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Real estate industry

Retail Real Estate Vacancy Rates Rise in Q3 2009

Strategic Insights

— 2 min read

The third quarter of 2009 saw an increase in total retail vacancy rates, reaching 8% across all submarkets, according to a report by Norris, Beggs & Simpson. This 1% rise over the previous quarter is a sign that a full economic recovery may not be expected until 2010. The suburban submarkets have been particularly affected by the bankruptcies of several retailers, including Joe's Sports & Outdoors, Linens 'n Things, and Circuit City. However, Jack Gallagher, vice president of Norris, Beggs and Simpson, notes that these spaces are likely to be filled by other discount stores within the year.

Key Takeaways:

  • The total retail vacancy rate in the Portland-metro area rose to 8% in Q3 2009, a 1% increase from the previous quarter.
  • The suburban submarkets have been impacted by the bankruptcies of Joe's Sports & Outdoors, Linens 'n Things, and Circuit City.
  • Dick's Sporting Goods has taken advantage of the opportunity to move into former Joe's Sports & Outdoors locations, occupying 150,000 square feet of space in the Portland-metro area.
  • The transition of these large spaces requires significant renovations, providing a bonus for general contractors.
  • S.D. Deacon, a construction company, has been awarded several contracts to renovate these spaces, including one in Bend and one in Eugene, Oregon, and is bidding on another project in Puyallup, Washington.
  • General Growth Properties, the owner of Pioneer Place in downtown Portland, filed for bankruptcy earlier in the year, and the shopping center was subsequently put up for sale.
  • The Portland Business Alliance notes that while the third quarter may not be as strong as hoped, the downtown retail sector may have been affected less than other areas by the closure of larger retailers.

Statistics:

  • 8% total retail vacancy rate in Q3 2009 (Norris, Beggs & Simpson)
  • 1% increase in total retail vacancy rate from Q2 2009 to Q3 2009 (Norris, Beggs & Simpson)
  • 150,000 square feet occupied by Dick's Sporting Goods in former Joe's Sports & Outdoors locations (Norris, Beggs & Simpson)
  • 10,000 new jobs to be created along the downtown retail corridor within five years (Portland Business Alliance)
  • 13% of regional employment base generated by the downtown retail core (Portland Business Alliance)
  • 15% of city's property tax revenues generated by the downtown retail core (Portland Business Alliance)

Sources:

  • Norris, Beggs & Simpson, "Third Quarter 2009 Report" (no date provided)
  • Jack Gallagher, vice president, Norris, Beggs and Simpson, interview with (no date provided)
  • Megan Doern, spokeswoman, Portland Business Alliance, interview with (no date provided)
  • Portland Business Alliance, "Downtown Retail Strategy" (no date provided)

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