Portland's South Waterfront feels the pains of a slowing condo market.

Share story

PORTLAND — A year ago, Tyler Treharne fell for Portland’s South Waterfront district — billed as the biggest economic development effort in city history.

The 26-year-old pharmacy student liked the futuristic John Ross tower and streetcar link to downtown. But even Treharne, an optimist on South Waterfront, recognizes the neighborhood’s challenges.

The riverfront park is half-built. The stores and pubs have been slow to arrive. Treharne’s floor is dead quiet as some neighboring condos sit unsold in the housing downturn.

“It’s going to take some time for it to develop and for people to catch up,” he said.

When South Waterfront started five years ago, skeptics wondered whether Portland had enough people interested in the condo life to support a batch of 300-foot-tall towers.

At first, Williams & Dame Development and its partner, Gerding Edlen Development, found plenty of willing buyers.

Their first project, the Meriwether, averaged about 20 sales a month and sold out in 2006 — twice as fast as developers expected. Some buyers found South Waterfront provided a quick payoff: one turned a 34 percent profit, $308,000, in just over a year.

Buyers buzzed for the second tower, the John Ross. About 225 people put money down to reserve a condo in 2005, spurring developers to speed up plans for their third and fourth towers.

Then the condo market deflated.

Seventy-seven people asked to get out of their John Ross purchase. Since last fall, the developers have added just 12 new sales for a total of 182, still below the 2005 rush of pre-sales.

“It started out like a house on fire,” said Irving Levin, who runs a Beaverton finance company and invested in South Waterfront land holdings controlled by Williams & Dame’s principals. “Then the curtain came down in the condo market in general. Like a lot of developers, they were stuck with a lot of inventory.”

Since last June, 11 of South Waterfront’s 481 buyers — or about 2 percent — have defaulted on their mortgages, the first step in a foreclosure. By comparison, about 0.9 percent of all Oregonians had a mortgage in foreclosure in the first quarter of 2008.