A major redevelopment project in Portland’s Northwest Industrial District is edging closer to reality, with the Port of Portland preparing to transform its largely vacant Terminal 2 marine terminal into a mass timber research and manufacturing campus. Once used to ship Oregon’s wood and steel, the 39-acre site will soon anchor efforts to advance sustainable building methods, support housing affordability, and revitalize Oregon’s timber economy.

The first stage of the project includes at least $15 million in soil stabilization work in 2026, laying the foundation for construction to begin. Phase one is expected to finish by 2028, creating about 366 new jobs and anchoring partnerships between international industry leaders, local universities, and small businesses.

But challenges remain. The Port of Portland estimates a $20 million to $25 million funding gap for phase two, driven by more complex soil stabilization needs at another section of the site. The uncertainty raises questions about when the second phase will be completed.

Key Tenants Driving the Project

The site is slated to host Zaugg Timber Solutions, a Swiss company that entered Oregon in 2023. The company plans to build a 100,000-square-foot manufacturing facility capable of producing prefabricated mass timber homes and buildings. Once fully operational, Zaugg expects to produce about 700 homes each year, dramatically cutting construction timelines by shipping pre-assembled components directly to job sites.

The company anticipates employing 60 Oregon-based workers, while another 180 employees remain in Switzerland on separate projects.

Another anchor tenant, the University of Oregon, will establish an advanced acoustic testing lab to evaluate how mass timber performs in reducing sound transmission between buildings. The lab will also help certify products to meet international building code standards—something currently only available at facilities in the eastern United States.

“What we’re trying to do,” said Mark Fretz, assistant professor at the University of Oregon, “is have the capability here to be able to innovate in those assemblies, make them lower carbon, lower cost and high performing by having that facility here.”

Small Business Innovation

In addition to its large tenants, the campus will also feature a small business incubator. One early participant, Single Widget, is experimenting with fire-resistant walls made from cement and wood-wool, designed for use in single-family homes. Founder Emily Dawson explained that her company is still in the research and development phase.

“We’re developing something that doesn’t have any code recognition yet,” Dawson said. “So the process of bringing a product like that to market is a lot of testing, process, development.”

Public Investment and Support

So far, the project has received nearly $37 million in public investment, primarily through a 2022 U.S. Economic Development Administration grant awarded to the Oregon Mass Timber Coalition. Federal backing has been critical to moving the project forward, and local leaders are lobbying for continued support.

At a recent site visit, U.S. Rep. Suzanne Bonamici, D-Oregon, praised the initiative’s potential while acknowledging the funding challenges.

“Whether it be research dollars or economic development dollars, housing dollars,” Bonamici said, “it makes a difference to our communities to have more sustainable, affordable housing.”

Bonamici also warned that looming federal research budget cuts, particularly to agencies like the National Science Foundation, could threaten momentum. Still, she emphasized her commitment:

“But at the same time, when we have projects like this that are improving the opportunity for people to have more affordable housing in a sustainable way, that is something I’m going to fight for.”

Mass Timber’s Promise—and Debate

Mass timber, a material made by layering and compressing wood to form structural components, has been heralded as a sustainable alternative to concrete and steel. Advocates highlight its potential to store carbon, strengthen Oregon’s struggling timber industry, and reduce housing costs by cutting construction timelines.

Critics, however, argue that large-scale timber harvesting raises environmental concerns, pointing out that logging is not inherently carbon-neutral.

Still, with global demand for sustainable building materials rising, Oregon’s investment in mass timber could establish Portland as a national hub for research, manufacturing, and workforce development in the sector.

Originally reported by Tristin Hoffman in Oregon Live.