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Most people in Portland have a story that illustrates how the city has changed in the past decade from twee Portlandia into a doom-loopy dystopia.
For real estate developer Lauren Noecker, it was the morning she walked from her loft in the Pearl to her office in Northwest and spotted an agitated man wandering around with a butcher knife. He clearly wasn’t a chef on his way to a brunch shift. She called 911, and the dispatcher asked her which “direction” the knife was pointed.
“I thought, ‘How is that relevant?’” Noecker says. “He’s walking around with a butcher knife at 9 in the morning in the Pearl. If this is what people want, maybe I’m in the wrong city.”
Noecker, 43, has since moved back to her native Los Angeles, and she says she’s stunned by how far Portland has fallen since she moved here in 2009, just after earning her MBA. Along with her brother Spencer, who’s no longer with the company, Noecker made a big bet on the Portland metro area, buying garden-style apartments in Vancouver, Wash., and Gresham by the hundred.
NBP Capital has a deep-pocketed backer: Nicolas Berggruen, a Paris-born billionaire who once sold everything he owned except a small bag of clothes, his BlackBerry (state of the art at the time), and a Gulfstream IV that he jetted around the world in, looking for investments.
As their empire grew, the Noeckers, backed by Berggruen, moved their money from the suburbs to the central city, buying the Templeton Building at the east end of the Burnside Bridge for $1.2 million in 2012 and the Woodlark Hotel for $6.9 million in 2014. NBP bought 290 units in the RiverPlace development for $97.2 million in 2015. Three years later, it paid $28 million for the old Multnomah County Courthouse at Southwest 4th Avenue and Salmon Street. At one point, NBP owned more than 50 buildings in town. It still holds 19.
“But a lot of them have to go back to the bank,” Noecker says.
The courthouse is among them, but the lender doesn’t want it, she says, a sign of how little interest there is in Portland. A property worth $28 million in 2018 is worth $5.8 million now, according to the county assessor. The lender pays the property taxes. NBP covers the utilities and makes sure the building doesn’t decay.
“It just doesn’t pencil,” Noecker says.
A lot of investors agree. As WW reported last month, permit applications for new apartment construction have collapsed to their lowest levels in a decade, a signal that out-of-state developers have lost their appetite for Stumptown (“What Goes Up,” Nov. 19). As someone seeing her lenders foreclose, Noecker has a keen interest in that enthusiasm gap.
Noecker hasn’t given up on Portland entirely. She’s hanging on to the RiverPlace property because she thinks it will be worth something, and she’s proud of the Holloway, a 271-unit apartment building on the site of the old Sunshine Dairy. It has a spa-worthy gym, common areas that rival Soho House (a mile away), and works by local artists.
Bonus: The new Kachka Fabrika: Distillery & Zakuski Bar just opened around the corner, making a short walk for tenants who have one too many Ukrainian vodkas.
Apartments start at $1,399 a month, so no one is getting rich off the Holloway. The place is treading water, having leased 63 units, about a quarter of the total, since it opened in August. In any other city, a property as nice would command higher rents, says Don Mutal, NBP’s president of construction.
“It’s a joke what we’re renting the units for in this building,” Mutal says.
A silver lining, according to Noecker: Anemic rents mean no one can build apartments as nice as the Holloway for a long time, giving the building an advantage.
“We’re stealing tenants from other places,” Noecker says. “I don’t know if we can jump back into anything in Portland, but if we ever did, it would be so basic. I’m talking no amenities. You can’t build this stuff anymore.”
Noecker sat down with WW to talk about the challenges of building the Holloway and why she thinks Portland has gone from developer heaven to hell so fast. Answers have been edited for clarity.
WW: It’s almost impossible to build anything big in Portland without capital from big investors elsewhere. We hear big money is scared of our town. How bad is it?
Lauren Noecker: We can’t get capital to come in and fund any short-term needs at any project because Portland fell off the map in terms of capital funding. We see that it’s 80th out of 81 markets in terms of investment capital, and it used to be in the top five. At least that’s how it felt when we used to take meetings in L.A., San Francisco or New York. We used to talk about Portland, and there was a lot of interest from capital partners, be it debt or equity. Now, you say Portland and people want to run. How this happened so fast is the real question.
Why do you think it did?
There are states that are in full recessions. We are one of them, but I think the commercial real estate collapse was just so much faster and so much deeper in Portland. All of the pieces came together at the wrong time. It was Measure 110, and the protests, and the absence of office workers downtown, and the city and the county not willing to bring people back, and all the new, high taxes. You had a very lax D.A. Go downtown and you’re going to see something you don’t want to see. You’re not going to get killed, but you’re going to see something else. You’re going to see some bad shit. From a business perspective, it was just impossible. You’re running uphill, and it’s not just the typical cycle of interest rates going up.
You still own your condominium in the Pearl even though you live in L.A., and the Holloway is really luxurious. Why keep skin in the Portland game?
We put our heart and soul into it. You can see it in every detail. It took a lot of capital, and even more time and energy. As you can see from the Woodlark Hotel, we try to do things, and when we do them, we try to do them well, but it’s hard when the economics are not penciling. So we made it through, and now we’ll lease up and hopefully get some recovery, and we’ll hold it long term. There isn’t another option because recent sales are unimaginably low.
A debate rages whether high taxes are chasing people out of Portland. Care to join the fray?
The property taxes are just simply too high for the value of what you’re getting. When we get five leases, I think, “Oh my God, there are five people in Portland who want apartments.” I had lost faith that anyone would want to be here. I look at my condo tax bill in the Pearl and wonder who else would pay this?
We had lunch at Bullard Tavern in the Woodlark the other day. It was great. How does the hotel stay in business?
The best angle I have with my lender on the hotel is that they don’t want to take it back. Lenders just took back the Target across the street, and they don’t know what to do with it. And all these other hotels got taken back. I’m really proud of the hospitality experience we delivered. We have two years of Michelin stars and we’re No. 1 on Tripadvisor. We have a restaurant that opened in 2019, had to do takeout during the pandemic, and now has a great following.
