Commercial vacancies haunt Broadway
Portland State’s newest, mixed-use building is also generating mixed results.
While student-housing demand creates waiting lists for the Broadway’s upper levels, the ground floor remains over 60 percent empty more than a year after opening.
The one-year point is significant because it marks the passing of a period where vacancies were budgeted by Broadway Housing, LLC, the limited-liability corporation that owns the structure. The building leases retail space at $24.50 per square foot annually, giving the vacancies a potential value of $220,157.
The vacancy rate is about to greatly improve though, according to Dee Wendler, director of Business Affairs at PSU. Four of the Broadway’s seven commercial spaces remain closed, including corner lots on the southwest and southeast sides, but only one of them is still without a signed agreement of intent to lease.
Wendler said two companies, Coffee People and Vision World, have signed leases. A third, a sandwich shop, is in the final stages of doing so. They will join EB Games, Great Clips and Chipotle in the building, leaving only the southwest corner unoccupied.
Part of the lagging retail development is attributable to the dense legalities involved in leasing at the Broadway. Wendler said the leases sometimes exceed 50 pages with clauses upon sub-clauses negotiated to fit the specific needs of each tenant.
"You want that vendor to be successful," she said. "Just like when you buy a car, there are all these different factors to consider."
Commercial development faced a huge setback earlier this year when a coffee shop, not Coffee People, backed out of its plans to lease the largest lot
.
"That completely reset the process and totally threw us," Wendler said.
Once rented, a retail space at the Broadway goes into a phase called "build out," where the interior and infrastructure are tailored to the tenant. Wendler said the lots are purposely left without concrete floors to assist the build out process. For instance, she said a restaurant would have very different electrical, heating and ventilation needs than a bookstore.
Tyler Kueber, a sales associate at EB Games who lives at the Broadway, said business had been pretty slow there since he took the job in April. Summer was especially quiet, he said. "I’ve had customers come in and say they had no idea this was here."
Assistant Manager Brandon Jones said it’s not the company’s policy to advertise individual stores even if that store is located between two empty lots and off a main road.
"When the store first opened, we talked to the corporation about that," Jones said. "But they didn’t want to pay $300 to put up a street sign because they rely on word of mouth."
In contrast, Wendler said Chipotle’s initial popularity has far exceeded her expectations. The Mexican restaurant chain was met with some controversy this spring because it is majority-owned by McDonald’s Corporation. An actual McDonald’s store leases university retail space at the corner of Sixth Avenue and Harrison Street.
"We’re very concerned about making sure it’s a good mix of tenants at Broadway," Wendler said. "We’ve tried to look at what the campus is lacking."
One thing the university lacks, but that is actually a boon to its retail market, is a housing-related food plan on par with campuses of comparable size. Wendler said this quirk is an incentive for food vendors. However, PSU’s history as a commuter campus doesn’t help.
"We haven’t traditionally had much of a residential population," she said, adding that the construction of the Broadway proves those times are gone.
