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When Portland developer Vanessa Sturgeon bought an old gear factory for $6.8 million, she envisioned an office building with all the amenities that attracted hipster employees back then: exposed wooden beams, polished concrete, vast windows, and a roof deck.
She spent $18 million gutting and rebuilding the Premier Gear & Machine Works Building on Northwest 17th Avenue at Thurman Street. It opened in April 2020, just as COVID-19 lockdowns began. The tech companies that had been flocking to Portland from Seattle and San Francisco sent most—if not all—of their employees home, obviating the need for office space, anywhere.
Suddenly, Sturgeon had a trophy property that no one wanted to win. Now, after three years of paying for upkeep on an empty building, she’s pivoting to meet demand from a very different clientele: people suffering mental health crises, often brought on by drugs.
If Sturgeon has her way, a building where tech bros might have tapped out marketing copy on laptops while sipping matcha will become a 16-bed “crisis assessment and treatment center” (a term of art in the business) attached to 80 units of housing, 50 of them permanent. It will have doctors, nurses, counselors and intake specialists on staff 24/7.
“We went to Multnomah County and asked, ‘What is your biggest need?’” Sturgeon says.
The county has just one crisis center now, with 16 beds on Northeast Martin Luther King Boulevard, but it has no housing for people after their stays. (Sixteen is the magic number for beds at these facilities because operators can’t bill Medicaid if they have more.)
Sturgeon hopes to open the new complex in 18 months. If she succeeds, the Premier Gear & Machine Works Building will be one of the first office buildings in the city to find an alternative use. Portlanders have been clamoring for city leaders to turn vacant office buildings into much-needed housing, but most are impossible to repurpose because they don’t have enough windows to meet residential codes and often require earthquake retrofitting that is prohibitively expensive.
Sturgeon’s building has plenty of windows, and it’s been earthquake-proofed with massive steel struts. Units in the building will cost about $215,000 each to build, Sturgeon says. The average price for affordable units in Portland is $490,000, according to city estimates.
“Compared to what is out there, this is a bargain,” Sturgeon says.
In its new incarnation, Sturgeon doesn’t expect the Premier Gear & Machine Works to be profitable. “We’re not going to be making money on this,” she says. “There’s not a chance of that.”
Sturgeon needs another $22 million to hive the cavernous space into apartments. She plans to have everything from studios to three-bedrooms so clients can live with their families, if they have them. To get that cash, she’s talking to the city, county and state, and private funders.
“This is precisely the kind of idea that we’re looking for,” says Jillian Schoene, chief of staff to City Commissioner Carmen Rubio, who oversees the Portland Housing Bureau. “Commissioner Rubio has directed me to start looking for funding sources. We’re really excited about it.”
Crisis treatment and the lowest of low-income housing are new areas for Sturgeon’s company, Sturgeon Development Partners. Sturgeon is also chief executive of TMT Development, which is best known for building and operating the 27-story Fox Tower and the 30-story Park Avenue West Tower. Sturgeon’s grandfather, Tom Moyer, a professional boxer in the 1930s, founded the company in 1992. Sturgeon took the helm in 2003.
To help with the new venture, Sturgeon is partnering with Jackson House, a for-profit company that runs drug treatment and mental health centers in California. Its new Pacific Northwest region is run by Jim Sechrist, who joined in July from Telecare Corp., the Alameda, Calif.-based company that operates the crisis facility on Northeast Martin Luther King Boulevard.
The problem with crisis assessment and treatment centers, or CATCs, is that there is no reliable “back door” to a place where people can continue to get treatment once their acute episodes are over, Sechrist says. Many people end up back on the street.
“We said, ‘What if we built a CATC with a built-in back door?’” Sechrist says.
At the Premier Gear & Machine Works Building, that back door leads to temporary and permanent housing.
If she can pull it off, Sturgeon hopes the site will become a model for others. Plenty of buildings in Portland have the space. Just a block away stands Field Office, a brand-new 290,375-square-foot complex that defaulted on its $73.8 million loan in July and has found no buyer.