Burnside Bridgehead Evaluators Lean Toward Beam

PORTLAND-A $246-million, 1.7 million-sf proposal by locally based Beam Construction & Management LLC has been selected as the preferred plan for redeveloping five contiguous blocks at the east end of the Burnside Bridge with a mix of uses. The selection of Beam as the preferred developer was made by the Burnside Bridgehead evaluation committee, a group of neighborhood leaders and business people put together by the city’s urban renewal agency, the Portland Development Commission, which plans to make a final decision on April 27.Beam is competing for the project — the largest development ever proposed for the city’s Central Eastside — with two other teams. One of the other teams is led by locally based Gerding Edlen Development, the developer of Portland’s Brewery Blocks, a five-block redevelopment in Northwest Portland. The other is led by Opus Northwest, an affiliate of Minnetonka, MN-based Opus that most recently helped transform the former Durham Quarry in Tigard, OR, into Bridgeport Village, a 465,000-sf, open-air shopping center. Beam’s experience does not include such large undertakings but does include the Eastbank Commerce Center, a run-down Central Eastside industrial building that he converted into a thriving mixed-use building with a ground-floor restaurant and flex-office space above. Beam now is in the process of renovating two other buildings nearby the Eastbank Commerce Center, and has tied up the B&O warehouse on Southeast Second Avenue between Washington and Stark streets. The Burnside Bridgehead land covers a five-block area between Northeast Second Avenue and Martin Luther King Jr. Boulevard and Burnside and Northeast Everett streets. Beam’s proposal calls for 267 housing units, 217,000 sf of office, 169,800 sf of light manufacturing space and 120,340 sf of retail. Original proposals for the redevelopment were submitted December. While Opus and Gerding Edlen each originally proposed anchoring the Burnside Bridgehead redevelopment with a big-box home improvement retailer, Beam officials proposed a mix of smaller retailers they said better fit the neighborhood. The PDC was originally scheduled to select a developer Feb. 9. When strong neighborhood opposition surfaced to the idea of a big-box retailer in the center of the city, a decision was pushed back to Feb. 23 and both Opus and Gerding Edlen publicly stated that a big-box retailer was not required for their participation. Prior to Feb. 23, the PDC further postponed the decision to the end of April to allow the three competing development teams to massage their proposals in response to the substantial public comment received at public hearings on the topic, and time for PDC staff and the evaluation committee to review the changes. When the revisions came back, Beam Development had the most expensive project ($246M) with the most square footage (1.69 million sf), the lowest return on investment for the investors (6%), the most annual revenue to the city ($1.5 million) and the second lowest amount of public assistance ($20.6 million). As a result, the evaluation committee proceeded to rank Beam first in three out of four criteria–Program and Design, Business Deal and Implementation–and last in the fourth, Developer Capacity, because of the other two competitors’ experience with larger projects. “I just thought I had a different take on it, a different program, and I thought the mix of what I was proposing would compete well against what they were putting up,” Beam’s managing director Brad Malsin tells GlobeSt.com. “I never envisioned it being as high profile as it has turned out to be.”Whichever team gets the nod on April 27, it will have 90 days to submit legally binding agreements with its development partners that specify each partner’s equity commitment, each partner’s space ownership or rental commitment, and who will have effective control over the development as master developer. In the case of Gerding Edlen and Opus, the number of development partners is so few that it is clear who would have control. In the case of Beam, which lists eight development partners, it was not so clear to the evaluation committee.Malsin tells GlobeSt.com it’s clear to his partners that Beam is steering the ship, with Malsin and development director Pete Eggspuehler at the helm. Indeed, Malsin says Beam’s leadership will not just be on paper. Of the $55 million of developer equity necessary for the development, he says Beam Development will be putting up the biggest chunk (as much as $15 million), with Shaanxi Jierui Group, Walsh Construction and BPM Development also contributing big chunks. The other partners are listed as Ankrom Moisen Architects, DiLoreto Architects, COLAB Architecture and Reach Housing Northwest. Beam’s director of development Moreover, between the development partners who are taking nearly 150,000 sf of office space in the project and the tenant interest generated by the high-profile nature of the project, Beam says he has lease commitments for 115% of the project’s 507,000 sf of retail, office and light manufacturing space.