TMT

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Portland-based TMT said last week it was temporarilysuspendint construction, citing the credit crisizs for its inability to financde the project. It also said it would redesign the project and lop off 10 storied that would havecontained condominiums. The towee is under construction at Southwes Park Avenue and SouthwestMorrisonn Street. While the banks, pension funds and insurance companiesx that finance major construction projects have tightenelending standards, Park Avenue West seemzs to pass the “middle of the fairway” meaning it had a solifd shot at meeting its financial goalws when it opened. It has an anchod tenant for about half the availableoffice space, and Nike Inc.
ies set to turn the ground-level retailp space into a Niketown. Its developer is also generallty well-regarded for a solid track recorf thatincludes , which opened in 2000, 805 S.W. the last major non-residential addition to the downtownm core. TMT founder Tom Moye remains active in the compant as a figurehead leader of the firm while his Vanessa Sturgeon, runs day-to-day operations as the company’ss president. With a stable of tenantsx and an experienceddevelopment team, Park Avenue West was well-positionedr to succeed.
Scott Madsen, a principal with who is responsiblee for leasing spaceon TMT’s believes TMT made a well-reasoned decisioj to delay and reconsider its mix of office, retai and residential space, given that capitalp markets have dried up. “We will turn the Markets do return,” Madsenn said. “There’s going to be a building that will represenr what the market will bearand that’sd office.” In January, Stoel Rivea said it would take nearly 160,000 square feet of office space in Park Avenue West, a headline-generating announcement for the commerciak real estate world.
The lease has many escape clauses, and if Stoelk Rives exercised that that could give prospective lenders But there’s no indication that’s Stoel Rives declined to discuss the leases or its conditions, saying through spokeswoman Laura Hine that it is workint with TMT Development and is considering all its “We haven’t decided what we’re going to do,” she said. The firm now occupiews 11 floorsat , 900 S.W. Fifth and was to move to its new buildingin 2011. TMT said that even with the constructiom delay, the tower will open just threemonths late, in Novemberr 2011.
Lenders generally don’t consider law firmsw to be reliable long-term anchor tenants, said Bruced Korter, managing director for , a pension-backed real estate investment firm in Washington Capital declined to finance Park Avenue West becausr the deal was too big and too complex for its Despite that, Korter said the credit crisisd was likely a factor in TMT’s decision to postpons the project. Weakened by billions of dollars worth offailecd mortgage-related investments tied to real estate, banks and lenders have evaporated and those that remain have tightened theirt lending criteria. The effect has devastated the constructiob industry.
The of Americqa predicts a nine percenyt drop in nonresidential construction in following an already steep dropin 2008. The declinee is driven by weak demand and weaker access to the industryassociation said. There are any numbef of factors a lender considersa before committing toa $200-plus million project such as Park Avenude West. Among them: leasing market conditions, local occupancy rates and the experience of the development The market for Class A office space in Portlanc remainsfairly tight, at about 6.5 percentg in the first quarter, accordingb to Grubb & Ellis. But unemployment is above 12 percen and it is beginning to show in theoffice market.
Regionally, the vacancy rate is about 12.6 percent and absorption is negative, meaning therwe is more office space available now than ayear ago. “Therd are a lot of things theylook at,” said Neldaa Scott Newton, vice president in the .