As aging baby boomers migrate back to cities, many seek opportunities to integrate their workspaces and their living spaces in walkable urban neighborhoods that are burgeoning with new cafés, shops, and restaurants. And many millennials are joining them in their quest. But finding available and acceptable older buildings or building new ones that might suit diverse needs and meet zoning requirements, building and environmental codes, as well as economic feasibility needs, can demand innovative solutions to create long-term value.
Before attending art school at the Pacific Northwest College of Art in Portland, Oregon, from 1984 to 1988, Linda Hutchins was a computer engineer who wrote operating system software for Intel. Upon becoming a successful artist, she began searching for space into which to expand that would accommodate her large-scale wall drawings and other artwork. She and her husband, John Montague, a retired software engineer, carried the methodical practices of engineering through to what ended up being a real estate venture.
In 2006, they learned of a 5,000-square-foot (465 sq m) defunct factory/warehouse in northwest Portland built in 1938.
“I had leased studio space in industrial buildings with high ceilings and great light, and dreamed of owning a similar space,” Hutchins says. “When we saw the existing building, we fell in love with the bowstring-truss roof structure and realized that the building was large enough to house both studio and home. We were seduced by the walkability of the neighborhood, the openness and light of the skylit warehouse, and the flexibility of living and working under one roof.”
Sensing both the opportunities and challenges associated with rehabbing the factory to suit their needs, the couple hired Portland-based Works Partnership Architecture (WPA) to brainstorm potential solutions. “For the existing building to be successful as a residence, we had to do something about the derelict gas station and parking lot next door,” Hutchins says. “Any changes would need to meet a city-mandated 1.5 floor/area ratio, which was required because of the proximity of the site to the streetcar line. So redeveloping the gas station site meant we would need to build something larger in its place. In addition, the former gas station was a Department of Environmental Quality [DEQ] contaminated site.”
The pair determined that they needed to acquire the former gas station in order to protect and shield what would be their new studio/house, regardless of the contamination issues. Enthralled by the possibilities of both living and working in a renovated warehouse building that was spacious and flooded with light, they paid $1.395 million for both properties in December 2006, confident that the busy corner location in a burgeoning area would support long-term values.
Since then, this northwest Portland neighborhood just west of the trendy Pearl District has filled with new restaurants, brew pubs, shops, and offices.
The factory/warehouse sat on a 5,000-square-foot (465 sq m) lot and adjoined a second lot of equal dimensions, 50 by 100 feet (15 by 30 m), which contained the gas station on Northwest 19th Avenue, a busy one-way street. The warehouse itself sits around the corner on Northwest Overton Street, a narrower, quieter, tree-lined two-way street with two travel lanes and two on-street parking lanes.
At that point, Hutchins and Montague had entered the development business and sought counsel. “We considered many options, including demolishing everything, including the bowstring-truss building we had originally fallen in love with,” says Hutchins. “We considered building a multistory mixed-use development like so many others in the surrounding neighborhood, with condos or apartments above ground-floor commercial space. We were advised we could even claim the penthouse as our own with the profits we would reap from this approach. But we were never interested in living in a penthouse, removed from the street. A significant appeal of the existing building was its connection to the street and the neighborhood. In the end, we returned to our original idea of converting it to a live/work residence.”
They hired Vern Rifer of Portland-based Rifer Real Estate Development, a mechanical engineer and experienced developer who had undertaken other urban infill and live/work projects.
One of the first problems was obtaining environmental clearance for residential use on both sites because the warehouse had originally been used as a mechanic’s garage. Over the years it had also housed an awning fabricator and a furniture refinisher. Three 1,000-gallon (3,800 liter) gasoline tanks and one 500-gallon (1,900 liter) heating-oil tank had already been removed. Further testing in 2007 and 2011 determined that removal of contaminated soil to a depth of 15 feet (4.6 m) would allow the site to meet DEQ limits on vapor intrusion. At that depth, 167 cubic yards (128 cum) of soil under the pump island was removed, disposed of off site, and replaced with gravel. Environmental remediation for both sites cost $130,000.
Hutchins and Montague decided that an additional live/work residential component would be the use most compatible with their own studio/home. They figured that since they wanted to live and work that way, others might, too.
The site was zoned EXd, central employment, which allows residential and commercial use of live/work units outright. The ground floor of the units can be commercial, residential, or a combination: there is no use restriction, per se, in the zoning code. However, the state’s live/work building code allows up to 50 percent of the space built to residential standards to be used for commercial purposes; the commercial portion must be on the ground floor to provide access in accordance with Americans with Disabilities Act regulations, notes WPA cofounder Carrie Strickland, although 100 percent of the space can be residential. The owners added a requirement for a renter business plan and liability insurance for their own protection.
Making live/work spaces too deep would deprive them of light, so WPA determined that 30-foot (9 m) depths of the new building would be sufficient. That fit well with the owners’ need to bring light and air into the 100-foot (30 m) length of the warehouse. On the other hand, at 50-foot (15 m) widths, the site was too narrow for the standard double-loaded-corridor apartment units that, while yielding more units, would have violated the privacy of the owners.
So the owners adjusted the lot lines to recapture a space 20 feet wide by 70 feet long (6 by 21 m) from the adjacent decommissioned service station and parking lot to create a private garden for their own live/work space, which they named the Bowstring Truss House, and to allow for window walls on that side of the structure. That was particularly important because the warehouse abutted buildings on the south and west, blocking sunlight on those sides. The owners demolished the service station to create a 3,600-square-foot (335 sq m) L-shaped corner lot fronting both 19th Avenue and Overton Street. The Overton 19 building developed on this site serves the Bowstring Truss House by buffering it from 19th Avenue.
In this way, WPA, the project architect for the studio/house and the live/work units, was able to create a plan to shelter the Bowstring Truss House while exposing it to light and air. The space is clear-spanned by a series of four bowstring trusses and exposed roof framing. The intent of the design is to maintain the 17-foot (5.1 m) height of the exposed trussed ceiling and the open floor plan while inserting a series of boxes into the space for discrete uses, including the working studio, desk workspaces, garage, kitchen, bedrooms, bathrooms, and storage.
The principal device to bring light into the house is a 13-by-17-foot (4 by 5 m) wood- and glass-clad atrium in the center of the house. A large six-by-eight-foot (1.8 by 2.4 m) window opens from the living room east of the atrium to overlook the glass walls of the eastern exterior to the garden. A second five-by-eight-foot (1.5 by 2.4 m) window opens the office to the west of the atrium, and two others bring light into the kitchen and library to the north and south. The whole box of the atrium above the eight-foot-tall (2.4 m) level of the wooden box is glazed to the top chord of the bowstring trusses, acting as a giant light scoop to flood the interior with daylight. In addition, 11 square skylights ranging in size from three by three feet (0.9 m) to eight by eight feet (2.4 m) bring daylight to most other spaces.
An unusual aspect of this adapted warehouse in a dense urban area is that the owners control all the spaces at grade level and have sufficient street frontage for a 25-foot-square (7.6 m) private two-car garage. Besides providing complete accessibility, the single-level structure facilitates the loading and unloading of large-scale artwork.
Developing the investment side of the project required carefully balancing several considerations: the owners’ objectives to protect their studio/house without invading their own privacy, building a product that could appeal to the marketplace without overpricing it, meeting city zoning and building codes without constricting market acceptability, and building in enough high quality to enhance long-term appreciation and cash flow without outpacing economic and financial feasibility.
The traditional model for development in this urban neighborhood is multiple-story commercial development with retail space on the ground floor and offices, apartments, or condominiums above. Rifer did not believe there was enough market demand to fill solely ground-floor retail space and a second and third level of offices. Condominiums would require on-site parking, which could not be done on such a small, 3,600-square-foot (335 sq m) site. Second- and third-story apartments would require elevators and double-loaded corridors for which there was not enough site depth or size, even at the original site dimensions. The solution to the market conundrum was the one that also fit best with the owners’ objectives—two-story rental townhouses where the ground floor would be workspace and the second floor would be living space.
A gross depth of almost 30 feet (9 m) and an average width of 17 feet (5 m) would permit five two-story units of about 500 square feet (47 sq m) per floor, large enough for effective use, but not so deep as to be dark. (The basic net interior module footprint is 16 feet by 25–28 feet (4.9 m by 7.6–8.5 m).
However, a live/work corner unit on the ground floor of a busy street corner was not ideal; that space could be used more profitably for retail space—a use toward which the market had been moving. Therefore, two more units were lifted above the retail space, adding separation from the street and giving one a corner view above the surrounding low-rise buildings. This decision proved correct: the unit with the corner view was the first to rent.
That gesture still left the problem of too much exposure at grade for privacy versus too little exposure to bring daylight into units that open in only one direction. That single-direction opening was necessary to protect the owners’ privacy in the Bowstring Truss House and its garden. Except for businesses that seek continual visitors like shops and restaurants, workspace at ground level requires some discretion.
WPA’s solution was a distinctive one: creating a veil of full-height window walls where the wide mullions climbing the building are like closely spaced tree trunks. The interstices are all glass, set in the middle of deep mullions to reinforce their solidity, flooding the units with dappled daylight as though they are in an urban forest. This was particularly important because the long walls of the site face an active tire shop. Street trees and planters along the units reinforce this design gesture.
To accommodate city-mandated planters for stormwater management, a second design technique reinforces the depth of the forest-like facade, making it undulate along the street. Each live/work townhouse at grade is angled, in pairs, at about eight degrees, making each entry recessed by about three feet (1 m) for increased privacy.
The interiors of the live/work townhouses are designed to be flexible. All service spaces are recessed into the longest wall in each unit. This includes separate compartments behind doors for storage, a shower, toilet and sink, and a stacked washer/dryer. An efficient kitchen is recessed into the same wall. These service walls are mirrored in the adjoining units to make plumbing and electrical service more efficient and to reinforce the facade undulation.
Ceilings are 11 feet (3.4 m) tall on the first floor and 9.25 feet (2.8 m) tall on the second. Structural glued-laminated timber beams are exposed on the first floor, as is solid 1.5-inch-thick (3.8 cm), six-inch-wide (15 cm) Douglas fir plank decking laid at a 45-degree angle, which forms the first-floor ceiling and the floor of the second story. Staircases have solid fir treads and are encased in a vertical laminated-veneer lumber stud screen that permits light to penetrate. These long-lived materials, along with the polished concrete floors, solid-core doors, and heavy architectural-grade hardware, lend a feeling of permanence that often is lacking in new rental construction.
Rifer and the owners evaluated the market and judged that rents of about $1,900 per month for each of the seven units, which averaged 838 square feet (78 sq m) of net rentable space, could be achieved. That made rents about $2.27 per square foot ($25 per sq m), equivalent to newer apartment units nearby that had less flexibility. Rifer says the value created was approximately equal to the development cost of about $2.3 million, which he says could be justified by a longer-term investment that also protected the owners’ noneconomic objectives.
The small size of the project and fact that the owners had no development experience were the primary impediments to obtaining a loan. Umpqua Bank, a regional commercial bank, agreed to provide a construction and term loan based on the strong development concept and design, the owner’s financial strength, and retention of an experienced development manager. It issued a ten-year mini-perm term loan, with 30-year amortization, for $1.475 million, 63 percent of the development cost, rather than separating the financing into a construction/lease-up period loan followed by a permanent loan. “After the term loan expires in ten years, owners will then have the option of refinancing, selling, or converting into condominiums,” Rifer says. The owners view the development as a long-term investment and were willing to make sufficient equity contributions to achieve all their financial and nonfinancial objectives.” The project, which was completed in March, is partially leased; the corner retail space recently was not occupied.
The live/work project protects and enhances the owners’ single-level Bowstring Truss House, allowing them to live and work in spacious and light-filled environs overlooking an inner courtyard atrium and a private walled garden. Live/work/invest may become a new strategy for selective baby boomers.
William P. Macht is a professor of urban planning and development at the Center for Real Estate at Portland State University in Oregon and a development consultant. (Comments about projects profiled in this column, as well as proposals for future profiles, should be directed to the author at firstname.lastname@example.org.)