Portland's downtown retail revival
Premium content from Portland Business Journal by Wendy Culverwell , Business Journal staff writer
Date: Friday, March 23, 2012, 3:00am PDT
A recent string of retail wins in downtown Portland didn’t happen by chance.
The improving economy only partly explains why Target Co. and T.J. Maxx are moving downtown and why Nike Inc., Sephora USA Inc., Starbucks Co., Apple Inc. and Punchbowl Social, among others, are investing in new locations here.
The improving economy has helped, but Cori Jacobs, Portland’s downtown retail advocate, said efforts by business, civic and city leaders set a welcoming stage for the new actors.
Though talk of revitalizing downtown has been a constant theme throughout the years, the latest push began when Portland Mayor Sam Adams made central city retail a priority after he was elected in 2008.
The downtown vacancy rate stands at roughly 4.5 percent when vacancies in Pioneer Place mall are excluded. That’s the lowest level since the recession high of about 7.2 percent in early 2009. Regionwide, the vacancy rate is almost two points higher, about 6.2 percent.
Leasing activity is also picking up at Pioneer Place. Most prominently, Apple is widely expected to expand in the former Saks Fifth Ave. space at 850 S.W. Fifth Ave. Punchbowl Social, a Denver-based entertainment operator, is also slated to open a full-floor food-and-fun center early next year on the floor below the Regal Cinemas.
A renewed focus
Retail promoters say the turnaround happened because the city and its partners focused on downtown development as if it were a Broadway play. If downtown is the stage, retailers are the actors and shoppers are the audience.
“We’re the stage managers,” says Katherine Krajnak, retail program manager for the Portland Development Commission, the city’s economic development agency charged with supporting the work.
The city and PDC work with the Portland Business Alliance, the Clean & Safe Coalition, Jacobs, landlords and retail brokers to pursue the vision laid out in a 2009 action plan dubbed the Downtown Retail Strategy. It branded the central city the “Pioneer District” and made Southwest Morrison and Yamhill streets its center.
“We decided to think about downtown like a shopping center,” Jacobs said.
That includes safety and cleanliness, twin focuses of the coalition. The Clean & Safe District, which consists of downtown landlords, spends more than $4 million a year on cleaning and security. Its funds support four Portland Police officers.
Downtown advocates are constantly working to address the perception that the area is unsafe, citing extra police presence and the city’s 2010 “sit-lie” ordinance against lying or sitting on portions of downtown sidewalks.
The Portland Business Alliance reports a 33.5 percent decrease in crime in downtown since 2006.
Retailers take notice
Anne Naito-Campbell, secretary of the Bill Naito Co., which owns The Galleria, credits the renewed focus for helping woo Minneapolis-based Target to the Galleria, 921 S.W. Morrison St.
Target confirmed last month it is leasing 80,000 square feet on two floors at the Galleria for its new urban “City Target” model. The store is expected to open early next year.
“It was because of the mayor’s interest that they came,” Naito-Campbell said. “The focus on Morrison and Yamhill helped.”
Jacobs said Target was a big plum. It previously only installed “City” stores in first-tier cities such as Seattle, San Francisco and Los Angeles.
“We’re a second-tier city. To get one of the rollouts of the new concept is huge,” she said.
The Schlesinger Cos., a fourth-generation family-owned real estate firm, recently signed a deal to lease a portion of the current Office Depot space at 615 S.W. Alder St. to Framingham, Mass.-based TJX Co. for downtown’s first T.J. Maxx store.
The discount apparel retailer will open this fall in Office Depot’s 31,020-square-foot basement space.
T.J. Maxx Vice President Josh Schlesinger said downtown revitalization was an important factor in the decision.
Jacobs said downtown property owners played a key role in the transformation. General Growth Properties, which owns Pioneer Place, notably embraced the vision of a vibrant street presence. When H&M, the Swedish apparel retailer, opened in a portion of the former Saks space, its front door opened toward the street.
“I think we’ll see more of that as more tenants come into Pioneer Place,” she said.
Sandra McDonough, president of the Portland Business Alliance, is passionate about the role retail plays downtown.
“Retail is the canary in the coal mine for downtown. If you have a healthy retail, you know that your central city and downtown are healthy,” she said, noting it provides a range of jobs, from career-level work to front-line jobs that employ students at the colleges and universities ringing downtown.
McDonough said timing, teamwork and a focus on action set the 2009 retail plan apart from earlier versions.
“Every player in downtown came to the table and everyone executed. We did OK,” McDonough said. “That urgency melded the team."
The downtown retail advocate position is funded through a partnership among the city of Portland, the Portland Development Commission and the Portland Business Alliance.