Final Report Central Portland Retail Research and Analysis Study Prepared for City of Portland Bureau of Planning Portland, Oregon Submitted by Economics Research Associates Marketek, Inc. April 2009 ERA Project No. 17879 388 Market Street Suite 1580 San Francisco, CA 94111 415.956.8152 FAX 415.956.5274 www.econres.com Los Angeles San Francisco San Diego Chicago Washington DC London New York Table of Contents Introduction ........................................................................................................................ 3 I. Executive Summary....................................................................................................... 4 Study Objectives...................................................................................................................... 4 Key Issues and Recommendations............................................................................................ 4 Central Portland Overview .......................................................................................................8 Long Term Outlook for Ten Central Portland Retail Areas ......................................................... 9 II. Overview of Central Portland...................................................................................... 19 Economic and Demographic Overview................................................................................... 19 Central Portland Retail........................................................................................................... 20 III. Analysis of Ten Retail Areas ........................................................................................ 26 Study Methodology...............................................................................................................26 Area 1: Portland State University ........................................................................................... 28 Area 2: Downtown Retail Core .............................................................................................. 33 Area 3: South Pearl ............................................................................................................... 39 Area 4: North Pearl ............................................................................................................... 43 Area 5: NW 21st and NW 23rd Avenues.................................................................................. 47 Area 6: Old Town/Chinatown ................................................................................................ 51 Area 7: Convention Center/Rose Quarter................................................................................ 55 Area 8: Lloyd District ............................................................................................................. 58 Area 9: Central Eastside......................................................................................................... 62 Area 10: South Waterfront.................................................................................................... 67 IV. American Downtown Retail Trends ............................................................................ 71 Short-Term Retail Outlook ..................................................................................................... 72 The Role of the Department Store ......................................................................................... 73 The Future of Independent Retail........................................................................................... 74 Big Box Stores in Downtowns................................................................................................ 76 Proliferation of Lifestyle Centers.............................................................................................77 Emergence of Food & Entertainment as Anchors ................................................................... 78 University-Supported Retail....................................................................................................80 Conclusions........................................................................................................................... 82 V. Best Practices in Downtown Retail ............................................................................. 84 Big-Box Stores in Downtowns................................................................................................ 84 Addressing Shopper Safety and Comfort ............................................................................... 88 Zoning for Retail ................................................................................................................... 92 Economics Research Associates Project No. 17879 Introduction Economics Research Associates and Marketek, Inc. (The ERA Team) were retained by the City of Portland Bureau of Planning to conduct the Central Portland Retail Research and Analysis study. Central Portland is home to a variety of distinct districts and neighborhoods. Each of these districts has its own characteristics and identities. Some districts such as NW 23rd Avenue, the Downtown Core, and Lloyd Center are home to established retail concentrations that serve both the surrounding neighborhoods and draw people from around the region. Other areas such as the NW Lovejoy Street in the Pearl District and Lower E Burnside in the Central Eastside are emerging as vibrant neighborhood-oriented main streets. Still other districts like South Waterfront and the University District have yet to really develop significant retail concentrations, but likely will in the future as the city continues to grow and develop. In this assignment, the ERA Team inspected Central Portland retail study areas, interviewed key stakeholders, reviewed demographic and economic trends and projections, conducted a SWOT analysis of the retail study areas, researched national downtown retail trends, analyzed future retail demand in each study area, and reviewed best practices in downtown retail in three comparable cities. Following this introduction, this section presents an Executive Summary of ERA’s analysis. Section II presents the study’s methodology, the economic and demographic trends in the metropolitan region, and the context for retail development in Central Portland. In Section III ERA provides for each Central Portland study area data on historical retail trends, an analysis of strengths, weaknesses, and opportunities for future retail development, and retail market demand estimates. Section IV summarizes national downtown retail trends and explains their relevance to Central Portland. Section V analyzes the downtown retail development strategies utilized in Boston, Vancouver BC, and Seattle, and their applicability to Central Portland. The maps for each of the ten districts and the long-term retail demand estimates are presented in Appendix A and B respectively. This report was prepared by the San Francisco office of ERA, with William “Bill” Lee serving as Principal-in-Charge and Chief Analyst. Sujata Srivastava served as Project Manager. Mary Bosch of Marketek, Inc., Tanya Chiranakhon, and Ernesto Vilchis assisted with research, analysis and report preparation. Tom Moriarity, ERA Principal based in Washington DC, served as advisor on tenanting and district issues. Economics Research Associates Project No. 17879 Page 3 I. Executive Summary Study Objectives This study seeks to understand the health of these varied retail districts, their potential for growth over the next 20 years, and how they relate to and complement each other in the context of a vibrant, diverse and evolving Central Portland. The results of the study will be used to inform the development of a new long-range plan for Central Portland. Rather than near term sales and tenanting concerns, the objective of this study is to provide economic guidance to long-term public policy and land use plans. The scope of this study was limited to analysis of ten specific study areas within Central Portland. The areas chosen were intended to capture existing major retail destinations, clearly emerging areas, and some (but not all) possible future retail areas. Some areas within Central Portland that have potential for future retail concentrations were not included in the study. Examples of these areas include SW 18th Avenue in Goose Hollow and Russell Street in Lower Albina. The omission of these areas and others like them from the study is a result of financial constraints and does not suggest they will not see future retail development. The knowledge gained from looking at other retail areas in Central Portland may be informative for these areas as well. Key Issues and Recommendations Based on the market analysis, stakeholder interviews, and the ERA Team’s experience, the following have been identified as key issues and ERA team recommendations for long-term retail development in Central Portland. 1. The requirement of active ground floor use of mixed-use buildings should be re-examined and better targeted. The current policy that mandates ground floor active uses in Central Portland has worked well in creating a vibrant pedestrian oriented city center. However, the geographic area where this policy is applied needs to be examined more closely. For example, at the periphery of Central Portland in emerging neighborhoods like the South Waterfront or the North Pearl, this policy is likely to lead to the creation of too much ground floor active use space and retail commercial