Tactical Update on Retail Leasing in Southern Oregon

First, I'll share my candid thoughts on what we're seeing work vs not work in retail-specifc, overall leasing, and then share my thoughts on specific ideas we're seeing property owners ask about.

First, in the retail world, property owners  are by no means alone in seeing vacancy tick up and deals becoming exponentially harder to get across the finish line. As I'm sure property owners see all the time, a lot of these smaller retail spaces (especially inline spaces) are occupied by smaller/younger businesses and even brand-new "startups". We are NOT seeing a slow down of new businesses by any means - AI and the resources today have allowed more and more people to start their own business.

However, what we are seeing is a large, large bid-ask spread. Tenants simply cannot afford the rents today's property owners are asking. They are getting squeezed in every direction, with COGS way up, staffing more expensive and harder to retain, and the consumer's pockets getting light.

The rift between large corporate tenant's financials and the smaller single-location tenant have really grown. Not to say there are no smaller tenants that can afford market rent, but these tenants are in high demand and have lots of options.

The local struggle is that a lot of spaces are simply older and becoming more and more functionally obsolete - tenants really need to be able to visualize a space, and if it's not presented with detail, plans, and a good story, they'll just move on to the next option.

Now, in more positive news, we're seeing relatively smaller concessions have an outsized impact in helping deals happen. 1-3 months of rent abatement can accomplish a signed lease and a longer term, resulting in a net positive for landlords. I encourage property owners's to give some room on TI terms, have more flexibility in lease term and structure, and consider more creative options - specifically, we're seeing a specific business concept really take off in leasing. This concept is a master lease deal - essentially a lease arbitrage for a tenant. Specifically, this is a hair salon/barbershop-style deal (booth rental), and a flea market / mercantile operator. Very small tenants (typically a hobbyist) would love to have a dedicated space - they can't afford $3,000 per month, but they can afford a booth for $100 per month and a share of sales.

In terms of specific tactics we're experimenting with across the board, we are seeing really strong reception from listing our lease spaces on Facebook Marketplace (list it "for sale" under the Misc category for the best reach). It takes a lot more qualifying work upfront, but I can see we have signed multiple leases from FB leads. Also, direct mail works, full stop. Reach out and we'd be happy to help give you some ideas.

Any tenant in the discount / low-cost business segment also seem to doing well. Burlington's, TJ Maxx, etc and locally Cash Connection and other mark-down stores are solid performers and will take space others may not.

Moving on to your concepts that property owners are trying to work with: these ideas are those of pop-ups, activations, and short-term traffic generators. hese are all good ideas, which work - in large markets. Immediately what comes to mind is tracking and finding growing smaller local businesses and offering to either sponsor a pop up event where you donate the space or charge a small rent and split some of the revenue, while having signage on-site explicitly stating the space is available.

However, the through line between these ideas is the same problem: this solves short-term income, but in a few days or weeks the space is again vacant and producing $0.

Any events or pop-ups would have to have an agreement that your goal is to lease the space long-term - otherwise I fear it'd be wasted effort.

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