Five years ago, Royal Caribbean turned out the lights and locked the doors at its Springfield call center, after laying off all the facility’s hundreds of workers. The distinctive 160,000-square-foot Gateway-area building has sat dark ever since.
It’s the biggest empty office building in Lane County. Given the vibrant economy, the five-year-vacancy is remarkable.
Who owns this real estate, so visible from Interstate 5? Why is it empty? Read on for answers.
But first, an executive for the owners tells Eugene Weekly to expect news on the building by January. “We’re working on something that will have positive re-use of that property,” says Jon F. Hanson, chairman of New Jersey-based Hampshire Real Estate Companies. He won’t elaborate much.
From the freeway, look east to glimpse the building, set amid acres of empty parking where weeds compete with untended shrubs.
Two decades ago, Miami-based Royal Caribbean wanted a West Coast office to handle cruise bookings. This was before low-cost foreign call centers and computer-assisted booking gutted the U.S. call center employment. The company picked Springfield. Local officials were euphoric.
Royal Caribbean didn’t want to own the building. Instead, a developer built it to Royal Caribbean’s finicky specs and in 2006 leased it to Royal Caribbean for 20 years at a very high lease rate. Then, in 2008, the developer sold the building — with its binding lease — to Hampshire.
Hampshire remains the owner, although it has tried to sell it. Royal Caribbean continues to pay the rent, says Hanson. Royal Caribbean is locked into the lease until 2026 and the rent now likely exceeds an eye-watering $4 million a year, court records indicate. So keeping it empty hasn’t hurt Hampshire. But with the lease nearing its end, Hanson says he is exploring options. “We’re in dialogue for a future use of the property,” he says. Miami-based Royal Caribbean did not respond to emails from EW.
The building is a standout, with LEED-Gold energy certification, a cafeteria and a gym. “The … property includes unique features designed to evoke a cruise ship, such as a mast over the entryway, spiral interior staircases, and a waved barrel-vaulted roof,” an Oregon Tax Court judge wrote in his 2017 decision on the property’s market value.
In 2008, Hampshire paid $47 million for the building and its 21 acres. Key to the deal was the lease, which has an annual rent escalation clause, plus requirements that Royal Caribbean pay the property taxes insurance, maintenance and utilities. The court decision quoted a real estate expert saying the rent was “considerably higher than what is achievable in the marketplace.”
In that lawsuit, Hampshire and Royal Caribbean tried to get Lane County to set a low market value on the building — $18 million — in order to cut the property taxes. The county argued the market value was $42 million. The judge decided on $35 million.
A potential buyer had offered to buy the property in 2015 for $56 million, but only if Royal Caribbean extended the lease beyond 2026, the court decision said. Royal Caribbean refused. The deal fell through.
Then Royal Caribbean vacated the place. Now, the county puts the property’s market value at just $12 million. Royal Caribbean continues to pay the property tax tab, $223,000 this year.
This financial albatross doesn’t merit even a mention in publicly traded Royal Caribbean’s financial filings. With 29 cruise ships and 100,000 employees, the company reported a profit of $1.7 billion on revenue of $14 billion in 2023. Compared to that, what’s $4 million in rent on an empty building?
Student High-Rise Update
The footprint for the proposed 15-story student apartment building at 13th Avenue and Alder Street in Eugene has changed, according to filings by the developer, CRG Real Estate Solutions of Chicago.
Eugene Weekly, using documents the developer filed with the city in October, reported on Dec. 5 that the footprint would cover the properties now occupied by Dave’s Hot Chicken, Jersey Mike’s and the Espresso Roma cafe, plus the empty storefront on Alder that once housed the Maple Garden Restaurant.
But in documents obtained by EW after that article ran, CRG outlines a new footprint. It still includes the cafe spot and the empty Chinese restaurant. But it drops the Dave’s/Jersey Mike’s building from the footprint and adds a three-story apartment building at 1251 Alder St., immediately north of the empty restaurant building. The new filings show the apartment tower as an L shape around the Dave’s/Jersey Mike’s building. All the buildings in question are owned by various real estate investors.Bricks and Mortar is a column anchored by Christian Wihtol, who worked as an editor and writer at The Register-Guard in Eugene 1990-2018, much of the time focused on real estate, economic development and business. Reach him at Christian@EugeneWeekly.com.