The Colony, in St. Johns, used to be a funeral home, then a New Age church. Dayna McErlean is reinventing it as a ... let’s see: 

The ballroom rents out for weddings, parties, whatever. Cooks can rent the kitchen by the hour. (“There’s huge need,” McErlean says. “There are so many food start-ups in Portland.”) Two stylishly retro suites serve as a miniature hostel. (“There’s nowhere to stay in St. Johns.”) A food cart will sell the Yakuza burger, the signature of the hipster izakaya McErlean cofounded in Northeast. 

McErlean bought the property last summer and transformed it—replacing weird rose-tinted glass in the ballroom windows, for example. She sees the Colony as a potential hub for St. Johns, where bright young businesses sit next to empty storefronts.  “I’m very drawn to ‘potential,’” she says, “which usually means ‘crappy.’ I love the shack everyone wants to tear down.” 

The 42-year-old grew up around the New York building trade—her father developed Staten Island housing from the ’60s to the ’90s—and spent postcollege years in Baltimore’s scrappy art scene. (“I was going to crazy parties in abandoned warehouses,” she recalls.) After moving to Portland in the mid-’90s, she rented 3,000 square feet off of NE Killingsworth Street for about $500 a month and turned it into Itisness.

What? Exactly. Itisness was a gallery, a performance space, sometimes a cinema, occasionally a speakeasy. For about two years, McErlean ran an organic grocery there. She also lived on-site; her landlord eventually pointed her toward a tumbledown premises for sale down the block. “It was disgusting,” she says. “Trash was piled four feet deep in the backyard. I thought, this is perfect.”

“Things that are pretty from the start don’t interest me.” —Dayna McErlean

She snagged the building, on NE 30th Avenue, for $147,000 in 1999. After toying with the idea of a Russian-style bathhouse, McErlean built a big bar and tiny kitchen, then showed the place to Micah Camden, a hustling cook she’d gotten to know. “After five minutes he said, ‘It’s a Japanese izakaya. Yakuza is the name.’”

Yakuza, opened in 2007, quickly begat Beast, Naomi Pomeroy’s acclaimed restaurant next door. McErlean and Camden launched DOC, a perennially good Italian kitchen, in rented space down the block. McErlean went on to set up Dash, a rent-by-the-hour commissary on NE 42ndAvenue. Next up: a residential project in Linnton, a Portland exclave on the way to Sauvie Island, designed by architect Jeff Kovel. 

All told, her enterprises now employ 55 people—testament to the fertile soil this entrepreneur finds on the city’s ragged edges.

Check out (or into) the Colony’s guest rooms with our Tripster slide show.