Fallout: The Financial Crisis

Big shifts on Main Street

Mitchell Hartman Feb 1, 2010
Fallout: The Financial Crisis

Big shifts on Main Street

Mitchell Hartman Feb 1, 2010


Tess Vigeland: Walking around the neighborhood for exercise is more and more an exercise in wow, where’d that store go? Empty storefronts litter main drags and alleyways of cities across the country. In fact, according to figures from real-estate consultants Cushman & Wakefield, some 10 percent of retail space is now empty. But new businesses are coming along to fill those gaps.

From the Entrepreneurship Desk at Oregon Public Broadcasting, Mitchell Hartman has this report.

MITCHELL HARTMAN: I’m standing on Sandy Boulevard, a busy four-lane road that runs through the heart of a bustling Portland neighborhood, just a mile or so from downtown.

MIKE WILLIAMS: This would be classified as storefront commercial, on a major thoroughfare, probably post-war.

That’s Mike Williams. He teaches real-estate finance and works in the state’s economic development department. He’s helping me map this post-recession landscape.

The boulevard’s lined with shops and restaurants, some new, some old, some empty.

There’s a sprawling vintage clothing store that moved from a small space across the street into a defunct car dealership. A shop selling vintage furniture took its place.

WILLIAMS: There’s sort of a supply-and-demand effect when it comes to vintage.

Williams says second-hand is hot all over the country, as some people unload what they don’t need, and others buy used to live cheaper.

We make our way down the boulevard, past a cell-phone store, a Thai restaurant, to another orphaned car dealership. This one got the ax in the Chrysler bankruptcy.

Now, some of the former showroom is an outlet for discount mattresses. Another section has been converted to cubicle space.

WILLIAMS: It’s for short-term lease, something that would fit a kind of a more entrepreneurial economy, people that may need a temporary place to stage themselves.

CHRIS SHERLAND: The thing about retail is that the space is always being recycled and adapted.

Chris Sherland analyzes commercial real estate at Cushman & Wakefield.

SHERLAND: Properties have to adapt over time to reflect the changes in the marketplace.

Those changes now amount to a tectonic shift.

In urban neighborhoods, the recession knocked out small retailers and repair shops that held on for decades. In their place: salons, bars and restaurants that generate more traffic and revenue. In suburbs, community colleges and trade schools are moving into half-empty shopping centers.

And wherever you look, services catering to aging Baby Boomers are moving in, says Richard Green of the USC Lusk Center for Real Estate.

RICHARD GREEN: So whereas there might have been a Spencer Gifts before, there’s now a Doc in a Box, who can do urgent care for people at a fairly small price in a very convenient way.

Cheap, convenient. It’s a pretty good formula for any kind of retailer to expand in a recession.

Por Que No Taqueria: You guys ready to order? Could I get the one taco with the small salad and can I do it for the shrimp one, the camarones?

BRYAN STEELMAN: My name’s Bryan Steelman, and I own Por Que No Taqueria, some low-brow Mexican street food.

Steelman opened his second taqueria in Portland’s trendy Hawthorne District a year ago. It’s been packed ever since. He took over a funky old building with hardwood floors and exposed beams that for 40 years was a family-owned upholstery shop.

STEELMAN: Someone wouldn’t be able to buy this building back and open up an upholstery shop and make the numbers work. Partially because of the way that people are shopping at IKEA and just re-buying something when they need it. But also the way the economy is changing.

Steelman says the speed and severity of the recession has accelerated the retail transformation: with new vacancies, lower rents, and contractors hungry for work.

STEELMAN: It was an excellent time to get good quality construction crew on to do the work. And I do think it was a good time to open up another place where people can come in and get a large sum of food for $6.50.

Back where we started, on Sandy Boulevard, a few miles from that new taqueria is another place you can do quite well with just $6.50 in your pocket.

HARTMAN: And then behind us is Katie O’Brien’s, which must be an ancient Irish pub.

WILLIAMS: It has good visibility, especially the coming-home visibility. You have some retailers are on the way to work, some retailers are on the way home, and I guess you would go to a pub on the way home.

A reminder that some rules of the retail game will probably never change.

I’m Mitchell Hartman for Marketplace.

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