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PORTLAND-Venerable Properties has pre-leased 52% of the Telegram Building, kick-starting a multi-million renovation of the landmark property at Southwest 11th and Washington Street in Downtown Portland.

Topped by a clock tower and listed on the National Register of Historic Places, the Georgian Revival-style, three-story brick building was built in 1922 for lease to the Portland Telegram, the City’s evening daily newspaper at the time. The building and the rest of the block are owned by the Nathan Family, which hired Portland-based Venerable Properties in early 2001 to execute the renovation and lease up.

To secure financing for the $8 million project, however, Venerable needed a tenant to commit to at least 50% of the building. They landed it last month, when the owner of the Nelson’s Nautilus health club currently in the basement of the Governor Hotel signed a 17,500-sf 10-year lease that commences next spring for the first two floors of the building.

Venerable’s President Art DeMuro tells GlobeSt.com there is currently 23,800 sf of rentable space in the building, but as a result of the renovation that figure will increase to 33,333 sf with the addition of a mezzanine level on the first floor, which has a 17-foot ceiling, and a new penthouse office space atop the building. The basement level, which has a 19-foot ceiling, will be converted into two levels of underground parking that will hold 51 vehicles. As well, the current main entrance into the building, at the corner of Southwest 11th Avenue and Washington Street, will become the entrance to the health club, and a new main entrance to the building’s upper floors will be recreated further down 11th Avenue. Otherwise, the exterior of the building will be kept in tact and refurbished.

Nelson’s Nautilus, which will open with a new name and tag line — Abstract: Portland’s Unique Fitness Experience — will be paying a triple-net lease rate of around $19 per sf following several months of free rent, according to local brokers familiar with the deal. Local Broker Coby Holley of Insignia/ESG represented Nelson’s in the transaction. Holley declined to confirm the lease details for GlobeSt.com, but did say that Nelson’s is moving in order to increase visibility and expand membership.

Health club owners Myron Nelson, Jeff Turner and Greg Diamond took on its current basement location in 2001 when it acquired the Princeton Athletic Club business former owners Lee Morris and Jeff Marlow and assumed their lease, which had two years remaining. Instead of exercising a 10-year lease extension option, Holley says the threesome has negotiated an extension that will keep Nelson’s in the building until the new space is ready next spring, giving them plenty of time for pre-sales. Nelson owns seven health clubs in the region.

The Nathan family also owns the entire block that includes the Telegram Building, including the Mark Spencer Hotel, the Washington Plaza Apartments and a two-story commercial building. The Nathans completed upgrades to the hotel and the apartment complex in the 1990s. The two-story commercial building has the potential to be built up by several stories when the time is right, says DeMuro.

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