Oregon’s and the Portland metro area’s economies are on fire and continue to shatter records, resulting in strong retail sales, continued local and national tenant expansion and successful retail developments. The decline of retail that we read about in the daily press is having little impact on Oregon’s retail leasing market. No sooner does The Sports Authority at Cascade Station close its doors, then Nordstrom Rack leases the space. In Salem, Macy’s and The Sports Authority closed and Hobby Lobby leased the space before the former ceased doing business.
But first, the numbers. The unemployment rates in Oregon and its metro areas are at their lowest levels on record. Oregon’s unemployment rate dropped to 3.8% in March and the Portland Metro Area’s held steady at 3.5%. Total nonfarm employment hit another record high in March at 1,863,200, while per capita income is over $45,000 for the first time.
Housing added 7,344 single-family building permits in the Portland metro area in 2016, the highest number since 2007 (US Census) and the median sales price of single family homes in March 2017 rose to an all-time high of $370,000 (RMLS). In addition, 7,650 apartment units were permitted in 2016, with permits expected to reach 14,000-18,000 units in 2017 and 2018 (Barry Apartment Report). Apartment rents have held steady year-over-year, with median rent of $1,340 for a one-bedroom (Mar ‘17).
The retail real estate vacancy rate for the Portland Metro area is at a near-record low of 4.0% for Q1 2017, with average asking rates of $18.55, the highest on record.
Downtown, the construction boom continues. Sky3, at SW 11th & Jefferson (196 apartments, 13,000 SF of retail space) was just completed and the Collective on 4th (417 apartments, 36,000 SF of retail space), at SW 4th & Harrison, is scheduled to break ground next week.
In Beaverton, C.E. John is expanding Cedar Hills Crossing to the north with construction of 220,000 square feet of new retail, mixed-use, and medical office space.
In Vancouver, Gramor Development is under construction at the Waterfront Vancouver USA on the Columbia River. The first phase is scheduled to open next spring with 88,000 square feet of retail and restaurant space on five blocks. Flagship restaurants include Ghost Runners Brewery, Twigs Bistro & Martini Bar, and WildFin American Grill.
In Salem, the former Lancaster Mall, renamed Willamette Town Center, is being renovated by C.E. John with 135,000 square feet of anchor and junior anchor space. New tenants include Hobby Lobby, Sierra Trading Post, HomeGoods, and Ulta Beauty.
In Bend, the 367,856 square foot Cascade Village Shopping Center is under construction with Phase II to add 66,780 square feet of new retail space.
Across Highway 97, the 52,937 square foot Plaza Robal is under construction to include Central Oregon’s first Ulta Beauty location, scheduled to open in mid-2018.
Ulta Beauty will also be opening new locations in Portland later this year and Salem next year.
In the fast casual business, Chipotle Mexican Grill continues its expansion with fifteen new stores open in the past two years, including the Goat Blocks in Southeast Portland and Woodburn, both scheduled to open this spring. Panera Bread also opened in Sherwood, bringing it to 16 stores in Oregon and Southwest Washington.
The grocery market continues strong with 99 Ranch Market opening this summer in Beaverton and Natural Grocers opening on NE MLK Jr Blvd and at SE Powell Blvd and 39th Avenue. Target will also open a small-format store on SE Powell Blvd next year.
Fitness is also active, with nine full-size gyms set to open by the end of the year including Crunch Fitness in Aloha and two in Vancouver.
With all this positive news, coupled with a strong economy, the Oregon retail market is better than we have ever seen or experienced.