RETAIL PERFORMANCE - THE PORTLAND LOOK

Sometimes, the best of intentions can go awry. On behalf of a private sector initiated Retail Task Force (RTF), E. D. Hovee & Company, LLC has recently evaluated sub-city shopping patterns in Portland, Oregon. With this analysis, the RTF submitted testimony to City Council members expressing concern that current proposals for commercial areas of the city could render "access to affordable goods and services, including healthy food, more difficult.” 

To understand the rationale for these concerns, in-depth evaluation of current patterns of retail sales and commercial real estate rental space city-wide. Principal findings are that: 

  • Portland is already under-retailed – especially lacking in meeting the day-to-day needs of city residents as for grocery retail.  
  • Disparities are greatest for areas removed from the city core – to the east where commercial space rents are lowest and least adequate to support high costs of new development and to the west where viable retail sites are limited due to topography and proximity to retail in the neighboring suburban jurisdiction of Beaverton. 
  • City of Portland consideration of standards that may be workable in higher density areas with good transit service risk even greater shortfalls in retail availability for residents who already have the poorest access to quality, healthy and affordable retail services. 

Retail Sales & Leakage

Retail sales leakage occurs when sales volumes of retail stores are below what residential demand would support - meaning that in-city residents are traveling outside the city to shop. For this city of over 613,000 residents, an evaluation of 2015 retail sales patterns using nationally recognized Nielsen data showed that: 

  • City-wide retail demand and supply are roughly in balance - with relatively nominal levels of overall sales leakage experienced but with substantial sales leakage for grocery stores as anchors for vital neighborhood business districts.
  • Portland's vibrant Central City is experiencing retail sales levels nearly double what the purchasing power of Central City residents alone would support - not surprising given strong attraction of the downtown and Pearl districts to suburban residents and tourists.
  • Other Portland geographies are substantially under-retailed. Even trendy Inner Area neighborhood districts experience net sales leakage at about 38% of resident demand, including grocery leakage at 15%.
  • Socio-economically challenged Eastern areas (east of about the I-205 beltway) are indicated as having sales leakage approaching 50% of resident demand - with limited grocery options offset by extraordinarily high rates of purchases at less healthy convenience stores. 
  • The topographically challenged Western area with its hilly terrain experiences even higher rates of leakage, with many residents traveling by auto over the hill to the neighboring jurisdiction of Beaverton. 

A surprisingly high 18% of all in-city retail sales occurs at the northern edge of the city near industrial and airport areas - especially for large format stores that can not find appropriate sites closer to residential neighborhoods. 

City Action

In May 2016, the Portland City Council approved amendments as proposed jointly by RTF and planning staff to the updated Comprehensive Plan that better address the widest range of retail needs across the city with policies aimed to:

  • Provide for a competitive supply of retail sites that support the wide range of consumer needs for convenience, affordability, and diversity of goods and services, especially in under-served areas of Portland.
  • Provide adequate land supply to accommodate a full spectrum of grocery stores catering to all socioeconomic groups and providing groceries at all levels of affordability.
  • Consider short-term market conditions and how area development patterns will transition over time when creating new development regulations.

A final City Council vote on the Comprehensive Plan is scheduled for June 2016. As a related implementation activity, the City's Planning and Sustainability Commission is receiving testimony through July 12, 2016 on a Mixed Use Zones Project and zoning code amendments affecting current commercially zoned districts of the City - after which a public hearing will be held on a proposed composite zoning map.