Portland’s hottest office developer aims for his riskiest project yet
October 1, 2018
After two stunning successes, Walter Bowen’s BPM Real Estate is pursuing a 35-story downtown tower.
Walter Bowen remembers driving through downtown Portland decades ago, stopping at a Standard gas station on the corner of Southwest Broadway and Southwest Columbia on his way to Portland State University.
“That was a good place to stop when you were on your way to PSU,” he said.
The gas station isn’t there anymore. In its place has risen the sleek, 19-story hotel and office building that will soon be home to a Radisson RED hotel and offices for lawyers, a title company and 85,000 square feet of space leased by Amazon. It’s called Broadway Tower, and it came from Bowen’s company, BPM Real Estate Group, which kicked off the speculative project in 2016.
The building is only the second office building Bowen’s ever produced in his nearly 40-year career in real estate development. The relative speed which with it filled up, first with the hotel tenant, then with Amazon — a major coup in the local real estate scene for Kidder Mathews senior vice president Kevin Joshi — had other developers in awe. Envy levels were already high after BPM sold its only other office building, Pearl West, to LaSalle Investment Management for $87.5 million last year, at the time a record-setting price per square foot.
Now, BPM has set its sights on its most ambitious project to date: a 35-story tower in downtown Portland with a five-star hotel, 180,000 square feet of office space and nearly 140 luxury condos. The proposal comes at a time in the cycle when many other developers are reining things in, girding for the drop-off — or at least the leveling-off — of the market that’s bound to come.
But Bowen, well aware that the project has a long way to go before fruition, is optimistic. Based on his recent track record, others would put their money on him, as well.
“He’s had two huge home runs in a row,” said Jordan Menashe, a principal with Menashe Properties. “How can you not believe he can pull it off?”
Apartments and seniors
Bowen, a Portland native, launched BPM in 1977 and began acquiring apartments. He later expanded into acquiring and developing low-income housing and affordable projects, before moving into senior living and assisted living across 11 western states. To date, the company has acquired or built more than 4,400 apartment units and 44 senior communities.
BPM was also among the first developers to get into the assisted living world in the late 1980s when it acquired Park Place, an assisted living facility on Portland’s west side developed by the pioneer of the assisted living concept, Keren Brown Wilson. Bowen said senior living projects can be extremely complicated, considering all the services required, but they’re also incredibly important in people’s lives.
“You are taking care of a mom who’s 85 years old, so you’re just trying to make life better every day,” he said. “We take that very seriously.”
In 2012, BPM sold 10 of its assisted living communities in a profitable deal that allowed the company to begin to diversify its portfolio. One of the first manifestations of that came one day when Bowen was walking around the Pearl District sizing up opportunities for a new office for BPM. “There were condos and a large number of apartments,” he said, “but I started looking around and said, ‘Where’s the office space? Doesn’t anybody work here?’”
That started the ball rolling on Pearl West, the 155,500-square-foot office building at 1455 N.W. Irving St. — the first speculative office building in Portland to rise from the ashes of the Great Recession. The timing couldn’t have been better. It was 2014 when ground broke. Nobody else was building new office projects, and long before construction wrapped up, the building had all but pre-leased to big names like Wacom Technology Corp., Zoom+Care and Howard S. Wright Construction.
“We were very fortunate to have some investors who believed that it could happen,” said Bowen, noting that funding for Pearl West came from private investors and a loan from Washington Capital Management.
The stars further aligned for BPM in 2017, as Portland’s office market was soaring. Institutional investors from outside of the area, looking for hot markets in which to deploy capital, took a shining to Portland and its relative value compared to other West Coast markets. LaSalle Investment Management paid $87.5 million for Pearl West. It’s per-square-foot price, $562.83, set the new record at the time.
“A lot of times, these are buildings they don’t intend to sell,” said Kevin Cavenaugh, founder of Portland’s Guerilla Development. “But when the market’s that hot . . .”
While good fortune and timing played a role, Bowen chalks up the real success of Pearl West to the team behind the project, which included Howard S. Wright, GBD Architects (Hacker was also involved), Washington Capital and Kidder Mathews. He liked the team so much, he put them together again for the $150 million Broadway Tower.
And he’s put a similar team on the 35-story tower. But this time, the game has changed.
For starters, Bowen’s proposed tower would be among the largest new development projects in Portland since the U.S. Bancorp Tower in 1981. He said the price tag could approach $500 million, which could be a heavy lift from a fund-raising standpoint.
“Getting financing could happen quickly because of the nature of having a five-star hotel, or it could take some time,” he said.
The Portland Design Commission is also going over the plans with a fine-toothed comb, and the idea that a developer wants to displace one of Portland’s most popular food cart pods has raised plenty of hackles in town.
But the biggest bumps in the road are likely to come from much larger forces at work. Construction costs have climbed steeply in recent years and made projects harder to pencil. And the general sentiment in the development sector is that it’s late in the cycle and the once hearty appetite for investing in a project like this might be waning.
Bowen is undeterred, even as he acknowledges that if things change to the point that the project won’t make financial sense, he’ll wait till it does. Backing up that confidence: BPM already has a firm contract with a hotel for the tower.
“I just love creating things, and this is going to be a great project for Portland,” Bowen said. “Portland is becoming a major international city. A few years ago, we could not have envisioned bringing in a five-star hotel here, but right now, there’s a moment in time where it’s going to work.”