Vancouver’s former City Hall, a building renamed Block 56, is now fully leased and is moving into its new life as a Class A office building.
The much brighter renovated building is a far cry from the cold, mostly windowless government building that housed city employees and countless city council meetings for 44 years until 2011.
NW Equity Holdings, the real estate investment firm that purchased the building at 213 E. 13th St. in 2013 for $2 million, has spent approximately $4 million rebuilding its infrastructure and reinventing its work spaces, moving the once-weary building into the top tier of downtown office spaces, those commanding leases of $21 to $27 per square foot.
“I liken it to the Pearl District,” said Gary Ehrig, senior vice president of NW Equity Holdings, a firm owned by members of the Firstenburg family who once owned the former First Independent Bank.
But Ehrig’s Portland reference comes with a Vancouver context: Block 56 is decorated with old photos of the building as City Hall and plaques of Vancouver’s “All America City” awards, among other local mementos. “We want people to know that we haven’t lost sight of what the building was,” Ehrig said.
The owners named the building after its map name, following a trend popularized in New York City. They hope it will become a new anchor of high-end office space for downtown’s north end, an area with some contemporary office buildings but also with a wealth of low-rise buildings and small parking lots. But the success of Block 56, which will welcome its third and final tenant this fall, follows a common and worrisome pattern for downtown: All three tenants have simply moved from another downtown location, contributing to a shuffling of the deck without bringing the vitality of a new business to the city center.
While the downtown market has welcomed some new tenants post-recession, in particular national firms wanting to plant a small flag in Southwest Washington, commercial realtors say downtown’s growth lags well behind that of east Clark County area, where basic costs are slightly lower and parking isn’t an added cost. And even though it can cost $10 more — or more — per square foot to lease in Portland than in Vancouver, few businesses seem willing to cross the river to take advantage of those lower costs.
There are plenty of variables at play — differences in taxes, schools, housing costs, cultures and the all-important traffic issues — but some still wonder why downtown is not yet enjoying more fruits of a strong regional economy.
“Why haven’t we had Oregon companies coming over?” asked commercial broker Eric Fuller of Vancouver-based Eric Fuller and Associates. “Did the I-5 Bridge failure pop the balloon for Oregon businesses?
“We are trading deck chairs on the Titanic downtown,” Fuller said.
New tenants
The consulting firm BergerABAM was the first new tenant in Block 56, moving into the third floor in October 2014. The office is open and brightly lit, thanks to the windows created by removing some of the concrete walls of the original structure. The roughly 6,500-square-foot space has a staff kitchen and eating area and several meeting rooms, creating opportunities for collaborative gatherings. The open vent-work in the ceilings creates an industrial feel.
One floor below, Stewart Title moved into its approximately 6,500-square-foot space in April. The work area has more enclosed space for meetings and transactions and a handsome entry for visitors.
The first floor, the most impressive space, with its 16-foot ceilings and large windows opening to the building’s plaza and fountain, is a work in progress. Ehrig expects the building to be ready for employees of the Windermere Stellar real estate firm to relocate from Officers Row by Nov. 15.
Tom Shimota, broker for the JLL commercial real estate firm and leasing agent for Block 56, said the one-year time period for filling the building matched his expectations. “My client purchased the building and did a complete asbestos abatement and renovation of mechanical, electrical and elevators, and leased it up in about 12 months with three top-tier tenants,” he said. “That’s a pretty good case study of creating value.”
NW Equity Holdings also owns the five-floor former First Independent headquarters building at 1220 Main Street, close enough for some tenants to park in some of the 119 parking spaces at Block 56. Umpqua Bank has closed its walk-in branch in the building’s lobby but is still under lease, and Ehrig hopes to have a new tenant in the space next year. On the upper levels, some tenants have relocated into space once occupied by First Independent Bank, and Regus has agreed to lease 14,500 square feet later this fall.
Shimota says he does see growing interest in downtown real estate, which he describes as “a flat curve, not a spiked curve. When you tour a tenant in downtown Vancouver, it’s a headline just because (the market) is so flat.”
The lead architect on Block 56, Craig Davis of GBD Architects in Portland, said he immediately saw potential in a building that was worn out and overdue for renovation. The work required a gutting of the building and a complete overhaul of its operational systems to improve efficiency, as well as a restoration of the public plaza area and its decorative fountain.
That building had some really good bones,” Davis said. “It was easy for me to picture a new beginning for it.”
One goal, he said, was to “create a new kind of office that could be a catalyst project for that end of town.” While that hasn’t happened yet, Davis said he hopes that Block 56 will at least show the possibilities for new and restored buildings in the area.
“It hasn’t become a catalyst, but I think it will open peoples’s eyes,” he said.
