"In spite of what we hear, activity remains extremely strong," says Mark New of New & Neville Real Estate Services, one of the more productive retail brokerages in the city. "National retailers are continuing to look for sites--more than we have available--but everybody is looking closely and hard at the numbers and people are less likely to overpay or hit the top of the market."

Craig Barnard, president of Barnard Commercial Real Estate, also is optimistic. "I really don't think it will affect us much here in Portland, because Portland kind of bucks the trend," says Barnard, whose company specializes in leasing shopping centers. "On a store-by-store basis, retail sales would probably reflect national trends as far as being flat or not having much growth, but as far as real estate, we have a limited amount of space we can develop, which forces properties to be renovated and upgraded and, quite frankly, there are a number of national retailers just circling and waiting for a spot to land because there aren't locations available."

The limited availabilities have kept rental rates rising steadily for the last couple of years, says Barnard. Smaller shops in newer centers are paying anywhere from $22/sf to $25/sf on a triple-net basis, where two years ago those deals would have been closer to $18/sf to $19/sf, says Barnard.

It's those kinds of statistics that helped rank Portland the No. 4 city in the country for investment in retail properties behind Seattle, Houston and San Diego, according to a new report by Integra Realty Resources Inc., a national appraisal and real estate consulting firm with offices in Portland and 44 other cities around the nation.

Bearing that out, there is about 2.3 million sf of retail planned to come online between now and the end of 2003, according to the report. With just under 1 million sf absorbed over the past three years and more than a million square feet scheduled to come online this year alone, the real issue is whether activity will remain strong enough long enough to keep rental rates and vacancies rates from heading in the wrong direction given the faltering economy.

Much of the current activity was initiated at a time when the economy was considered strong, says New, unlike today when it's considered a little weak in the knees, at best. "Our cycle is pretty long term; retailers make a decision today and open the store a year from now," says New, adding that tenants may decide to hold out to see if they can get a better deal later in the year. "So we're maybe not seeing the full impact of today's market."