August 2023
Like all major American cities, Portland saw many business closures in the retail industry with the beginning of the pandemic in early 2020. We continue to see the effects of that shock on rent and vacancy statistics for commercial retail space. In the first half of 2023, the average cost of renting retail space in Portland averaged $27.05 per square foot. Adjusting for inflation, the cost of renting retail space has declined by 19% since 2019, putting the average rent in 2023 at nearly its 2013 level.
Asking Rent for Retail Space in Portland (Price per Sq. Ft.)
In the second quarter of 2023, the City of Portland had a retail vacancy rate of 26.8%. This is more than twice the vacancy rate in early 2019 of 10.6%. Portland’s retail vacancy rate today is in the middle of the pack of comparable American cities. Oakland has a noticeably higher vacancy rate, while Raleigh and Boston have noticeably lower vacancy rates.
Retail Space Vacancy Rate by City, Q2 2023
Looking at neighborhoods around the city, retail vacancies and rents vary widely. Portland’s Pearl District has a low vacancy rate of just 7.3%, although that is a noticeable increase from the District’s 3.2% vacancy rate in early 2019. Portland’s Central Eastside has a noticeably low retail vacancy rate of just 3.7%, unchanged from its rate in early 2019.
The Lents Foster neighborhood has one of the lowest retail vacancy rates at just 2.1%, unchanged from 2019 when the cost of renting was just $16.11 a square foot. But by early 2023, that rent had increased dramatically to $23.28 a square foot, suggesting that demand for retail space is pushing up against space availability, sending rents to new highs.
Escalating rent costs in certain Portland neighborhoods – along with the surge in online shopping – represent a constraint to economic growth in brick-and-mortar retail. Since the COVID pandemic began in early 2020, retail employment is down in Multnomah County by 8 percent. This decline has been led by the clothing, electronics, and furniture retail sectors, while grocery stores, landscape and garden stores, and hardware stores have seen a mild employment increase.
Portland’s small business community is anchored by brick-and-mortar retail businesses. The growing cost of retail square footage underpins the need to support businesses to stay in place. Prosper Portland offers two grant programs with that goal in mind. The Local Small Business Repair Grant, created in 2020 with funding allocated by City Council, supports funding up to $10,000 to local small businesses needing immediate repairs. The intent of the grant program is to help eligible businesses remain open and operational, contributing to healthy and thriving neighborhoods. Since 2020, the Repair Grant has provided $2.1 million in funding to more than 600 businesses.
Funded by the American Rescue Plan Act, the Small Business Stabilization Restore Grant opened in 2023 and provides one-time direct grants to support Portland small businesses experiencing hardships resulting from the COVID-19 pandemic.
It is intended to help stabilize small businesses with up to $25,000 in financial assistance for operational expenses related to impacts of vandalism and break-ins.
