With a population of 2.2 million, Portland is the 28th largest metropolitan area in the country, the fourth largest city on the West Coast and the largest city in Oregon. Sportswear and equipment businesses Nike, Adidas-America and Columbia Sportswear are all headquartered in Oregon. National publications often cite the Portland area for its coolness factor. In 2009, Men’s Journal named Portland the third “Best Beer Town in the U.S.,” the Wall Street Journal dubbed it the fourth best “Youth Magnet City” and it was third in the Forbes annual list of safest major cities.
Unfortunately, it’s not all positive news for the area. Oregon has the fourth highest statewide unemployment rate in the country. During the past year, Oregon has lost 100,000 jobs, and the unemployment rate is now holding steady at 11.5 percent.
However, for the real estate sector, the state had the foresight to have well thought out land-use planning laws, and this has benefited the region in these tough times. In the early 1970s, Governor Tom McCall commissioned a study on the future of the Willamette Valley, whose farms and forests were being threatened by a wave of new growth and poorly planned development. Knowing that Oregon’s natural beauty and quality of life were endangered, the study explored the imminent issues and choices confronting the state. The results led to a groundbreaking statewide land-use planning system. It is the foundation of ongoing visionary planning efforts across Oregon, and the sustainability efforts that guide and motivate growth.
This forethought has reduced overdevelopment in the area, so even in this economy, the Portland market is certainly not as bad as other parts of the country. In fact, activity is starting to pick up in the area. The regional retail real market has slowed along with the local and national economy, but overall vacancy rates remain fairly healthy.
The suburban submarkets have been affected by the bankruptcies of Joe's Sports & Outdoors, Linens 'n Things and Circuit City, to name a few. Those exits in the market left 55 empty big box stores with nearly 2.3 million square feet of space throughout the state, bumping the average vacancy rates in the Portland area to 8 percent. Dick's Sporting Goods has seized this opportunity and has already leased four stores totaling 232,811 square feet in Portland. Both Dollar Tree and PetsMart also opened three stores in the Portland area. Chipotle opened two fast casual restaurants and continues to look for other sites.
Portland will continue to attract young, educated people to the area. When the economy turns and employment expands, the population will grow. Currently, Portland is not developing any more real estate and is restricting future retail development. That means, for retailers, now is the time to get into the Portland real estate market and take advantage of high levels of inventory and reasonable rental rates.
— Mark New is an X Team International partner and co-owner of New & Neville Real Estate Services in Portland.