Portland has it all. Third “Best Beer Town In The U.S.” (Men’s Journal,10-5-2009), fourth best “Youth Magnet City” (WSJ, 9-30-2009), third “Safest Major City” (Forbes,10-26-2009) and the leader in “Mobile Carts Serving a Range of Diverse, Innovative and Budget Friendly Food” (Bon Appetite, 9-2009). Portland is cool and every national travel, active sports and business magazine continually cite Portland and Oregon for their natural beauty, environmentally sensitive built environment and well thought out land use planning. That’s the good news.

The bad news is that Oregon has the fourth highest unemployment rate in the country, behind Michigan, Nevada and Rhode Island. Over the past year, Oregon has lost 100,000 jobs and the unemployment rate is now 11.1%. There is, however, a silver lining among the state’s unemployment statistics. “Portland has continued to draw migrants through the recession and the influx of new residents is part of the reason the unemployment rate in the Portland metropolitan area has doubled over the past year” (WSJ, 5-16-2009 and 9-20-2009).

“Portland continues to draw the young, educated workers that communities and employers covet” (WSJ, 6-6-09). Young, well educated people are moving to Portland to enjoy the beer, food carts and natural beauty preserved by the land use planning laws…and that’s in one of the worst recessions in recent history. They are waiting out the economic storm in Oregon. When the economy turns, and jobs are again being created, look out because every young well educated kid in the country will have moved to Oregon.

Metro, the regional government responsible for land use planning, envisions accommodating a million more people in the Portland metropolitan area in the next 20 years by “infilling and increasing the density” of the existing city centers (The Oregonian, 9-15-2009). Metro wants to preserve the current urban growth boundary by building up and not out so we can maintain farmland and key natural areas outside the current urban growth boundary.

Portland is hot, even when the national economy is not. Portland has what the next generation of young, educated, potential high income earners want and continues investing in the community to sustain its desirability. In August, the $575.7 million dollar southbound light rail opened which completes the fourth leg of the light rail system and connects suburban Clackamas County to downtown. In the center of downtown, the $6 million dollar Director Park just opened, and along the Willamette River, Saturday Market just dedicated its new venue.

So what does this mean to the retail real estate industry in Portland and Oregon, particularly following the consolidation, bankruptcies and going-out-of-business sales that left 55 vacant big boxes throughout the state, with a total square footage of 2,292,108, square feet and an 8% retail vacancy rate in Portland?

While times are not what they were in the boom years when we built and leased one million square feet annually in the Portland area, the market is certainly not as bad as other parts of the country. Activity is also starting to pick up.

Tenants ranging from fast casual to convenience stores to electronic retailers are looking at the Oregon market. Some have signed leases for a significant amount of space while others are looking at the market for future expansion and new market entry.

Dick’s Sporting Goods leased four stores in Portland totaling 232,828 square feet, and three stores outside the metropolitan area, single handily reducing the vacancy by over 328,756 square feet. Dollar Tree leased and has opened three stores in Portland including Hollywood, NW Portland and Tanasbourne (185th and Walker), and Petsmart opened stores in Hazel Dell, Tanasbourne and Cascade Station this year. Chipotle has opened stores in the Pearl District and Clackamas Town Center and continues to look for additional sites.

There is good news out there; it’s just that the popular press does not like to report it. For property owners, the time is right to make the deal. Rental rates have fallen dramatically for big boxes, and to a lesser extent, for small shops. Though it will be a long time before we get back to the rates seen in the boom years of 2007-2008, when the economy does turn around and employment expands, there are expectations that the population will, once again grow. But, just like elsewhere across the nation, Oregon 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 Oregon real estate market and take advantage of the historically high levels of inventory and reasonable rental rates.