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Recession leaves retail holes


Of the Keizertimes

Notice more “for lease” signs on River Road than you used to?

A recent informal survey of commercial vacancies along River Road found at least 25 available office and retail units. And Pam Rushing, a commercial real estate broker for Coldwell Banker Commercial, said River Road currently has about a 13.3 percent retail storefront vacancy rate.

A spike in available real estate is a byproduct of a downturned economy. In fact, commercial real estate agents say fear of the future and a lack of credit are primary deterrents from investing in or expanding a business.

Jennifer Hand of Gall Real Estate Services sees a light at the end of the tunnel, but says prospective tenants are taking “baby steps” instead of leaps.

“People are thinking we’re going to be coming out of this,” Hand said.

Julie Frazier, an advisor for Sperry Van Ness, said her office is “receiving so many more phone calls than we were last year. … I think overall it’s looking promising.”

In addition to increasing optimism – or perhaps decreasing pessimism – many landlords are doing almost whatever it takes to get retail and office space filled.

Hand said length of lease has been a barrier.

“(Tenants) are hesitant to sign a five-year or 10-year lease, and a few years ago that wasn’t a problem at all,” Hand said.

“Landlords are needing to be more creative and more flexible than they have had to be previously,” said Jeff Corner, principal broker for 1st Commercial Real Estate. “Rent concessions, free rent periods, shorter or more flexible lease terms have all been things that have become more common in the marketplace. What we know to be the case is it’s getting more and more difficult for landlords to justify spending money on tenant improvements while at the same time granting lower rent, or rent concessions.”

Well, not all landlords.

“Landlords who are well-positioned financially are not so desperate that they give away the farm to get a tenant in their space,” Frazier said. “They also are cautious about putting tenants in at greatly-reduced lease rates that, when the economy turns around, might be detrimental to the overall value of their property.

“But we are also seeing landlords who do whatever it takes to get the tenant in the door,” she added.

But there are certainly other factors in play. Depending on who you ask, Keizer Station was either a boom or a bust for River Road businesses.

Frazier believes that Keizer Station “will probably, if not already, be a good thing for the retail community in that area. … People driving by that aren’t from this area probably don’t know a whole lot about Keizer and what’s there. Now there’s a sort of beacon that shines from the freeway … into the local area.”

Rushing thinks that Keizer Station is a hit with residents, but has hurt the River Road business strip in that major, nationwide tenants prefer Keizer Station.

“And I think a discount grocer will be great for the people in Keizer, (but) I don’t know how the local stores, like Roth’s and Albertson’s, are going to fare with a discount grocer going in,” Rushing said.

And for better or worse, agents spoke of River Road and Keizer as a “submarket” to the greater Salem area. Corner said businesses moving to the area often want to try Salem first before opening a Keizer location.

“You’re going to tend to focus on the larger market area first, then look to the smaller submarket areas second,” Corner said, citing Sonic Drive-In as an example.

“South Salem and Lancaster Drive are the number one choices,” Rushing acknowledged. “River Road ends up being third on the list.”

She said higher traffic counts on Lancaster Drive and a somewhat wealthier demographic in south Salem were two reasons retailers cited. Corner also noted that retailers are looking at rooftops, density and traffic, saying Keizer “is a smaller community, so it’s a smaller trade area.”

And some simply think Keizer isn’t a great place to do business, Frazier said.

“I have a client looking to relocate one of his businesses, and he said, ‘Don’t bring me anything in Keizer. That’s certain death for my type of business,'” Frazier said. “There’s a perception, real or imagined, that it’s not as viable or successful a trade area as some of the others.”

That said, the River Road Renaissance program – where business owners traded a piece of ground to the city’s urban renewal agency for new, meandering sidewalks with plants, fountains and benches – has been a positive step, agents said.

“It just feels like a place you’d like to be, especially on a beautiful sunny day,” Frazier said. “If you could go to one of two same-type businesses, and one’s warm and inviting with greenery and plants, that’s where you’d choose to go and do your business.”