In red-hot Portland, housing costs soar, income gap grows

By

Published:

 

PORTLAND — Jordan Snider made the move here from Los Angeles in 2013 to join his girlfriend.

He had no wish for a “Portlandia”-style life change to work as a barista. He had digital production skills honed by motion-picture work. So he freelanced, then started his own firm, Chromacolor, in a century-old space shared with a bamboo-furniture maker and a “brew bar” where the espressos are served up with fresh-roasted beans.

“I was afraid I might end up with a job in a coffee shop. Instead, I opened my own business above a coffee shop,” said Snider, whose small loft is reached by climbing the stairs at the back of the building.

Snider, 31, is a bit player in the kaleidoscope of Portland startups that have helped turn this city into one of the nation’s hottest urban economies, with a job-growth rate second only to Miami from 2013 to 2015.

But in Portland, as in other parts of the country, the recovery from the depths of the Great Recession has been profoundly uneven. The city’s surging fortunes have been a source of pride but also angst, as soaring home prices and rents increasingly separate the haves from the have-nots.

A state analyst notes the fastest employment growth in the Portland area has come at polar ends of the spectrum — low-wage jobs, such as those in the hospitality industry that average $21,000 a year, and high-wage jobs, such as those in tech manufacturing, paying more than $130,000. There has been scant increase in middle-income jobs.

“The cruel irony is that, in the shadow of this economic growth, there is crushing structural poverty,” wrote Christian Kaylor of the Oregon Employment Department, which conducted an analysis of job growth. “It’s a classic tale of economic divide. And that divide is growing.”

Portland long has benefitted from two major employers situated to the west of the city: sports-apparel giant Nike and Intel, the computer-chip manufacturer.

Within Portland proper, much of the recent growth in high-end wages has been driven by the tech startups. Though the urban core lacks a major anchor like Amazon in Seattle, Portland still draws software talent from around the country.

Josh Petty is a 26-year-old Purdue University graduate and was a partner in a software-design studio, Cellaflora, in his native Indiana when he decided to move to Portland a year ago. He sometimes works out of his apartment, other times opts to rent space. And he is constantly networking at events such as 1 Million Cups meeting, which last month featured a pitch for Chubstr, an online startup that showcases stylish clothes for big, young men.

“There’s a lot of creativity here,” Petty said. “You can push out an idea, and you are not embarrassed. Even if it’s not yet as good as it can be, you are not going to be cut down.”

Artisan ethic

In Portland, some software developers embrace a kind of artisan ethic that has carried over from woodworking and brewmasters to the world of computer coding.

“You have this almost anarchist, against-the-system attitude,” said Alex Bilmes, chief executive officer of Reflect, a Portland-based startup focused on visualizing data. “It is anti-corporate and you end up getting developers who care much more about their craft than the business impact they are making. They like to write really amazing code.”

Even as Portland tech leaders cherish a culture apart from the more corporate Seattle-area scene, they also look north to the Puget Sound region for financial support.

Reflect, for example, received some of its $2.5 million investment from Seattle-based Founder’s Co-op, a fund that specializes in early-stage startups and backed Bilmes last year in a three-month incubator program.

“Fundamentally, I feel there is a real strong collaboration between the Portland startup community and the Seattle community,” said Chris DeVore, a partner in Founder’s Co-op.

When you walk into the century-old building where Snider works, collaboration also thrives, blurring the physical lines between businesses. Close by the street entrance, Coava Coffee showcases an expansive bar and tables crafted by Bamboo Revolution, which sells furniture and other bamboo offerings farther back in the room, and manufactures it in an adjacent industrial space reached through a massive bamboo door.

“We wanted to show off what we could do — what bamboo could do — and I get 500 people walking through here every day who would not have been here otherwise. So everybody wins,” said Michael Pullen, who owns Bamboo Revolution and renovated the space.

The coffee clientele includes lot of startup people, Snider said, and that helps his business. “The other day, I saw one of my old clients, so I invited him to up to my office to see my coloring process,” he said.

In the Portland startup community, many are hoping for a big payoff that is still somewhere on the horizon.

So far, Portland has yet to undergo the kind of tech cycle Seattle went through in which some companies matured and early stakeholders cashed in their shares.

Still, deep pockets are investing in Portland.

Back in September 2015, Amazon announced it was acquiring Elemental Technologies, a Portland-based video software startup, for a price Bloomberg reported to be more than $500 million.

Portland is also attracting more satellite offices of Silicon Valley companies, where employees can find more affordable housing than in the Bay Area.

The migration from Silicon Valley, as well as Seattle, adds to the pressure on Portland real-estate prices.

New arrivals flush with money from home sales in the higher-priced regions often bid up prices. Through most of last year, the monthly rate of increase in Portland home prices led the nation, according to the S&P Case-Schiller price index.

Push for rent control

Meanwhile, rapidly rising rents are straining tenants.

Scott San Filippo, a software developer from the Bay Area, got a front-row seat to that process after he moved to Portland last year. His new home was just across the street from a four-plex that was sold to a new landlord. He then watched three of the tenants, a single father with his son, a couple and an older gentleman, vacate.

“I was shocked how people could be forced out,” San Filippo said. “In San Francisco, there is rent control.”

In Portland, there is a new push for rent control.

That movement has gotten a boost from state House Speaker Tina Kotek, a Portland Democrat, who supports a bill in the Legislature that would remove a statewide ban on rent control. She also backs a temporary, one-year measure to limit rent increases to no more than 5 percent and forbid evictions without cause.

“Too many property owners are taking advantage of the market conditions by evicting tenants, raising rents and finding new people who can pay more each month,” Kotek said in a September speech.

Within the Portland metropolitan area, expanding the housing supply faces a number of challenges, including an urban-growth boundary that limits where development can occur. But there also is new momentum to increase building housing stock for moderate- and low-income residents. Voters in November approved a $258 million bond measure intended to help ease what the ballot question described as a 24,000-unit shortfall in affordable housing.

Then in December, the Portland City Council approved a rule that will require developers building at least 20 units to set aside at least 20 percent of them for households making 80 percent or less than the median income.

This year, the council passed a law requiring landlords to pay relocation costs for tenants evicted without cause, a move that came about after one apartment owner in Northeast Portland in January nearly doubled his tenants’ rent.

Meanwhile, the Portland Development Commission, a public agency, wants private partners to commit to incorporating manufacturing spaces and affordable housing in their urban renewal projects.

“We are looking for ways that harness and continue the growth — but to do it in a way that benefits all of the community,” said Kimberly Branam, the commission’s executive director.

That can be a tough balancing act.

For years, the commission has been trying to redevelop The Grove Hotel, a dilapidated structure at a key location in Portland near an ornate gate that marks the entrance to Old Town Chinatown. The commission sold the property to two private developers who have invested more than $30 million to transform the building — now under renovation — into a boutique hotel and retail stores.

But just across the street is Right 2 Dream Too, an organized homeless camp that for the past five years has offered a “safe sleep zone” for the weary and received some city financial support.

That property, too, is expected to be acquired by the commission and redeveloped.

But so far, efforts to move the camp have been unsuccessful.

Last month, the frustrated hotel developers sued the camp owners for damages. They argue that the patchwork of shelters violates zoning codes, reduces their property’s value, and will deter guests from coming to the hotel.