Title: Another Creative Office Nearing Completion
Author: Chuck Slothower
Date: September 6, 2017
Link: Original Article
Tucked among industrial buildings in the Central Eastside, the Custom Blocks from Capstone Partners are due to be delivered in late November.
The development is an adaptive reuse of two buildings stitched together from two blocks and multiple pre-existing structures built in the 1940s and ’50s. The property was most recently home to Custom Stamping and Manufacturing Co.
In all, the development includes 72,000 square feet of creative office space targeted at tech firms or similar tenants – save for about 3,000 square feet of retail space envisioned as a brewpub.
The south block is the larger of the two properties, with 48,804 rentable square feet. The north block has 22,790 rentable square feet.
The blocks are bound by Southeast Madison and Salmon streets, and Ninth and 10th avenues.
Inside the south block building, massive wooden bow trusses support the roof. Capstone opted to keep the Douglas fir timber in place, sandblasting it to revitalize the wood’s appearance.
Large windows were removed and will be replaced with modern and energy-efficient windows that reflect the vintage industrial aesthetic. A full sprinkler system was installed.
Capstone’s renovation involves full seismic upgrades on both blocks. The developer is keeping in place some of the interior walls that were reinforced with rebar.
Capstone secured a conditional-use permit to allow for office space in the industrial neighborhood.
“The change of use triggered a full seismic upgrade,” said Chris Nelson, co-founder of Capstone Partners.
Nelson said he wants to give each tenant the chance to customize their spaces, including with murals instead of exterior signage if they choose.
A roof deck on the south block building will have views of downtown, Mount Hood and other landmarks. A smaller, cube-shaped glass office will intrude from the second story.
Peter Grimm, principal at Scott | Edwards Architecture, was the designer. He said the adaptive reuse project involved “getting out of the way, and letting the building tell its own story.”
“There’s just a wow factor that you can’t fake,” he said. “It’s there; it’s baked into the original architecture.”
Capstone purchased a massive industrial stamping machine from Custom Stamping. The machine – nearly a story tall – will decorate the south block building.
Creative-office projects have sprung up in the Central Eastside, often serving as a boutique alternative to pricey downtown offices. Developers such as Beam Development and Killian Pacific have specialized in finding large, underutilized industrial buildings to transform into office properties.
Office space in the close-in Eastside had average asking rents of $31.06 per square foot during the second quarter, according to Jones Lang LaSalle. The vacancy rate was 6 percent. Developers had 425,155 square feet of office space under construction.
Capstone Partners is asking $29.50 on a triple-net basis for space in the Custom Blocks.
Tenant spaces of 8,930 square feet to 23,047 square feet are available in the south block. The north block has spaces of 1,242 square feet to 10,199 square feet to rent. All the spaces have three-phase power and ceiling heights up to 24 feet or 30 feet.
Cushman & Wakefield brokers Brad Carnese, Mark Carnese and Doug Deurwaarder are representing the property.
Capstone is in discussions with brewpub operators to take over the small retail space, Nelson said. There’s enough room for a 10-barrel brewing system, he said.
Capstone has had success with brewpubs before. The developer worked out an agreement with Breakside Brewery to open a large brewery and restaurant in Northwest Portland’s Slabtown neighborhood.
Fortis Construction is serving as general contractor for the Custom Blocks. Capstone obtained investment from Premier Properties U.S.A. in a joint-venture partnership.