The Halsey Community Collaborative Compact (HC3) executive committee received a report from Johnson Economics on the economic viability of a variety of uses along the Halsey Corridor. The great news from the report is that we suspected that the investment viability along Halsey was improving, and Johnson Economics verifies that it is very true.
Looking toward the future, the Halsey Corridor is likely to see continued growth in traffic volume and economic activity. The roughly 750 housing units currently in the pipeline within the Study Area will increase the demand for all forms of resident-oriented retail and services. Based on standard traffic generation multipliers, Halsey Street should see a traffic increase of roughly 4,000 vehicles per day in the western portion of the Study Area and around 1,500 in the eastern portion, as these homes are occupied (cf. ITE guidelines). This will likely make new forms of commercial activities feasible.
The new employers moving to the area around the Halsey Corridor will also contribute to economic growth, especially the large industrial users moving into Gresham Vista Business Park and Troutdale Reynolds Industrial Park. Workers employed in these business parks will increase daytime traffic volumes and commercial demand, especially demand for lunch options and convenience retail. They will also likely contribute to additional household growth in the area, beyond what is represented by the current housing pipeline.
The market for retail space has undergone dramatic changes in recent years, reflecting technological advances and changing spending patterns. The most dramatic shift is the growth in online retailing, which has reduced the overall need for brick-and-mortar space, especially from retailers selling physical goods. Online retailing currently accounts for 9% of all retail spending, approaching $500 million in annual sales on a national level. Since the last recession, the segment has grown by around 15% per year, and it is currently taking market share from brick-and-mortar stores at a rate of nearly one percentage point annually.
An older trend, which continues to change the retail market, is the shift from goods to services. This shift began to take place in the wake of the Second World War, when goods accounted for 61% of personal spending. At the turn of the millennium goods accounted for only 36%, and by 2017 the rate had dropped to 32%. Retail users that benefit from this shift include restaurants, coffee shops, healthcare providers, personal trainers, and financial advisors. This has led to increased demand for smaller spaces in neighborhood/community centers and along arterial corridors. At the same time, demand for larger buildings and mall space has declined due to online competition.
Development of new retail space has been somewhat limited during the current business cycle, reflecting the shift to online retailing and the impacts of the last recession. While around 2 million square feet of space was constructed annually in the last years before the recession, the average annual supply since the recession has been around 700,000 square feet. The post-recession peak, in terms of new deliveries, was in 2014, with 1.3 million square feet. Geographically, most of the new space has been built in high-traffic suburban corridors with access to expanding residential areas.
The Halsey area is primarily a service economy, providing products and services to the local population. This reflects the location of the Halsey Corridor between large residential areas to the south and employment centers accessed via the I-84 freeway to the north. Retail is the dominant industry within this service economy. The Study Area also includes a significant tourist or visitor component, reflecting its location along a major tourist route. Retail, accommodation, and food/drinking services are the main industries oriented toward visitors. The Study Area is located within the East County economy, which is heavily weighted to industrial employment categories like manufacturing, warehousing, and transportation, concentrated between the I-84 and the Columbia River.
Most of the resident-oriented economic activity is concentrated either to the north or the south of Halsey Street, at the Sandy/238th Drive intersection and along Glisan Street. These have major retail anchors that draw significant traffic. There is also considerable resident traffic on north-south arterials that intersect Halsey Street. However, the traffic volume on Halsey Street itself is limited, and in most cases below the typical thresholds sought by resident-oriented retailers and service providers. Thus, there has been limited commercial development along this corridor to-date