In 1909, the Ladd Estate Company sold its Hazelfern Farm to the Laurelhurst Company for approximately $2 million. The name Laurelhurst was borrowed from a residential development in Seattle that Laurelhurst Company general managerPaul Murphy had recently completed. The name combined a reference to the laurel shrubbery near the Seattle development with the Old English hurst, denoting a wooded hill. The Laurelhurst Company platted a residential development of with the help of co-investor and landscape architectJohn Charles Olmsted. As the first houses were being built, the city purchased for $92,000 to construct Laurelhurst Park. Advertised as a "High Class Residence Park," the Laurelhurst Company placed numerous restrictions on the neighborhood. Similar to the Ladd's Addition development, the sale of alcohol was prohibited. Additionally, there were to be no apartments, hotels, motels, flats, stables, or commercial buildings, and no homes were to be sold to Chinese, Japanese, or African Americans. The Laurelhurst Neighborhood Association met as massive changes to Portland's transportation options were discussed in the 1970s, which led to the creation of TriMet MAX light rail in the 1980s. LNA and the community endorsed light rail being placed in the Banfield corridor, but was strongly opposed to alignment along the Burnside corridor, either a busway or light rail. 34 neighbors submitted a petition in 1978 objecting "to any parking, widening, or lane changes on East Burnside Street in the Laurelhurst area now or in the future', calling it "a serious threat" to the neighborhood, that it would lower property values, and be "a definite threat to our daily living pattern and destroy our neighborhood." The Portland-wide study noted a requirement to minimize projects "specifically in the Laurelhurst area".
In 1910, a racial covenant governing development of Laurelhurst mandated "...nor shall the same or any part thereof be in any manner used or occupied by Chinese, Japanese or negroes, except that persons of said races may be employed as servants by residents." A 1934 redlining map of Portland assigned the areas within current Laurelhurst boundaries with a blue grade, or "Still Desirable." Regarding the B19 tract, mapmakers noted "homogenous surroundings, improvements, and population" as among the neighborhood's favorable influences and called the subdivision's origins "a well conceived promotion, honestly administered"; regarding inhabitants, no foreign-born or Black inhabitants were reported.
