The retail market in Oregon continues strong. New retail centers are opening nearly 100% leased, rents are at historic highs, and national tenants in all categories continue absorbing additional locations.
Nationally, retailers are reporting strong comparable store sales. Ulta Beauty is up 16.7%, Ross is up 7.0%, Dick’s Sporting Goods is up 5.2%, The TJX Companies is up 5.0%, and The Home Depot is up 4.9%. With strong sales, expansion in Oregon continues.
The population in Oregon increased by 62,505 (1.6%) from July 1, 2015 to July 1, 2016 to 4,076,350 (PSU), employment has grown 3.3% (tied for third in the nation), and per capita income has grown 3.3% year-over-year (compared to 2.6% nationally). Locally, housing prices are up 11.5% over the past year to an average of $393,900 (Oct ‘16), with single and multifamily housing starts up 8.01% and 18.16%, respectively (U.S. Census).
Portland is again on Monocle Magazine’s “Top 25 Cities” list, ranking world cities by quality of life. This is Portland’s seventh consecutive appearance and the only mainland US city on the list.
With all this positive news, retail vacancy is only 4.1% for the Portland metro area (Q3 ‘16).
Downtown Portland, while still strong, has numerous vacancies/opportunities on the horizon (perhaps a result of the continued homeless situation). Macy’s announced the spring 2017 closure of its downtown store, with plans underway by KBS Capital Markets Group and Sterling Bay to redevelop the first floor into retail space and upper floors into creative office space. At SW Broadway & Morrison, Abercrombie & Fitch and Shreve & Co. Jewelers are or will become vacant, as will a portion of the Brooks Brothers space at The Galleria, two blocks west. Core Spaces is also underway with The Collective on 4th project at the corner of SW 4th & Harrison with 36,000 square feet of retail space and 417 apartment units. That project will serve the students of Portland State University, residents of the Southwest Hills, and the condo and apartment dwellers of the South Waterfront, with 25,668 residents within a one-mile radius.
In the suburban market, Gramor opened the 191,793 square foot Fred Meyer anchored
Happy Valley Crossroads in Happy Valley at 97% leased with rents ranging from $35.00 to $52.50 per square foot. Additional retail is proposed on surrounding property.
Also in Happy Valley, Grocery Outlet leased the former Haggen at Sunnyside Village Square, bringing the center back to 100% leased.
In Tualatin, CenterCal is completing Nyberg Rivers with the addition of a 7,766 square foot pad building to be occupied by Mattress Firm, a bank, and Good Feet and an 8,892 square foot Cracker Barrel restaurant, planned to open in Spring 2017.
Unfortunately, we still have 16 big boxes (657,000 square feet total) left over from the Safeway/Albertsons/Haggen reshuffling and 141,000 square feet from Sports Authority closings in Portland.
In Salem, with the closures of Sports Authority and Macy’s at Lancaster Mall, CE John will redevelop the 655,700 square foot center to include de-malling and additional anchors. Construction will start next year.
In Medford, Regency Centers completed the 179,870 square foot Phase II of Northgate Marketplace, located at the intersection of Hwy 62 & Hwy 99, anchored by Dick’s Sporting Goods, Field & Stream, HomeGoods, and Marshalls. Together with the 80,900 square foot Phase I, anchored by REI, Trader Joe’s, Petco, and Ulta, Northgate Marketplace is the dominant center in the market.
The state of Oregon and its metro areas are alive with growth in population, employment, and housing starts. This economic expansion is different, however, in that we have high quality new developments and extensive second-generation inventory available for retenanting, resulting in numerous opportunities for retailers entering the market.