Retail Reader: 2020 Year in Review | Happy Holidays
Wishing our clients, families, and friends a new year filled with health, happiness, and success.
We hope you enjoy this year’s Retail Reader. As we reflect on 2020, we are thankful for our relationships both old and new. We are also reminded of the saying “the only constant in life is change” and in our industry, with change comes new opportunities. We are excited to move forward, together, into 2021.
The Neville & Butler Team
Retail Reader: 2020 Year in Review
Oregon continues to be a desirable place to live. Both closed home sales volume and price are up double-digits year-over-year in Portland Metro (RMLS, Nov‘20). In Bend, the median sales price has jumped 19% since Q3 2019, driven by the pairing of low inventory and high demand (COAR, Q3 20). It’s no surprise that Bend has been America’s Best Performing Small City four years running (the Milken Institute).
While unemployment did spike in late spring and early summer along with the rest of the nation, Oregon’s unemployment rate is recovering at the same pace as the rest of the country and currently sits at 6.0% (OED, Nov‘20).
A concentration of high-tech and tech-savvy employers has made the work-from-home model manageable for Oregon employers such as Intel and Nike. In retail, the market vacancy rate is reported at 3.7% for Q3 but this appears to be lagging employment indicators based on announcements of area retail and restaurant closures. The discrepancy for the Bend market, currently reported at 3.38%, appears to be less significant.
Meanwhile, office leases continue to be inked in the central city: Apple leased 30,669 sf at 7 SE Stark; Square leased 64,000 sf at Aspect on Sixth; Stream leased 23,346 sf at The Reserve; and, Branium leased 22,599 sf at Tanner Point.
LOOKING FORWARD: NEW DEVELOPMENT & RETAILER ACTIVITY
In landlord development news, construction continues apace on the 844,217 sf Block 216 which includes the Pacific Northwest’s first Ritz Carlton; Mercantile Village in Lake Oswego, which includes 50,000 sf of retail space, is nearing completion; specialty retailer Floor & Décor will enter the Oregon market by scraping the original Safeway Marketplace at Jantzen Beach; construction will begin on the 62,000 sf Happy Valley Crossroads East in Q1 2021; CE John has begun construction on Phase 4 of Cedar Hills Crossing; and, CVS recently opened in Cedar Mill, with the 63,400 sf Milltowner I set for completion in late spring.
In Oregon and Southwest Washington, the biggest news in tenant expansion next year will be the aggressive expansions of drive-thru restaurant operators. In-N-Out will finally land in Portland proper with proposed stores in Beaverton and Tualatin and other locations planned; Chick-Fil-A is under construction in Gresham as they continue to expand in the market; Shake Shack is openings its first two Portland-area stores in Downtown and at Cedar Hills Crossing; and Chipotle recently opened a “Chipotlane” drive-thru concept in Raleigh Hills.
In fitness, Gold’s Gym is taking over BFit in Raleigh Hills; Planet Fitness is opening in Happy Valley; Snap Fitness took over BFit in Happy Valley; and, Elements Health Clubs took over Cascade Athletic Club in Gresham.
GROCERY STORES: THE ESSENTIAL NEWS OF 2020
In the grocery sector, warehouse/bulk-purchase concepts Costco and WinCo Foods are some of the strongest performers in the Pacific Northwest. WinCo will open in three former ShopKo locations in Oregon & Washington in 2021 totaling 285,000 sf: Bend, Eugene, and Wenatchee. Costco is scouting additional locations in Portland and will move its Salem store to a more spacious site.
In the natural grocery segment, Market of Choice is expanding and will open in the former Toys R Us in Medford in early 2021. Oregon-based New Seasons Market was acquired by South Korean-based Good Food Holdings (owner of Bristol Farms and other concepts) in late 2019 and is currently formulating expansion plans.
In the small-format natural segment, Green Zebra closed two of its four locations late this summer while Basics Market opened three stores in 2020, doubling its store count.
Existing grocery box vacancies continue the trend of being filled by nongrocery users. Wilco opened in the former Walmart Neighborhood Market in Lake Oswego; Parkrose Hardware opened in the former West Linn Albertsons; Planet Fitness opened in a portion of the former Albertsons at Tigard Towne Square; and, Target has proposed a small-format Cedar Mill store to fill a former Thriftway box.
In-store safety has shown to be the key to success in 2020: Ipsos found that “The ability to deliver on health and safety efforts is now the most important aspect of the customer experience” with Whole Foods, Costco, and Trader Joe’s topping the list of customer favorites.
Thank you again for nominating us for the second year in a row as the Best Commercial Real Estate Firm in Oregon & Southwest Washington in the Daily Journal of Commerce Oregon’s 2020 Reader Rankings.
