Oregonian: Tech Firms Flock to City's Core

By Jonathan Brinkman

It turns out that empty-nesters with excess discretionary income are not the only ones who gravitate to Portland's urban core.  To attract top talent, software companies are briskly filling large, open spaces in older downtown Portland buildings with fresh faces, ideas and energy.

In the past two years, dozens of software companies have taken root or expanded in downtown. Some have kept adding space in the district even amid worries of a broad economic slowdown. The trend has
gradually given downtown a burgeoning tract of the tech scene, traditionally concentrated in Portland's western suburbs.

Two crucial factors are driving the trend: Software companies -- particularly those focusing on social networking, online advertising and finance -- are thriving. And a hip office in a central location can be a
competitive edge in attracting top-notch staff.  "Software companies have always tended to go toward these types of creative spaces, but this is now a fullgrown phenomenon," said Harvey Mathews, executive director of the Software Association of Oregon. "I get calls from people from all over the place, and all of them want this Old Town, downtown, brick funky
space."

The spate of downtown activity also supports the recent conclusion of new economic development group Greenlight Greater Portland, which lists the software industry among the metro area's most promising job  engines.
The biggest recent deal came in February, when Jive Software announced it was taking three floors and 38,000 square feet of the vacant former Federal Reserve building at Southwest Ninth Avenue and Stark
Street. The move is slated for this summer.  Jive, formed in 2001 in New York City, came to Portland in 2004. It has 145 employees at its current
location at Southwest Third Avenue and Alder Street.

The new building "has the potential for a lot of creativity," said Dave Hersh, Jive's chief executive. "We would kill the company in one fell swoop if we tried to move out to the suburbs."

Among other software companies expanding in Portland:

• Galois Inc., specializing in computer security, is moving July 1 from a 12,000-square-foot space in Beaverton to a 19,000-square-foot space at 421 S.W. Sixth Avenue.
• PreCash Inc., a Houston financial software company, moved its 40-person technology team from a 17,000-square-foot space on Southwest Broadway to a 20,000-square-foot office in the same building that Galois is moving into, called the Commonwealth Building.
• An e-mail marketing software and Web company, eROI, moved Dec. 1 from a 6,200-square-foot-space inthe Albers Mill building at the west end of the Broadway bridge to a 10,000-square-foot spot in a renovated building on Northwest Fifth Avenue in Old Town.  It plans to pick up an additional 7,500 square feet in the building early next year.

"This is a very important evolving industry," said Sandra McDonough, chief executive of the Portland Business Alliance, the city's chamber of commerce. "For them to see the central city as the place they want
to be is great for Portland."

The state's tech bubble burst in 2001, and it's only been in recent years that the industry has gained new steam. Statewide employment in the software industry grew by 16 percent from 2004 to 2006, the most
recent year for which data is available.

Chris Elsenbach, a managing principle for corporate real estate adviser CresaPartners, said that's partly due to the tech bust survivors.
"Software firms struggled through 2002, 2003, 2004, but the good firms are coming out of that," he said. "The companies that survived the tech downturn are now profitable. They are selling their products, making
money, adding desks."

The hard part is getting good employees to fill those desks, said Joe Cortright, a Portland economist who co-wrote "The Young and the Restless," a study of the so-called creative class.

"The chief asset of a software company is the talent it attracts," he said. Being centrally located -- easy to get to by public transportation -- and having coffee shops, good restaurants and cultural amenities nearby
help attract creative young workers, he said.

That's what convinced Jay Haladay, owner and chief executive of Coaxis Inc., to move last April from Tigard into a 50,000-square-foot space in a converted warehouse in inner Southeast Portland.  "I wanted to create a recruiting magnet," he said of the LEED-certified building at 1515 S.E. Water St. he helped develop. "Being downtown lends itself to the kind of people we're looking to attract."

Jill Bruhn, a Web developer at eROI, lives by the Lloyd Center -- just across the Willamette River from work.  She moved from Ashland six months ago.
"I moved here to work in a company like this in the city center," she said. "I didn't want to work in the suburbs. This is kind of the lifestyle I want."

Jonathan Brinckman: 503-221-8190; jbrinckman@news.oregonian.com
©2008 The Oregonian

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