Portland Retail Market Improving Slightly in 2003

PORTLAND-According to the latest National Retail Index produces by Marcus & Millichap, the Portland-region retail market will see gains in occupancy and rents during 2003.

The NRI ranks 38 retail markets nationwide based on a series of 12-month forward-looking supply and demand indicators. The top-ranked markets are typically characterized by low vacancies, prospects for rental growth, limited new development, and solid employment and household growth.

The forecast, which ranks Portland 24th, predicts retail vacancy in the Portland region will decrease from 6.5% to 6.3% by year’s end while average asking rents will rise by 0.5% to $18.60 per sf. Portland dropped three spots in the rankings due to slow rent growth and modest employment gains forecast for 2003. After two consecutive years of layoffs, local employers will add to payrolls in 2003, with job growth of 1.1% forecast. Employment gains in 2003, however, will not make up for losses incurred during the recent economic downturn.

“The high-tech sector put a damper on the Portland market during the national economic slowdown; however, the area’s retail market remains healthy with low construction and stable sales growth,” states the report.

Washington, D.C., ranked as the top retail market in the nation for the second consecutive year due to its compelling demographics and reliable economic engine fueled by the public sector. Rounding out the top five were Orange County, Calif., (No. 2), San Diego (No. 3), Boston (No. 4) and Fort Lauderdale, Fla., (No. 5). San Francisco came in at No. 6, down one spot from last year, while Oakland and San Jose, respectively No. 8 and No. 12 last year, dropped to No. 14 and No. 19 in this latest ranking.

Cleveland came in at the bottom of the index, ranked No. 38 for its high vacancy rates and a lackluster economic outlook. Las Vegas made the biggest jump, climbing 10 spots to No. 13 for having the highest expected employment and household growth rates among the 38 markets surveyed. Seattle fell back the farthest, dropping 18 spots to No. 30, primarily due to economic and employment setbacks.