Retail Market was Mixed Bag in 2000

PORTLAND-The retail market reflected the economy as a whole in Portland this year, according to Grubb & Ellis, the first real estate services company to release its 2000 review/2001 forecast report on Portland. Unemployment rates and rising wages kept consumer confidence high while slowing job growth, stock market volatility and record high oil prices served to moderate consumer spending. As a result, retail net absorption was strong in 2000, but new construction delivered a significant amount of space to the market, pushing vacancy rates up slightly to 5% and holding rental rates steady, according to the Grubb & Ellis report.

Downtown Portland was on center stage this year with the opening of two significant projects: The Mills Corp.’s Pioneer Place II, which brought Saks Fifth Avenue Men’s to Portland; and Banana Republic, which opened its flagship store in the new Fox Tower, which sits on one of the best retail corners in the city.

In 2001 – thanks to an increase in office and industrial leasing activity west of Portland this past year – the report predicts increased retail development and leasing activity in the Sunset Corridor “as retailers search for ways to meet the needs of the ever-growing and highly affluent residential and office population putting down stakes in the silicon forest.” The most significant new project in the corridor, The Shops at Tanasbourne, is currently under development by Federal Realty Investment Trust. Originally envisioned as a 300,000-sf upscale specialty mall with no major anchor, it is now widely rumored that Meier & Frank will be an anchor tenant. “Although plans are currently being reworked, Federal will remain committed to the vision of a series of single and multilevel buildings that will form a “main street” shopping district,” according to the report.

On Portland’s east side, another urban retail project is underway to compliment the airport light rail line that is being installed. Cascade Station, a joint venture between Trammel Crow Company and Bechtel Enterprises, recently announced the sale of 45 acres to MBK Northwest to develop a 400,000 square foot retail center. Early signers are rumored to include Nordstrom Rack, REI, Staples, Borders Books & Music and Linens & Things. The project also will feature a cluster of restaurants anchored by a new addition to Portland, California-based Claim Jumpers.

The big disappointment this year is with the movie theater industry. Many of the nation’s biggest purveyors of move screens have filed for bankruptcy, causing theater projects in Portland an across the nation to be scrapped or put on hold. In the Portland area; MBK Northwest has changed plans for Cascade Station, replacing a planned 18-screen movie theater with a restaurant row; The 10-screen Sundance Cinemas planned for the top floor of the Pioneer Place II retail project due to the bankruptcy filing of its money partner General Cinemas; and the addition of 16 movie screen at Beaverton Mall have been put on hold for similar reasons.