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An entity controlled by Menashe Properties, the company that oversaw the decay of Washington Center in downtown Portland, bought the building that shares the block at a bargain price, property records show.
LBJ Gill LLC paid $3.25 million for the newly refurbished, 90,000-square-foot J.K. Gill Building, records show, or about $36 a square foot. The building sold for $9.85 million, or $109 a square foot, in 2018. The previous owners defaulted in 2022 after remodeling the tower. It went to auction in November, but no one made a cash bid, so the lender took it over.
The building struggled to attract tenants in part because the neighboring Washington Center complex turned into a open-air fentanyl market during the pandemic. Menashe Properties fenced the complex but failed to maintain the barriers, allowing people to enter the building through broken windows in a vacant KeyBank branch.
Jordan Menashe, manager of LBJ Gill LLC and the son of Menashe Properties founder Barry Menashe, confirmed the sale to WW in a text message.
“Our purchase price [is] on the deed pal,” Menashe wrote. “No other comment to you.”
To put the bargain-basement sale price in context, the 10-story J.K. Gill Building sold for less than what a five-bedroom, 4,650-square-foot house in Lake Oswego is listed at: $4.2 million.
Conditions at Washington Center got so bad in April of last year that Portland police and fire crews blocked two square blocks around it and sent in teams to clear squatters. The complex has been boarded up since.
In the past, the Menashes have blamed the city for the state of Washington Center. Last year, when WW wrote about the decline of the property, Barry’s daughter Lauren Menashe answered questions by email. Her family’s firm planned to sell the building to a developer, but COVID-19 and Portland’s inclusionary zoning policies scared off buyers, she said at the time. Measure 110, which decriminalized the personal possession of some hard drugs, was “another dagger.”
Jordan Menashe moved to Dallas in 2022 shortly after complaining to the Portland Business Journal about seeing hypodermic needles and human excrement outside Washington Center.
Strangely, a family that has been critical of Portland and its woes has been doubling down on real estate here while others flee. Last September, Menashe Properties bought the 183,735-square-foot American Bank Building for $13.6 million, betting that enough people would return to the office post-COVID to make office investments pay off again.
“Our purchase of the iconic American Bank Building represents a strategic, synergistic investment that not only underscores our commitment to downtown Portland, but also our confidence in the resurgence of the office space sector,” Lauren Menashe said in a press release at the time.
That resurgence has yet to arrive. Today, real estate firm Colliers said that occupancy in the greater Portland office market fell for the 17th consecutive quarter as tenants gave back more than 628,000 square feet in the second quarter ending June 30, “marking the worst start to a year during the current market cycle.”
The vacancy rate in Portland metro area rose to a record high 23.4%, Colliers said. The Central Business District fared far worse, rising past 33% for the first time ever, Colliers said in the quarterly report.
There were some signs of life in the second quarter, Colliers said. Leasing activity rose in the metro area, just not enough to offset all the new vacancies. The total square footage of leases signed in the quarter rose 4% compared with the same period in 2023. And for the first time in six quarters, leasing activity downtown outpaced activity in the suburbs, which fared much better after riots and the pandemic scared tenants from downtown.
“That’s a good green shoot,” Colliers analyst Jamison Shields said. “It’s a positive sign.”