Mixed-Use, Entertainment, Medical Bolster Portland’s Retail Basin
The retail market in Portland remains competitive. Vacancy rates are staying low at 3.1 percent, compared to about 5.5 percent just five years ago, leading to healthy competition among tenants for space.
Retailers and brands are thriving across the board in this market. We’re seeing food halls, outdoor apparel, athletic brands, brew pubs, schools, banks, value brands, homegrown food concepts and many franchise concepts entering or expanding.
Competitive socializing and esport lounges are growing in popularity across the country, taking up about 32 percent of the leisure tenant market. Competitive socializing concepts like Voicebox and Punchbowl Social are quickly becoming some of the most popular leisure tenants in the Portland area. Live Nation has recently signed a lease for a new entertainment venue at Lloyd Center, which will soon offer more small-venue live entertainment options.
Brands like Pendleton, Nike, Columbia Sports, Apple, Nordstrom, H&M and Zara have flagship stores in the downtown core. Patagonia, Anthropologie and a local favorite, the Mercantile, have all expanded their footprints taking prime real estate in the Portland CBD/West End.
The desire for wellness and a balanced lifestyle has led to a boom in demand for retail space. Wellness tenants like medical clinics, dental offices and fitness centers create a sustainable influx of consumers to shopping centers and fitness facilities, drawing frequent repeat visitors. There were a total of 2,800 medical clinics in U.S. retail space at the end of 2017. This is up from 351 in 2006. Considering the trajectory, the number of retail healthcare clinics could hit 4,000 by 2020. Recent Portland area health facilities include B Fit, Crunch, Cycle Bar and Planet Fitness.
New-build and repositioned space is also creating quite a buzz in the Rose City. High-end retail brands are racing to grab the limited 2,379 square feet of space arriving with the Ritz Carlton mixed-use development. There has been a lot of interest from luxury retailers that could complement the Ritz brand. There’s no doubt the Ritz will capture the attention of the city upon its arrival. The iconic Meier & Frank building redevelopment has gained awareness again recently as international brand Muji was added to the heart of the retail core. This historic building includes space for retail, food, office and the Nines Hotel within one of the most sought-out retail neighborhoods in the city.
Mixed-use developments have been performing exceptionally well in the Portland market. Many developers are looking beyond the urban core to the suburbs for new development. One example of this is Mercentile Village, a new mixed-use shopping and lifestyle destination in Lake Oswego on the site of the former Providence Medical Center. Another example is Parkway South, a new arrival to Sherwood that includes a family fun center, retail and food.
Overall, the Portland retail market remains steady due, in part, to the creative use of space and the demand for the next generation of entertainment. Traditional retail storefronts are still occupying much of the downtown corridor, but there is a new demand for more social activities, which has captured the attention of landlords and developers.
— By Karen BuSteed, senior vice president, JLL; and Brittany Bersani, associate and retail broker, JLL. This article first appeared in the October issue of Western Real Estate Business magazine.