People beelined for Mod Pizza on one of April’s rare sunny days. Like an efficient factory, they seemed to enter just as someone else freighted a pizza box out the back door.
“They’ve been killing it,” said Mark Osborne, a board member of the Vancouver developer C.E. John. Meanwhile, across the street from the pizza place’s patio, construction crews went to work building more retail space.
The pizza place’s busy afternoon was a welcome sign for Osborne and C.E. John. The development company recently pumped close to $22 million into its Hazel Dell Marketplace shopping center, which it co-owns with Hummelt Development of Wilsonville, Ore., to improve facades, remodeling existing spaces and adding about 50,000 square feet of new space.
Osborne, who lives nearby, said the area had been in dire need of more places to eat and shop. The center, north of 78th Street and west of Interstate 5, is now positioning itself to be the prime option for the relatively affluent residents of Lake Shore and Felida.
“The location really is an A-plus,” Osborne said.
The shopping center’s expansion runs counter to the national trend. Malls and large anchor tenants have faced uncertain times in the shadow of online retailers. Led by Seattle-based retail giant Amazon, e-commerce has taken huge bites from brick-and-mortar stores around the country.
It’s a trend that Osborne said he is not particularly worried about as C.E. John focus turns more toward providing good times and interpersonal experience that can’t be captured on the web.
“People, no matter what Amazon does, want a place to sit down, have some fun and have some food,” Osborne said. “That’s not going change.”
Hazel Dell Marketplace is ready to bloom this year, with a handful of new businesses moving in. Last week it was announced Orangetheory Fitness, a boutique gym, and Killer Burger would be moving opening at the space as early as September.
Killer Burger will move into a space just north of Marshalls, a 2,400-square-foot space formerly occupied by Hot Yoga. Orangetheory will move into a 4,000-square-foot building west of Mod Pizza, which it will split with another company not yet revealed.
And south of that building, a 3,000-square-foot space will soon become the French-style Sixth Avenue Bistro. The bistro will be a sister to Ferrar’s Bistro, a Felida landmark.
Owner Debbie Belden is excited, she said, because the second bistro may give her a toe into a new customer base.
“This new venture will add a diversity to our current customers as well as expanding to customers who haven’t been to Farrar’s,” Belden said.
That diversity stems from the kinds of businesses nearby. Sixth Avenue Bistro, which will seat 100 people indoors and another 50 on its patio, lies between a salon and a frozen yogurt restaurant, and a stone’s throw from a credit union and a PetSmart.
“I think it will definitely bring us more foot traffic from people in the immediate area and people stopping in for happy hour or dinner or takeout,” Osborne said. “And I realize we have a lot of restaurants around us as well, but we’ll be the only full-service restaurant and bar that’s locally owned.”
While that mix is a bonus for Belden, it’s vital for Osborne, for C.E. John and for other shopping center developers who are trying to lock tenants into 10- to 15-year leases. Tenant variety will attract more shoppers that in turn drive business, they hope.
Besides Sixth Avenue Bistro, the marketplace signed Legacy Go-Health Urgent Care, Parkrose Hardware, TwinStar Credit Union and Marshalls. It has been anchored by Safeway and Ross Dress for Less. A new fast-casual restaurant could be coming soon, too, Osborne said.
Leasing agent Rachael Diharce said C.E. John tries not only to appeal to commuters passing by, but also tries to offer enough so people visit Hazel Dell Marketplace can knock out several chores at a time: maybe buy groceries, pick out some clothes and then grab a quick bite.
“You want to give people a reason to stay longer and do multiple trips,” she said.
Though the center is growing, it’s not immune from the national squeeze on retail. Sports Authority, where Parkrose Hardware now stands, closed after less than a year when the company liquidated in 2016. Similarly, the new Rue 21 at the Hazel Dell Marketplace is already closing as the clothing retailer shuts 400 stores.
Osborne said such closures were simultaneously problems and opportunities: problems in that empty space is added costs for the developers, but opportunities to find suitable replacements.
“These things happen,” he said. “But, like all strong developers, we have back-up plans before problems even arise, which we derive from national, global, and regional market and business analysis on a daily basis.”
Ultimately, shopping centers such as Hazel Dell Marketplace seem to be thriving almost by being specialists in growing areas.
According to commercial realty company CBRE Group in Portland, rents at retail centers are the strongest they have been in a decade. Real estate agent Alex Martinac said that is largely due to developers keying in on population centers in demand.
“There’s a huge pent-up demand for quality retail projects” in growing towns, he said, where residents have been relegated to driving to nearby cities to find stores. “People don’t want to do that anymore, so you develop shopping centers in that market because of convenience. Convenience is huge.”
So are demographics. Hazel Dell Marketplace serves Felida, where the median household income is $96,000, Lake Shore, $73,686, and Salmon Creek, $71,314, compared with the county median of $60,756.
There’s also synergy from putting similar stores together. Hazel Dell Marketplace, for example, includes discount retailers Marshalls, Ross Dress for Less and Tuesday Morning. Together, the three offer variety of clothing and home goods and a browsing experience that can’t really be replicated online, Diharce said.
“You go in there and you’re looking to decorate, you might not know exactly what you’re looking for,” she said.
Likewise, when Vancouver developers Killian Pacific set out to revitalize The Mill, a smaller shopping center in the North Garrison Heights neighborhood, they focused on creating a place that met the needs of the people nearby. The relaunched center successfully pairs restaurants such as Rally Pizza and Smokehouse Provisions with Parkrose Hardware, Planet Fitness and The Barbers.
“We have been intentional about curating a mix of uses that will be synergistic and best serve the needs and wants of the surrounding neighborhoods,” said Lance Killian, president of the company.
The centers will have to be greater than the sum of their parts, experts say, because shoppers have changed. Carmen Decker, vice president with Kimco Realty, which owns about 500 shopping centers in the U.S. and Puerto Rico, said shoppers have different goals than they used to.
“A lot of younger shoppers want to have an experience,” Decker said. “That includes coming and working out or going to the movies or going out to dinner.”