Imagine Portland metro area commercial real estate as a giant deck of cards. Each card represents one property or retail business. The stack is sorted by suit, and each suit is a market segment: downtown, Vancouver, eastside, western suburbs. Each card is in its chosen suit.
Now, shuffle. Discard some cards, add a few others. It’s a different deck.
This sums up the recent activity in the commercial market. It’s an oversimplification—I don’t think we’re going to remember this as the Great Reshuffle—but there have been a lot of changes, of both cards and suits, within the overall market.
I’ve been struck by the changes occurring in two areas in particular: downtown and the suburbs. They’re each transforming, in different ways, and they each teach us something about how the commercial market evolves. They’re also providing an opportunity to “develop with intent”—adding an inclusion and diversity focus as we redefine our markets.
An outmigration of people and retail
Changes that may surprise you are taking place in the suburbs, a good example of which is Beaverton. There’s a distinct shift where more restaurants and retailers are moving into these markets.
This commercial migration actually started with a population migration, which is often the case. As housing prices and rents in Portland have climbed, many first-time homeowners, renters and new arrivals in both categories have chosen to live in the suburbs. But they’ve brought two important factors with them: a love of urban neighborhood hubs, and expectations of an eclectic set of choices for everything from restaurants to clothing stores.
This makes great sense, but through my years in CRE I saw resistance from Portland businesses to expanding to the suburbs. Intellectually, retailers understood there was demand for their concepts, but it wasn’t in their neighborhood or their comfort zone. Many continued to simply open locations in different Portland neighborhoods.
As suburban placemaking began to evolve from vast parking lots to more urbane, hub-like lifestyle settings, some Portland businesses started to see the light. But it was the pandemic that accelerated this mental shift tremendously. Businesses were faced with existential questions, and they became open to more options.
Central and downtown “Old Town” Beaverton is an epicenter of “neighborhood retail” expansion, but other areas that already had a historic or recently built core are definitely experiencing a resurgence—Vancouver, Tigard, Happy Valley, Sherwood and more.
How this changes the game
What can we learn from this as people at the heart of commercial real estate? For one, this is a huge opportunity to make business and CRE opportunities in particular accessible to more people—the “development with intent” I referenced earlier. Many of these communities are seeing the chance to encourage local entrepreneurs to site their businesses in suburban centers. There’s momentum, and public money is available. Instead of limiting themselves to attracting suburban outposts of urban brands, the development community sees the value in encouraging homegrown ideas and businesses from within their own communities. New tenants in these hubs can be more diverse and interesting—and financially sustainable. There’s a built-in and growing audience for eclectic, artisan retail, food and entertainment, offices and apartments. Thoughtful inclusivity may require developers to have some patience in getting returns, but those returns will come, through local loyalty, thriving streetscapes and increased suburban density.
Regenerating the city core
Even as the suburban scene has been expanding, downtown Portland has been evolving in its own ways. And the news is not nearly as bad as some have painted it.
My take on what’s happening downtown is that a lot of counterproductive information has been disseminated; a narrative developed that protests and demonstrations were the reason behind the downturn in traffic and business volume downtown, rather than Covid and the subsequent exodus of employees to home offices. It was baffling and disheartening to see leaders who were so instrumental in building our vibrant downtown being so quick to disparage it. And the narrative distorted perceptions of the downtown market, because it overlooked the key elements of commercial success.
Downtown commercial is irrefutably dependent on workers—office workers to fill commercial spaces and spend retail dollars. I don’t think anyone knows what’s going to happen on what timeline, but that doesn’t mean those of us with a stake in the health of our urban core should spend energy lamenting the demise of downtown. There will be a return flow of people into the city core. How and when depends on us.
What happens next is in our hands
What’s the learning here? That the situation has created opportunities downtown that weren’t there before, when it was booming and had its own momentum. Yes, it’s a circle—you need people downtown to have businesses downtown, and the pandemic has sidetracked that. But I’m excited to see that some savvy people are looking at downtown as a prime opportunity right now and going forward. Deadstock and Ovation Coffee, Kaizen Sushi, Rotigo, Grits N’ Gravy, Sunshine Noodles, Beastro by Marshawn Lynch, Flor Wines and the Queen’s Head burlesque bar are starting the next chapter of our urban core. They’re committed and enthused about building that downtown energy back, and we in the commercial industry have the opportunity to join them in our favorite cocktail of hope, grit and possibilities.
The idea that business is declining is based on individual decisions people make, and actions they take or don’t take. Individually and collectively, we can decide what our ground-floor commercial goals and environments will be; are we going to give up and buy everything from Amazon, or will we make conscious decisions to honor and enjoy our artisan hometown culture? I choose the latter. See you there!