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ADDRESS: 1017 SW Washington St.
YEAR BUILT: 1907
SQUARE FOOTAGE: 44,524
MARKET VALUE: $1.6 million
OWNER: Talon Fliedner QOZB LLC
HOW LONG IT’S BEEN EMPTY: Since at least 2019
WHY IT’S EMPTY: A Seattle-area investor is fixing it up.
Most weeks, this column is all bad news and blight. This week appears to be different.
The West End Building, at the southeast corner of Southwest 10th Avenue and Washington Street, isn’t surrounded by chain-link fence because it became a haven for fentanyl users. It’s not in foreclosure or receivership, according to county records. It hasn’t been gutted by fire.
No, the West End is fenced because the owner, Bellevue, Wash.-based Talon Private Capital, is renovating it, says Talon co-founder William Pollard. “We’re just about finished with it,” Pollard says.
Talon is giving the West End a full seismic upgrade and restoring terra cotta accents added during an art deco remodel in the 1930s.
Construction is moving slowly, though. At midmorning Tuesday, there was no activity at the building, and no opening in the fence. Pollard says that’s because Talon is working in phases based on the availability of contractors. The next step is seismic work on the flooring.
“Once we finish the current scope of work, we will stop, take down the fencing and wait for market conditions to improve,” Pollard adds.
Talon isn’t doing all this out of the goodness of its heart. The neighborhood, home to Powell’s City of Books and the Ace Hotel, is going to become one of the most vibrant in the city, Pollard says. He has a very posh new neighbor: the brand-new Block 216 building, a 35-story glass tower with high-end office space and a Ritz-Carlton hotel.
And there’s more: The West End, which Talon has rechristened “10West,” is in an “opportunity zone.” Promoted by Napster founder Sean Parker, believe it or not, opportunity zones found their way into President Donald Trump’s Tax Cuts and Jobs Act, passed in 2017. That law created 8,764 little tax havens endowed with money-saving benefits meant to lure capital into struggling communities that big-money investors usually ignore.
In exchange for sinking cash into one of the zones, investors get a temporary deferral of taxes on capital gains on other investments. They get more breaks if they hold on to an opportunity zone project for five years, and even more at seven years. Keep it for more than 10 years, and in some cases investors pay no taxes on capital gains made in the zone, according to the Tax Policy Center.
Investors have gamed the system, says David Wessel, a senior fellow at the Brookings Institution. “Mr. Parker and allies apparently failed to appreciate the cleverness and aggressiveness of lawyers, accountants and money managers employed by the wealthy,” Wessel wrote in The New York Times in 2021. “They found myriad ways to exploit opportunity zones to reduce clients’ tax bills without much attention to those who live in the zones.”
Wessel name-checked Portland and the Ritz-Carlton as an example of an opportunity zone that birthed a luxury development in a relatively well-off community, rather than housing in, say, Erie, Penn. On the other hand, Wessel was writing before a spate of foreclosures made Portland a city of zombie buildings, surrounded by sidewalks littered with tinfoil for smoking fentanyl.
Pollard says Talon plans to keep 10West for a while. “We have a long view, and we own the property for cash,” he says. “We’re going to hold it for decades.”
Taking the long view with 10West is probably wise, beyond the tax advantages. Talon bought the building for $9.2 million in April 2019, when Portland was a hot alternative to a booming San Francisco for tech firms looking for hipster-friendly urban amenities. A year later, COVID-19 turned both cities into ghost towns.
But Pollard says he’s undaunted. “We’re big pro-Portland people.”
Every week, WW examines one mysteriously vacant property in the city of Portland, explains why it’s empty, and considers what might arrive there next. Send addresses to newstips@wweek.com.