Owner of Industrial-Chic Office Building in Slabtown Aims to Turn Mental Health Crisis Center, With Housing

When Portland developer Vanessa Sturgeon bought an old gear factory for $6.8 million, she envisioned an office building with all the amenities that attracted hipster employees back then: exposed beams made of wood, polished concrete, expansive windows, and a roof deck.

He spent $18 million gutting and rebuilding the Premier Gear & Machine Works Building on Northwest 17th Avenue at Thurman Street. It opened in April 2020, when the COVID-19 lockdown began. Tech companies that have flocked to Portland from Seattle and San Francisco have sent most if not all of their employees home, avoiding the need for office space, anywhere.

Sturgeon suddenly had a trophy property that nobody wanted to win. Now, after three years of paying for care in an empty building, he’s turning around to meet demand from other clients: people suffering from mental health crises, often drug-induced.

If Sturgeon has her way, a building where tech bros can tap out marketing copy on laptops while sipping matcha will become a 16-bed crisis assessment and treatment center (a business term of art) that attached to 80 housing units, 50 of them permanent. It will have doctors, nurses, counselors and intake specialists on staff 24/7.

We went to Multnomah County and asked, What is your greatest need? said Sturgeon.

The county has only one crisis center now, with 16 beds on Northeast Martin Luther King Boulevard, but it has no place to house people after their stay. (Sixteen is the magic number for beds in these facilities because operators cannot bill Medicaid if they have more.)

Sturgeon expects to open the new complex within 18 months. If he succeeds, the Premier Gear & Machine Works Building will be one of the first office buildings in the city to find an alternative use. Portlanders are clamoring for city leaders to turn vacant office buildings into much-needed housing, but most are impossible to repurpose because they don’t have enough windows to meet residential codes and often require renovation. Earthquake retrofits are very expensive.

The Sturgeon building has many windows, and it is earthquake-proof with large steel struts. The units in the building cost about $215,000 each to build, Sturgeon said. The average price for affordable units in Portland is $490,000, according to city estimates.

Compared to what’s out there, it’s a bargain, Sturgeon said.

In its new incarnation, Sturgeon didn’t expect Premier Gear & Machine Works to turn a profit. No money here, he said. There is no chance of that.

Sturgeon needs another $22 million to put the cavernous space into apartments. He plans to have everything from studios to three-bedrooms so clients can live with their families, if they have one. To get the money, he’s talking to the city, county and state, and private funders.

It’s exactly the kind of idea that’s being sought after, said Jillian Schoene, chief of staff to City Commissioner Carmen Rubio, who oversees the Portland Housing Bureau. Commissioner Rubio directed me to begin looking for funding sources. Really excited about it.

Crisis treatment and low-income housing are new areas for the Sturgeons’ company, Sturgeon Development Partners. Sturgeon is also chief executive of TMT Development, known for developing and operating the 27-story Fox Tower and the 30-story Park Avenue West Tower. Sturgeon’s grandfather, Tom Moyer, a professional boxer in the 1930s, founded the company in 1992. Sturgeon took over in 2003.

To help with the new venture, Sturgeon is partnering with Jackson House, a for-profit company that operates drug treatment and mental health centers in California. The new Pacific Northwest region is managed by Jim Sechrist, who joined in July from Telecare Corp., the Alameda, Calif.-based company that operates the crisis facility on Northeast Martin Luther King Boulevard.

The problem with crisis assessment and treatment centers, or CATCs, is that there is no reliable back door to a place where people can continue to seek treatment once their acute episodes are over, Sechrist said. Many people end up back on the street.

We said, What if we built a CATC with a built-in back door? Sechrist said.

In the Premier Gear & Machine Works Building, the back door leads to temporary and permanent housing.

If she can do it, Sturgeon hopes the site will become a model for others. Many buildings in Portland have space. Just a block away is the Field Office, a new 290,375-square-foot complex that defaulted on its $73.8 million loan in July and found no buyer.

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