Experts bursting with ideas to fill space in Portland-area malls

Special Reports

A local real estate attorney says stores opening and closing in malls can be compared to Darwin's theory of evolution.

PORTLAND, Ore. (KOIN) — Within the last year, two Portland metro area malls each lost a major retailer and are now trying to fill vacant space during an economic recession. 

Nordstrom announced in May 2020 it would permanently close its store at the Clackamas Town Center, along with 15 other stores across the country. In a statement, Nordstrom said the coronavirus pandemic forced the company to accelerate its digital sales capabilities and that the decision to close the stores was based on the needs of each market.

A similar situation occurred at the Lloyd Center in Portland months later. Macy’s permanently closed its store in early January.

Both Nordstrom and Macy’s were considered anchor stores at the malls — large department stores that are meant to attract shoppers. 

This photo taken Jan. 5, 2021 shows the Macy’s at the Lloyd Center permanently closed. (KOIN)

The Macy’s closure now leaves the Lloyd Center with several anchor spaces vacant. Sears and Marshalls closed in 2018, and Nordstrom closed in 2014.

KOIN 6 News asked the Lloyd Center if they have any plans to fill the massive spaces. The Lloyd Center replied with a statement saying, “These are challenging times for many retail businesses, but Lloyd Center is constantly identifying new ways to reimagine the mall and provide a vibrant space for Oregonians to enjoy. We understand that our community is eagerly awaiting updates, but right now our focus remains on supporting current tenants and expanding community partnership opportunities.”

Greg Lutje, a real estate attorney with Ryan, Swanson & Cleveland, said although it might seem like a bleak situation, losing tenants and replacing them is nothing new for malls. 

“It’s Darwin’s theory of evolution. I mean, it’s grow, stagnate, or die,” he said. “What [mall owners] are examining is how do we maintain our relevance and experience in this new age? Recognizing that we still own prime real estate and have a lot of options and opportunities.” 

Lutje said sometimes, when these large retailers leave, it can be a positive change for the mall. He said oftentimes, when a large retailer moves into a location, it enters into a development agreement, which gives the store a lot of control and oversight over what is done on the property. When the retailer moves out, it often releases the developer from the previous restraints and allows them more opportunities to use the space creatively. 

It could also create an opportunity for the mall to purchase the space from the retailer. 

At Clackamas Town Center, Nordstrom owns the space it previously occupied. KOIN 6 News contacted Brookfield Properties, which co-owns and manages the mall, but no one would share information on their plans for filling the space.

On Jan. 5, 2021, The GAP at the Lloyd Center was holding a store closing sale. (KOIN)

Kirra Krussman, a commercial real estate broker in the Portland area, agrees that there’s an abundance of opportunities when it comes to filling mall space. Malls just need to do their research, get creative, and think outside the box when it comes to finding tenants. 

Currently, Krussman said strip malls are much more popular to consumers than traditional malls because of their easy accessibility. She believes malls could attract more shoppers by remodeling their exterior to more closely resemble strip malls. If they put more store entrances on their exterior, it would make it easier for customers to park in front of their destination.

“People don’t want to necessarily walk past all these different stores to get to the one they want,” Krussman said. “They want to get to the one they want and then maybe there might be a couple around it and then they’re probably going to get back in their car and move the car. It’s just the way it is.” 

Both Lutje and Krussman also said malls are relying on entertainment as a way to draw in crowds. Krussman applauds the Lloyd Center’s ice rink as a key way to attract people. She also said movie theaters, playgrounds, and open-air dining can draw people in. 

Krussman is brimming with ideas for filling malls. She said space could be used for offices, gyms, and childcare facilities. 

She even said online retailers, which have been a fierce competitor of malls in the last decade, could put mall space to use by building distribution centers in them. 

Krussman and Lutje both said they could see mall space being used for housing or hotels.

“I’ve also heard a lot of talk about going vertical with these buildings, turning them into mixed-use, so you could have high-rise office or you could have multi-family assisted living above and still plenty of parking,” Krusman said. 

She said she thinks malls need to be a bit more flexible when it comes to finding tenants. She’s had a lot of pop-up retailers coming to her looking for space, but said it can be challenging getting them into malls when they’re only accepting tenants who will stay on a multi-year lease. 

Although local malls might not be the bustling shopping centers they once were, Krussman feels optimistic they could be filled again one day. 

“I think that there’s definitely a way to do it,” Krussman said. “We all know retail is all about where you’re located and who’s next to you, the access, the location, and your neighbors. So, if you work together, I think, there’s definitely a lot of good things that can happen. You probably could see that zero vacancy again.”

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