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PORTLAND, OR-The Federal Reserve Bank of San Francisco has sold its vacant Downtown office property here for $12.5 million. The new owner is locally based Harsch Investment Properties. The sale closed Friday and already potential users are jockeying for position.

Built in 1950 for the Federal Reserve, the Pietro Belluschi-designed trapezoidal building has four floors above grade, each about 14,100 sf, and two windowless floors below grade, one 20,600 sf and the other 11,000 sf, which have been used for parking and storage. The building boasts 20-foot ceilings on the ground floor, a cafeteria and kitchen, fitness center with locker rooms and showers, and a firing range.

Located at the corner of SW 9th Avenue and Stark Street, the building sits on the city’s streetcar line one block north of the popular tourist attraction Powell’s Books and the new Brewery Blocks development on the edge of the city’s trendy Pearl District. Two blocks to its west is Broadway, the main drag through Downtown.

Harsch VP Steve Roselli tells GlobeSt.com there has already been substantial interest in the well-located marble-clad building from both office users and hotel operators. Then there’s the development opportunity. Although one of the below-grade floors covers about half the one-acre site, the building covers about one-quarter of the site. The excess land, currently a surface parking lot, could hold approximately 300,000 sf of development in a 270-foot-tall structure, based on its current zoning.

“More than a half dozen office users have shown interest,” says Roselli, “And there’s now up to five different hotel groups interested.”

Roselli says if it ends up selling the building to a hotel operator, which is by no means a sure thing given the strong interest from office users as well, they would sell the building and the land it sits on while retaining the remained of the property for future development, which could include street-level retail topped by office or residential.

Rich Sabel of CB Richard Ellis had the disposition assignment. Sabel told GlobeSt.com in February, for an article about the building coming to market, that the base asking price for the property was $8.5 million, which compared to a tax-assessed value of about $14 million. The interior is built out with a cafeteria, conference rooms, and a bank-like lobby that used to be off the building’s main entrance until the entrance was moved in the aftermath of Sept. 11. “They’ve put a ton of money into that building since the attack,” one local office broker told GlobeSt.com.

Harsch president/CEO Jordan Schnitzer was traveling Monday and could not be reached for comment. “This is one of those rare opportunities to purchase a piece of Portland history in a great location,” he said in a prepared statement. “The Federal Reserve Building is an architectural jewel which lends itself to redevelopment… .”The Federal Reserve announced plans to relocate its local branch into leased space in September 2005. Since that time, in accordance with previously announced Federal Reserve System consolidations and changes, check operations were moved to Seattle, all Portland vault cash was moved to the Federal Reserve Bank’s Seattle branch, and Portland’s cash processing operations were consolidated into the Seattle branch as well. Depository institutions in the Portland zone now are being serviced through new Federal Reserve business models that employ offsite check relay systems and a secure offsite cash depot. The new local home of the Federal Reserve is 1500 SW First Ave.

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