Uncreative End to Creative Services Center

PORTLAND-Looking to cut its losses, the Portland Development Commission will be relocating its 170-person offices to an historic seven-story building in Old Town that it master leased in 2001 in hopes of attracting more creative services firms to the CBD.

In cooperation with the PDC, the building’s owner, Kalberer Co., spent more than $1 million to have Venerable Properties turn the raw warehouse into a wired office building. In return, the PDC inked a 10-year, top-of-the-market master lease for the building’s 57,000 rsf. The negotiated lease rate is about $20 per sf per year, or just over $96,000 per month, not including annual increases.

At the time, the city thought it would be able to achieve sublease rents in the high $20′s per sf per year, full service, which is why it essentially gave the third floor to the not-for-profit Oregon Creative Services Alliance, renting them 675 sf at a cost of $1 per year and letting them keep all the rental income from leasing the rest of the 8,500-sf floor.