Historic Rehab


by Clint Copulos

Historic Rehab Most Sought-After In Real Estate

Urban cities are first in pecking order for most real estate investors for good reason: DEMAND. First, much of America’s business activity is centered around these areas. Think locales like Los Angeles, New York City, Chicago and San Francisco with large concentrations of corporations fueling the economic engine. Second, young, talented and ambitious employees are flocking to these destinations in search of that perfect live-work-play lifestyle.

With high demand for urban space and limited land availability for new construction, adaptive reuse has taken a key role in the revitalization of downtowns where historic buildings have lost their luster or are no longer in use. In fact, historic reuse is one of the strongest trends in innovative and cutting-edge real estate today.

Companies are always looking for sustainable advantages that is hard for competitors to replicate, and historic reuse fits that bill to a tee. More often than not, these structures offer the perfect ingredients for a successful project: one of kind, are favorably located within a downtown location with access to transportation and amenities, and are high on prospective tenants’ wish lists, especially those in the high-tech industries. Cities like Seattle Chicago, New York, Minneapolis and San Francisco are historic in nature and have seen tremendous activity on the adaptive reuse front–whether it is a warehouse, retail building or office building being revitalized into creative modern space.

The attractiveness of historic buildings is so great that companies are trying to replicate old buildings. It is a costly endeavor with a short advantage lead time. But getting into an original structure loaded with dense history still holds the greatest value.

KBS was fortunate to find its own historic gem in Portland, picking up the historic Meier & Frank Building that has been home to Macy’s for more than a century. Macy’s will shut its doors after the holiday season. The circa-1906 Meier & Frank Building is a 16-story structure that encompasses an entire city block directly across the street from Pioneer Square and the highly successful Pioneer Place Mall at the intersection of downtown Portland’s aggregation of technology-office and national retail tenancy.  It is literally on downtown Portland’s 50-yardline.

KBS has acquired the basement levels and floors one through five, providing us with a significant redevelopment opportunity to create a best-in-class, mixed-use asset encompassing retail (level one and the basement) and creative office space (levels two-five).  Just above our floors is the Nines Hotel (not part of our acquisition), downtown Portland’s most luxurious hotel featuring 331 rooms and rooftop restaurant and bar with sweeping skyline views.

    

We are pleased to add this project to our roster and expect it will take approximately 12 months to reposition the asset from its current use of a department store to our mixed-use asset. Portland is a great city to do business in and typically has a much greater focus on the backstory and craftsmanship of a property—which will bode well for this project upon completion. The Meier & Frank Building is truly a unique asset that will attract tenants looking for large floorplates and flexible options in vibrant community. You simply cannot replicate this building anywhere in the city.

 


Clint Copulos is a vice president and asset manager for KBS and a spokesperson for the KBS Health and Wellness Program. Clint is responsible for the asset management of numerous KBS investments located in Portland, Oregon, and Sacramento, California, in addition to acquisition and disposition activities. Mr. Copulos oversees a portfolio size of approximately 1 million square feet of office space.