Anyone driving down Kent Street through downtown Portland recently would likely have noticed several business properties for sale or for lease, as well as a number of properties that appear vacant with no for sale or lease signage. In the almost 20 years I have called Portland home, I do not recall ever seeing 100% occupancy in the downtown area, but the current number of properties available seemed like a increase to me.
To take a closer look at the current commercial vacancy situation, I decided to reach out to three people I believe have an exceptional level of knowledge on this topic. Terry Frewen - Broker/Owner of Coldwell Banker Frewen Realty, Tina ConnerWellman – Managing Director of Mi Portland Downtown, and Tutt Gorman – City Manager of the City of Portland.
As for the number of commercial properties currently available, Frewen said, “I don't see an unusual amount of vacancies in the downtown business district. There are approximately nine vacant ‘store/office’ fronts that are currently vacant that are for sale or rent, depending on how you count them. It’s probably more of a normal vacancy rate than one might think. The 1st two blocks of downtown Portland are comprised of just under 50 different property address's, that do not count the individual 2nd floor loft apartments and some separated interior office suites.”
ConnerWellman said, “There is no argument, brick and mortar businesses residing in commercial properties across the country, particularly in retail, are down in numbers. The world we live in is faster paced, and more demanding of 24/7 availability from our living rooms and work spaces, forcing both business and property owners to re think, re structure and adapt.” She added, “That said, in the past 18 months there have been 19 commercial properties on the market for sale or lease within the downtown Portland district. Currently, there are six still for sale or lease. Of the remaining thirteen, five have become operating businesses, four are under development, and four owners are reserving their interests and not offering the space. These numbers situate the commercial development district within the City of Portland well ahead of the game.”
Gorman stated that, “I do not have the statistical data and would defer to the DDA Director. I believe we actually have a net gain of businesses as of recent. Historically and nationally speaking, there is always an ebb and flow of businesses in traditional downtown areas.”
Gorman also said, “There is no overarching reason or systematic causal connection for existing vacant buildings. As such, there is no silver bullet or singular remedy to effectively and collectively address this issue. While local government has a role – that role is limited to ensuring that its zoning ordinances and other necessary regulations are not unduly interfering with commerce or the economic vitality of its community. To be clear, there is absolutely a proper and prudent role for local government to take on in facilitating revitalization and historic preservation in its downtowns, however, without acknowledging the individual property owner’s right and inherent responsibility to maintain their own property and to be a partner in that endeavor, the desired results will not be achieved. We have several great property owners who take great pride in their buildings and community, but there are always a few who are not motivated to conduct even routine maintenance. The City is prepared to address these issues through the enforcement of the property maintenance code or other blight elimination processes.”
He added, “Each building has a different story and owner with varying reasons for its vacancy. For example, one particular owner of a building that has been vacant for years has no interest in renting or selling his building. Like it or not, that is his or her right. Other vacant building may be priced out of market range and/or have significant structural issues due to years of neglect. In these instances, there are significant local, state, and federal programs to assist with redevelopment challenges, but again, the property owner must be a partner in this process. The City and DDA are committed to assisting our property owners and educating them as to the available resources.”
Taking a broader look at commercial real estate in general, Frewen noted, “Financing for commercial property is getting tougher and tougher, as the lenders are requiring large down payments, typically 20-30% of the purchase price, and higher credit scores are needed as well. A good business plan and a property investment calculation will go a long way in determining if your business can support the building along with the needed profit margins to sustain the business. Zoning is always a factor when it comes to limiting the usage of a building, and I think we need to see some loosening up on the current ordinance, as there are many uses that are not permitted or need a Special Land Use permit in the C-1 zoning district, which encompasses the downtown area.”
Looking specifically at Portland, Frewen added, “The downtown business district is zoned as the C-1 business district, and is intended to support a traditional downtown main-street atmosphere. District uses are intended to be primarily specialty retail uses with complementary, small scale service businesses. The C-1 central business commercial district is intended to promote the consolidation of commercial activities in the existing town center by providing for a variety of retail, office, restaurant and entertainment activities within the district. The purpose of this district is to encourage and promote the business use of existing residential buildings within the district and the development and expansion of the town center to serve the needs of the surrounding area. The central business area of the city is viewed as the older, traditional center of the city, and is characterized by smaller lot sizes, more intense land uses, mixed land uses and higher percentages of lot coverage. This area permits the integration of business activity, governmental functions, services and residential land uses.”
ConnorWellman said, “Within any commercial district, it is difficult to separate property from business, they are intricately tied together. Business viability decreases vacancies. Businesses have their greatest expenses and are most vulnerable in their first two years, factors that only slightly decrease in the two to five-year range. A business needs a clean, well maintained space that suits their needs upon start up for good first impressions. They don’t have the funding, and loans are typically not available to improve rental space. It’s an even more financially daunting task to fund a new business as well as a property that has been neglected or is in dis-repair. Property owners want to make sure they maintain and repair both the interior and exterior of their buildings to ensure good rental rates while helping to position the business for success. A well maintained, attractive property also improves the sale price.”
For a business owner or investor looking to purchase a commercial property in downtown Portland, there are a number of positives that come with Portland. Frewen said, “Probably the number one thing that Portland commercial property has over other towns, is the affordability factor. Price per square foot to purchase or lease a building is significantly less than neighboring towns. This always helps to keep the overhead down. Purchase rates start around $36/sf and rental rates, range from $5/sf to $12/sf per year. Many downtown buildings have loft apartments on the 2nd floor, which help keep the costs down for the owner that has their business on the main level.” He added, “As far as parking is concerned, I've lived in Portland nearly my entire life, and have never had to park more than two blocks away from any business. People sometimes forget how the parking and traffic is in larger towns. We should all feel very blessed with our small-town atmosphere and culture.”
Portland Downtown offers support to downtown property owners in a number of areas. ConnorWellman listed, “Portland Downtown’s DDA/Main Street Program offers both property and business owners valuable resources in a variety of platforms – from one-on-one free and confidential consulting, to online connections for starting, structuring, and sustaining a business or property project.”
She also stated, “We do have funding to assist and encourage property owners to rehab and improve historic building façades. These projects must be designed to meet community goals & guidelines for historic rehabilitation.”
She added, “What we offer can be highly specialized and individualized to a property or business owners needs and funding. The best thing about our assistance is that if you own a property or business, and have a want or need, contact us. We’ll do everything we can to help. If there is something we cannot do here in house, we have the resources available to connect you to. It never hurts to ask.”
When asked what she saw as strengths of a location in downtown Portland for potential commercial buyers, ConnorWellman said, “Portland is a quaint community with abundant natural amenities. It is well situated between Lansing and Grand Rapids with two highway exits. We have a high household disposable income average in a family friendly community.”
She added, “Our program functions in partnership with the city on setting the stage for growth and sustainability through placemaking and infrastructure. We’ve come a long way in our work to highlight a beautiful vibrant community. Many agree, Portland Downtown has a tidy, refreshed look with the renovation of Scout Park, improved partnership with the Garden Club for beautiful summer flowers, Veteran’s Memorial Bridge painting and lighting, and the painting of lampposts throughout the district. There are exciting and extensive plans for the next few years (see Tutt’s outline) that will be encouraging to current owners, and for those who may have an interest in investing.”
When asked what he saw as strengths in a location in downtown Portland for potential commercial buyers, Gorman said, “Unique to Portland, our downtown truly signifies our identity and heritage by being situated at the conflux of two rivers – the City of Two rivers. Investors and developers recognize the opportunities here, especially as Portland is perfectly situated off the interstate between Grand Rapids and Lansing. The City and DDA has pivoted from being events heavy to focusing on infrastructure. Recently, the Veteran’s Bridge lighting project, the redevelopment of Scout Park and the decorative street light painting have been completed and signaling the City’s commitment to the downtown and things to come. It’s an exciting time for Portland and our downtown with many substantial projects on the horizon:
Splash Pad and redevelopment of Toan Park – The DDA in collaboration with the Parks Department have applied for additional funding through the DNR for this project for potential construction in 2020.
Grand River Avenue Bridge Improvements – The City was awarded a 400k grant through MDOT’s local Bridge Program for improvements to the Grand River Bridge and approaches. Project set for 2019.
City Acquisition of the ADM Property - this will facilitate additional parking or other municipal purpose in redeveloping downtown. Most importantly, this acquisition will allow the City to redevelop the area and potential realignment of the Divine highway Bridge.
Kent Street Improvements – I am currently working with city engineers on a proposal for a streetscape and infrastructure project for Kent Street from Academy to Grand River Avenue. This would be a significant project in scope and cost and would transform the downtown area.
Redevelopment Ready Communities (RRC) Program through the MEDC – the City is currently engaged with MEDC to become certified as a RRC Community. The program is designed to empower communities to shape their future by establishing a solid foundation that retains and attracts business investment and talent.”
Frewen also noted the importance he sees is local residents supporting local businesses. He said, “While I can't speak for all the Portland business's, I think we all struggle a bit with Portland being a bedroom community and the majority of the population leaves town during the day and are in town in the evenings and weekends, so much of the residents’ business is done outside of Portland. I always try to tell people, that they should at least try to do business with a local company first, and then if it doesn't work out or you don't like the product, the price, or the experience, then, try the internet or elsewhere. Always, remember, it's the local business's that pay the school mileage tax that supports the schools, and they probably are sponsoring the school’s sports teams, and supporting local charities and events.”
Despite the number of vacant commercial properties in downtown Portland, there is quite a bit of progress that seems to show an exciting future for the area. Frewen said, “There are several up and coming projects in the 1st two blocks of Kent Street which includes a few coffee shops, bakery's, and offices.”
ConnorWellman said, “There is a bright future just around the corner for all of Portland. Our board members are people that have an interest and a passion for downtown. They have grown up here, created memories here, own and operate businesses here. Their dedication stems from their interest in growth and prosperity of the community. The Portland Downtown Board of Directors works to ensure that Portland continues to be a place that matters for generations to come. If his description also fits you, and you have some time and talents available, we’d love to talk to you about joining one of our teams, or finding meaningful projects for you to be a part of. 517-647-5027 firstname.lastname@example.org.”
Gorman said, “While there may be a few vacant buildings, the reality is that there is a lot of activity, growth and excitement in our downtown and our best days are ahead of us.”
After reaching out to Frewen, ConnorWellman and Gorman, I am optimistic that brighter days are just around the corner for our historic downtown.