What trends do you see presently in retail development in your area?
Developers continue to move forward on projects in which they have an anchor tenant and financing. Land and construction costs have risen to a point where the rents developers need aren’t feasible to tenants, thus putting the project on hold.
What type of retail product is doing well in your area?
Regional malls and our two lifestyle centers continue to perform very well.
What retailers are new to your area?
Dick’s Sporting Goods, Famous Dave’s, LA Boxing, and over a dozen new tenants to our area that are currently in negotiations with landlords.
Who are the active retail developers in your area?
Center Cal, CE John and Company, Gramor Development and Opus NW are the most prominent players right now.
Please name one or two significant retail developments in your area. What impact will these projects have on the market?
Cascade Station was recently completed located next to Portland International Airport, on the east side of Portland near the border of Oregon and Washington. This project’s success was banked on the fact that customers who don’t want to pay a Washington State sales tax will cross the Columbia River into Oregon’s sales tax free state to purchase products from tenants like IKEA, Best Buy, Golf Smith and Sports Authority. The project was developed by Center Cal Properties and has a total gross leaseable area of 375,000 square feet. It accommodates both large and smaller tenants.
C.E. John Co. is moving forward on the much-anticipated Cedar Hills Crossing Phase II, which is slated to begin construction this year in Beaverton. C.E. John plans to demolish about 110,000 square feet of buildings on the 12.2-acre property and replace them with roughly 128,500 square feet. Information on new tenants hasn’t yet been released, but the development will be loaded with retail and restaurant space. This developer has already enjoyed success with Cedar Hills Shopping Center, Beaverton's hottest spot for shopping, eating and movie-watching.
Where is the majority of development taking place? Why is this area doing well?
Downtown Portland is seeing a lot of activity, from NW 23rd through the Pearl District and the South Waterfront. This area is doing well because of Urban Renewal assistance from Portland Development Commission and the private sector’s commitment to downtown Portland. Portland’s pedestrian mall is receiving a multimillion dollar facelift, along with the addition of two light rail lines connecting the downtown core to two significant suburbs. This transit construction is slated for completion in the fall of 2009.
What area do you expect to be the next big retail development market? Why?
Downtown Vancouver has huge potential for major retail development. Gramor Development recently completed a $19 million purchase of a former industrial site along the Vancouver waterfront. The 32-acre site is slated to be developed into a mix of retail, housing, office space, shopping and restaurants. New access 1,900 feet of the Columbia River waterfront is planned. This development will provide for a waterfront experience hitherto unavailable in downtown Vancouver.
Please describe the retail leasing activity in your area.
Rents have leveled off, and landlords are offering more concessions to secure tenants. I’ve seen an increase in sublease space on the market and decreased new tenant activity. Few tenants are looking for space right now, and ones that are don’t plan to make a move until fourth quarter of this year or later.
What major leases have been closed recently?
PetSmart leased 20,926 square feet at Cascade Station, while JC Penney leased 104,175 square feet at Columbia Tech Center in Vancouver.
Please give a measure of retail vacancy rates and a measure of available sublease space.
Overall retail vacancy was at 4.9 percent in first quarter 2008 — this includes Portland, OR and Vancouver, WA. We do not track sublease space.
What types of retailers should look into your market in the coming year? What type of retail is needed?
High-end tenants. We are one of the most under-retailed markets in the nation and the fact that we don’t have a sales tax excites tourists to spend money on luxury items.
Would you like to make any additional observations about the retail market in your area?
Portland was rated a Top Travel Destination by Frommer’s Guidebooks, number six Best Places to Live and Launch by CNN Money’s Fortune Small Business and a Best Place for Business and Careers by Forbes. It is known for its high quality of life and in the past decade has become quirky and smart with heart and soul.
Submitted by J. J. Unger and Debi Rosenbaum, brokers with NAI Norris Beggs and Simpson in Portland, Oregon.