “We just didn’t see how deep it would be and how large an impact it would have across our economy. I don’t think I’m the only one surprised by the depth and breadth of this downturn.”
Cyan/PDX, which opened in May, is only 40-percent leased; its sale to a Texas-based commercial real estate firm is pending. Now Edlen wonders when he’ll be able to develop a similar project in Portland.
When it became apparent in 2008 that condos weren’t selling, Gerding Edlen decided to convert Cyan/PDX from condos to apartments. Selling the building became part of the company’s business plan.
The multifamily market is expected to begin to stabilize in late 2010 or early 2011, according to an analysis by Beth DuPont and Gary Winkler of Colliers International, but Edlen said it may be a while before his company develops more housing in Portland.
“I think apartments will be the first thing to come back,” Edlen said. “But until we get to the point where the return warrants the need, you won’t see a lot of new construction. Right now we’re trying to take advantage of our sustainable solutions to help others outside of Portland with their buildings. But it’s not as much fun as working in Portland.”
On Nov. 20, Behringer Harvard Multifamily OP I LP entered into an agreement to purchase the 352-unit apartment building from 4th & Harrison Investors LLC for $65 million, according to documents filed with the U.S. Securities and Exchange Commission.
The potential sale was a surprise to Cyan resident Nyco Herzog, but she said she has seen signs over the last year that Gerding Edlen’s vision for the project wasn’t going to develop.
“It feels like any other apartment building,” Herzog said. “They used to have movies on Friday nights, and they stopped doing those. The only people in the common areas are college kids. The staff does a great job, but I don’t think it has become a community.”
But Damin Tarlow, a development manager with Gerding Edlen, said his vision for the building is coming along, and that the lack of activity is related to weather and not a lack of community.
“We had a lot of events out on our plaza during the summer that were well attended,” Tarlow said. “With winter coming, we’re doing more events in the building’s common rooms. We had a mini-Street of Dreams a few weeks ago where people opened their apartments to their neighbors. My sense is that people are happy.”
The slow trickle of incoming tenants, Herzog said, could have something to do with a lack of tenant participation in her community. When she and her husband moved into the building in May, Herzog said it was “dark and depressing” and mostly empty.
“There are more people on the floors now and the garage is full of cars,” Herzog said. “But I think because they had such a hard time leasing it, the ideal hasn’t realized itself.”
Edlen cited Portland’s Central Business District as he reemphasized his support for mixed-use, transportation-oriented projects. But the recession won’t be forgotten. And with high unemployment, the demand for new multifamily housing doesn’t exist right now.
“I like to think positively that our large unemployment rate is related to young people migrating here without jobs because of the city’s livability,” Edlen says. “Maybe they will become the new businesses that lead our region out of this recession. But when job growth goes backwards, you’re creating excess capacity with new projects. We have to have enough job growth to warrant new construction.”
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One can never know for sure what a deserted area looks like.....
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