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Articles - May 2012
Monday, April 23, 2012
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Tenant trade
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VACANT BIG-BOX SPACE IN PORTLAND
2009: More than 1.8 million square feet
2011: 541,296 (much of which is under negotiation)
0512_Dispatches_Retail_03
With some national retailers back in expansion mode — and redeveloping existing real estate rather than investing in new construction — most of the state’s retail centers have hit bottom and are climbing back up to normal, brokers say.

Yet while luxury properties once again have their pick of retailers, Class B and C establishments, whose locations and existing tenant mixes may be less than ideal, are still struggling to fill the empties.

Even so, many people in the commercial real estate industry are wary of nontraditional tenants. Because patrons of places like fitness centers and doctors’ offices tend to come and go (and take up parking spaces in the meantime) without stopping to shop, anchor store contracts often prohibit owners from leasing to non-retail tenants.

“It’s a slippery slope,” says Suzanne Mulvee, a national retail expert with the commercial real estate information company CoStar Group. “Once you bring in a lesser-quality tenant, the overall quality of the center can continue to deteriorate.”

CenterCal Properties CEO Fred Bruning, who oversees Bridgeport Village in Tigard, does his best to avoid “the progression to mediocrity.” When the Borders at Bridgeport closed last fall, the center resisted offers from a gym, a sporting goods store and several discount retailers and mass merchants.

“We really wanted to hold out for something that would uphold the integrity of the leasing at the center,” Bruning says. The center has lined up a tenant that complements the space well, he says, but it has not yet made the deal public.

Other retail areas can’t afford to be as choosy, though. When the Linens ’n Things near Clackamas Town Center went dark, a Salvation Army moved into the 40,000-square-foot vacancy.

“We had to discount the rent by 10% or 15% from what we were getting before, but it was certainly better than an empty box,” says Mark New, president of New & Neville Real Estate Services. “As long as you’re not trying to put those guys next to your high-end luxury goods, you can create a symbiotic relationship.”



 

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