By Jack Stubbs
Portland’s retail market had a strong end to 2022, with several market indicators suggesting dynamic times ahead. According to Kidder Mathews’ recently released Q4 2022 Market Trends: Portland Retail report, overall vacancy rates were down year-over-year, rental rates increased, employment numbers saw a downturn and construction deliveries saw an increase.
Vacancy rates saw a 15 percent year-over-year change, with fourth quarter 2021 witnessing a 4 percent overall vacancy rate and fourth quarter 2022 posting a 3.4 percent vacancy rate. At the same time, average asking rents saw a 4.66 percent annual change, with fourth quarter 2021 posting a rate of $20.16 per square foot and fourth quarter 2022 posting a figure of $21.10 per square foot..
Some of this vacancy could also be attributed to the lack of new product added to the market over the course of the fourth quarter. In fourth quarter 2021, there were 62,002 square feet of new construction delivered to the market, which contrasts sharply with the 9,377 square feet seen in the fourth quarter of last year. This marks an annual decrease of nearly 85 percent, the report showed.
As market constraints remained tight, average sales prices for retail product in Portland also shot up slightly. The average sales price per square foot saw a 4.54 percent increase over the course of the year, with fourth quarter 2021 posting an average per-square-foot sales price of $232.18 and the fourth quarter of last year yielding a rate of $242.17.
Some of the top sales transactions in the fourth quarter included Cartlandiadogz, LLC’s purchase of a 53,143 square foot property located at 8145 SE 82nd Ave. from Roca Investments for $4.75 million, or around $89 per square foot. Han River LLC also acquired the 17,045 square foot Mill Plain Plaza from Honey Badger Properties LLC. The property is located at 221E NE 104th Ave. in Central Vancouver and traded for $4.59 million, or $269 per square foot.
Elsewhere, Los Nietos Development LLC sold an 18,682 square foot property – located at 2110 SE 82nd Ave. – to Craft3 for $3.6 million, or around $193 per square foot.
In terms of leasing activity, there was marginal year-over-year change from fourth quarter 2021 to fourth quarter 2022, which saw just under two million square feet leased and around 1.75 million square feet leased, respectively, according to the report.
Some of the top lease transactions in the fourth quarter included Rich’s for the Home’s 18,000 square foot lease at 9350 SW Washington Square Road in the Tigard submarket; and Natural Grocer’s 15,000 square foot lease in Beaverton’s Canyon Place Shopping Center, which is located at 3805 SW 117th Ave.
Looking ahead, it’s possible that the significant amount of under construction projects will add some much-needed inventory to Portland’s retail market, with the latest numbers indicating positive times ahead.
As of fourth quarter 2021, there were 434,472 square feet of retail under construction, which contrasts with the 571,939 square feet under construction in third quarter 2022. Fourth quarter 2022, meanwhile, encapsulated 574,897 square feet under construction, all of which represents a positive 32.32 percent year-over-year change.
Some of the noteworthy under construction projects include the 140,000 square foot Life Time Beaverton property – expected to be complete in first quarter 2023 and located at 600 SW 116th Ave. – and the 125,850 square foot Skyview Station, which is located at 13909 NE 10th Avenue in Vancouver. The property is expected to be completed in the second quarter of 2023.
