January 15, 2003 - Portland Business Journal: Gabon RPCV Kevin Cavenaugh succeeds as Real Estate Developer in Portland Oregon

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Gabon RPCV Kevin Cavenaugh succeeds as Real Estate Developer in Portland Oregon

Read and comment on this story from the Portland Business Journal on Gabon RPCV Kevin Cavenaugh who is succeeding as a Real Estate Developer in Portland Oregon at:

Developer succeeds with don't-lose-money focus*

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Developer succeeds with don't-lose-money focus

Heidi J. Stout Business Journal Staff Writer

An architect's most feared phrase is "value engineering."

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Most aptly defined, it calls on architects to cut costs by eliminating a building's most interesting attributes. If a building design pencils out to be $500,000 over budget, the client isn't likely to cut a wing from the building—they're more likely to downgrade their choice of windows or other architectural components, substituting something cheaper and usually less attractive.

It's the kind of situation that made designer Kevin Cavenaugh pull out his hair.

"I'm crazy about windows," Cavenaugh said. "Right now I'm into these steel-framed warehouse windows. They're pricey as hell, but they look so good."

Enter Cavenaugh the developer—a 35-year-old former Peace Corps volunteer in Gabon, with an architecture degree from University of California at Berkeley and a simple and seemingly naïve development mission: Not losing money.

"There's a perception that you have to have an Armani suit to be a developer—you have to have a big war chest to even get started," said Cavenaugh, who has holes in his jeans and hair that sticks up in several directions. "But anyone can do it. There's no magic in it. And now that I'm doing it, I'm getting calls from other architects who want to do this, too."

When Cavenaugh started developing commercial buildings after a decade of fixing up and renting out houses, he admits he had to use "a lot of smoke and mirrors" to initiate his first project. The Box and One Lofts on Southeast 28th Avenue and Ankeny Street, won great acclaim for its design, featuring garage door-style roll-up windows.

The project was so successful as apartments that Cavenaugh was able to refinance it and hold onto the building, instead of selling the residential units as condominiums as he'd originally planned.

Cavenaugh's most recent project is Ode to Rose's, a 5,500-square-foot mixed-use building at 4440 N.E. Fremont St. The new restaurant Fife opened last month on the ground floor, while an office cooperative called TENpod operates upstairs. Cavenaugh's own desk is upstairs, and he also works part time with the downtown design and planning firm Fletcher Farr Ayotte.

Cavenaugh started his learning curve by taking developers to lunch and picking their brains for information.

"They thought it was kind of cute, that I was trying to do this," Cavenaugh said. "For quite a while, I was flying under most developers' radar." But since Cavenaugh's successful completion of two small-scale, mixed-use urban infill projects—doing both at once was "just stupid," he admits—he is proud to debunk the myth that this type of project is not profitable.

Cavenaugh is also proving that urban infill doesn't have to be boring. He purchased the former site of Rose's Drive-in restaurant because it was just two blocks from his home, and Cavenaugh wanted to be sure that he had some say over what went into the neighborhood—he didn't want to see a convenience store or fast food chain to suck the character out of the street.

His tastes dictated a unique sense of style, including public art, a parking lot full of signs with poetic words on them, and a lacquered, butterscotch-colored wood exterior.

"I have no idea if this siding will work," Cavenaugh admitted. It's just sanded and stained plywood, but the stain is the same stuff Norwegian fishermen use on their boats, so chances are the product will stand up to the demands of Northwest weather.

"There's nothing really exotic about the actual pieces of my buildings, like garage doors or concrete blocks. It's how you assemble the pieces—you don't have to be boring." Cavenaugh said many people jump to blame the architect for a bland building, but in many cases, a designer's hands are tied by the client.

Ode to Rose's was also certified by the U.S. Green Building Council, earning a silver LEED designation and operating 41 percent more energy-efficiently than similar structures. Cavenaugh said he found it easy to integrate energy-saving aspects into the design.

Cavenaugh's tastes also dictate his tenant mix. Although local chef Marco Shaw was the fifth business owner to approach Cavenaugh with interest in renting the ground-floor retail space, and he planned to create a brand-new restaurant, Cavenaugh took a chance on him.

"My goal was not to make a bunch of money, but to create an interesting building with a good tenant mix," Cavenaugh said. "I don't want to be thought of as a developer first and an architect second."

Cavenaugh grew up in the Bay area and his first real estate investment was a $50,000 house "in the 'hood" in Sacramento. He bought it because he doesn't believe in renting and he couldn't afford to buy a home in San Francisco. He sold it 12 years later for just $49,000—and along the way, he realized that land-use and zoning policies in the Bay area do not encourage redevelopment of the central city.

Portland, on the other hand, is perfect for the kind of urban renaissance Cavenaugh wants to create. He says he's in love with North Mississippi Avenue, Brooklyn and lower Division in Southeast Portland, Albina, East Burnside near the Willamette River, and pockets of North Interstate Avenue, particularly Kenton, where the older architectural stock has not been "screwed up" by modern development.

"I love the east side because it is made up of a patchwork of little villages that are sewn together," Cavenaugh said. "I also love the proximity to downtown."

Despite the attention his projects have received, including design excellence awards and media coverage, Cavenaugh remains a bit shy.

"I'm not used to all this attention," he said. "I'm still on the low rungs of the architectural and development ladders, and I don't think I can ever be a big developer. My brain can't fit around a project that big. People assume I'm going to be one of the 'big boys' one day, and while it's flattering, I'm still focused on the small stuff."

But Cavenaugh's projects have prompted developers such as Mark Edlen and John Carroll to seek his input. He was also hired by Sockeye Development to work on an eastside urban infill project.

This interest prompted someone to ask, "Aren't you afraid of the big guys coming in and stealing your next project?" Cavenaugh related. "But I didn't even think of the possible conflict. There's so much potential out there, I'd rather they come in and be my neighbors."

Cavenaugh can call big developers neighbor in North Macadam, where he owns one city block. But he has no plans for a single-building skyscraper on that block.

"I've tried to design big buildings—I just can't," Cavenaugh added. "No one's forced to be creative when they have a flat 200-square-foot parcel. What I really want to do is design a small building that's on just part of the block, and on the rest of the block, force designers to be creative."

© 2003 American City Business Journals Inc.

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