I spent Halloween visiting my daughter and son-in-law at the home they recently purchased in close-in Northwest Portland. Walking around their neighborhood, I was amazed at how many young families with children lived in the area. On one block alone, there were four sets of couples who worked at Intel. Young families like my daughter’s and her neighbors would previously have flocked to the suburbs, but today they are much more likely to choose an urban lifestyle in an area like Northwest or the close-in Eastside.
This demographic shift to close-in living is no longer just a trend, but is the new normal. People of all ages are just not as interested in the suburban lifestyle, and are willing to sacrifice financially to live an urban lifestyle. They are forgoing features like more square footage, yards, garages and well-funded schools, which are readily available in the suburbs, to live near amenities like restaurants and arts and entertainment options.
They’re paying for the convenience and amenities of urban living. For instance, RMLS’ September reports on the single-family market showed a median sale price of $292,500 in NE Portland, while the median price of a home in Beaverton and Aloha was $251,500, and $238,100 in Hillsboro and Forest Grove. A recent study by the chief economist at real estate website Trulia also examined the urban population shift. In Portland, urban home prices have grown 15.7 percent year-over-year, while suburban prices are up just 12.4 percent in the same time period.
Renters are also paying a premium for urban spaces, as NAI Norris, Beggs & Simpson’s Third Quarter reports show. Some renters in prime locations are paying nearly twice the amount per square foot for a close-in location as compared to the suburbs. Overall price per square foot for an apartment downtown (which includes the Pearl/Northwest) is $1.80, compared to 95 cents in Beaverton/Aloha. When price per square foot is so high, the trend toward micro-units makes perfect sense.
No matter whether people live in urban or suburban areas, retailers continue to adapt to the new reality of online shopping. Black Friday is generally the don’t-miss shopping day, and is top of mind for retailers at this time of year. This year, however, Adobe expects online shoppers to spend $1.6 million on Black Friday, up 17 percent from 2012, and many online shoppers will not even wait until Black Friday – they’ll start on Thanksgiving.
Amazon paved the way in online shopping, and legions of retailers continue to try to remain competitive with its free shipping. Walmart, for instance, recently announced its foray into same-day delivery from its superstores. Retailers, particularly large-format ones like Walmart, continue to shrink their brick and mortar stores and move more of their sales online.
Retail investors are closely attuned to the new realities of both urban living and online shopping, and these play a major role in their investment preferences and risk analysis. The two retail asset classes that institutional investors are most bullish about today are malls and lifestyle centers. Even as consumers prefer to do some shopping online, malls and lifestyle centers have their niche, as there will always be items that people want to see and feel before buying. Shopping destinations like Bridgeport Village and Clackamas Town Center will continue to draw a critical mass of shoppers.
And even when a traditional retailer at a mall or lifestyle center downsizes, as we’ve been seeing frequently in the past five years, another specialty store will be there to take the additional space. The combination of more traditional department and smaller-format stores, and more boutique-like, specialty stores, creates a synergy that draws shoppers, and the risk for investors is less because of this multi-tenant mix.
In addition to malls and lifestyle centers, investors also understand Portlanders’ preference to shop near their homes, and to spend dollars locally. That’s why they remain interested in convenience shopping, neighborhood centers, urban retail, strip centers and single tenant credit NNN.
Portland’s retail vacancy remains healthy, continuing its downward trend to 6.15 percent during Third Quarter. Strip center and urban retail cap rates are holding steady despite a temporary increase in mortgage rates. Investors are moving to well-located convenience centers in secondary markets like Portland, as the risk profile of multi-tenant properties is so much less.
Portland is uniquely qualified to benefit from the demographic shift and increasing retail investor interest. Its excellent transportation infrastructure is a major asset, and the preference by residents to shop local is helping to strengthen resurgent neighborhoods. 2013 saw increased retail sales volume and price per square foot, and this trend is driven by a surge of private investors and 1031 buyers. 2014 will be even stronger yet.
Vice President Denis O’Neill specializes in retail, investment and special asset sales at NAI Norris, Beggs & Simpson, a real estate brokerage and asset/property management company. Contact him at 503-223-7181 or email@example.com.
Jim Bennetts has joined NAI Norris, Beggs & Simpson as a Real Estate Broker specializing in industrial leasing and sales throughout the Portland metro area.
Bennetts has a background in sales, and graduated from the University of Oregon with a degree in political science and a minor in business.
He is a licensed real estate broker in Oregon and a member of the Commercial Association of Brokers Oregon/SW Washington (CAB).
Custom online menswear retailer Indochino is opening a pop-up Traveling Tailor store in Portland for nearly two weeks in September.
Indochino describes itself as the world’s premier online custom menswear company, with customers taking their measurements in the comfort of their own homes, and a hand-tailored, stylish suit delivered to their homes within four weeks. The Traveling Tailor program, however, allows customers in select North American cities to be measured and styled in person.
The pop-up shop will be open in downtown Portland’s Blanchard Building, 922 SW Yamhill Street, Sept. 12-23. NAI Norris, Beggs & Simpson retail broker Geri Varvel represented Indochino in the 4,393 sf lease.
Michael Hale has joined NAI Norris, Beggs & Simpson as a Real Estate Broker specializing in industrial leasing and sales throughout the Portland metro area.
Hale was most recently a Strategic Wine and Spirits Chain Representative for Gallo Wine Company in Los Angeles. He launched and marketed liquor and wine brands, with primary duties including strategic merchandising, product placement in grocery and drug stores, and building and maintaining client relationships with store directors. During three years with the company, he was repeatedly recognized for high sales levels.
Hale holds a bachelor’s degree in speech communication from the University of Nevada – Reno, where he also played baseball.
With $3.75M Purchase of 23-Acre Truck Terminal Campus, Swift Transportation Will Remain in Troutdale
Swift Transportation has paid $3.75 million for a 23-acre truck terminal campus in Troutdale, opting to stay in Troutdale rather than relocate to another part of the metro area. NAI Norris, Beggs & Simpson Vice President Ken Boyko and Senior Vice President Jack McConnell represented the seller, Ilahie Holdings, LLC. More >
The sale of Block 296 at NW 21st and Raleigh has closed, paving the way for a mixed-use redevelopment anchored by New Seasons Market. NAI Norris, Beggs & Simpson President Chris Johnson and Vice President MaryKay West represented the seller, Con-way, Inc. Vice President Robert Black represented the buyer, C.E. John Company.
The 2-acre property, which includes a 36,000 sf warehouse that was built in 1952, is located between NW 21st and 22nd Avenues and Raleigh and Quimby Streets, and its redevelopment has been dubbed Slabtown Marketplace.
“Securing an anchor tenant such as New Seasons has been the goal of Con-way since the inception of this project, and having such an amenity will help catapult the remainder of the development,” Johnson said. More >
Adventist Health Exercises Purchase Option, Pays $2.38M for Vancouver’s Fisher’s Landing Medical Building
Adventist Health has purchased the 10,550 sf Fisher’s Landing Medical Building, 417 SE 164th Avenue, for $2.38 million. NAI Norris, Beggs & Simpson Vice President Tamara Fuller, CCIM, and Associate Vice President Pam Lindloff represented the seller, Allergy, Asthma and Dermatology Associates (AADA). Ted Gilbert and Molly Mink-Liston of Gilbert Brothers represented the buyer, Adventist Health. More >
REACH Community Development’s $3.9M Purchase of the Bronaugh Apartments Preserves 51 Units of Downtown Affordable Housing
REACH Community Development has paid $3.9 million for the 51-unit Bronaugh Apartments, a Section 8 affordable housing property at 1434 SW Morrison Street in downtown Portland. NAI Norris, Beggs & Simpson Vice President Robert Black represented REACH and the seller, Bronaugh Investors Oregon. More >
The $2.01 million sale of the former Vancouver City Hall in downtown Vancouver to Northwest Property Resources, LLC closed on April 15. NAI Norris, Beggs & Simpson Principal, Director of Vancouver Production Charlie Kleier and Associate Vice President Doug Bartocci represented the seller, Vancouver Public Schools. Northwest Property Resources plans to renovate the property for use as a multi-tenant office building. More >
When the Shoe Fits, Comfort Shoe Retailer with Three Vancouver Locations, Opening First Oregon Store at Beaverton’s Progress Ridge TownSquare
When the Shoe Fits, a locally-owned comfort shoe retailer with three locations in Vancouver, is opening its first store outside of Vancouver at Progress Ridge TownSquare in Beaverton.
The 1,628 sf store is expected to open in early June. NAI Norris, Beggs & Simpson Associate Vice President Pam Lindloff represented When the Shoe Fits in the lease with owner Gramor Development. Progress Ridge opened in 2011 at SW Barrows Road and SW Horizon Boulevard and is anchored by New Seasons Market and Cinetopia. More >