Commercial Real Estate: Retail in Salem by Zip Code
Salem’s new Costco is complete, parking lots of our area’s shopping centers are largely full and our residents are seemingly back to normal following a Covid-induced slide in many retail sectors – particularly dining.
There’s certainly more than meets the eye, which has never been more true than now in the retail sector of commercial real estate. Let’s break down some of the macro data points zip code by zip code in Salem.
97301, which comprises downtown and its immediate vicinity, has zero retail currently under construction. This comes as no surprise as there is very little land to develop a retail building on. This should place upward pressure on rents, but when adjusted for inflation we see a decline in year-over-year rents of 4.5%. Vacancy has ticked up year over year as well, 4.5% a year ago and 5.3% today. Mind you, this is still exceptionally low.
97302 is a bit of a current darling in the retail space boasting a 0.9% vacancy rate, down from 1.6% a year ago. Rents, adjusted for inflation, are down by 4.2% from this time 2021. There is currently 6,600 square feet under construction which is good news for our south Salem market and we’ve seen positive net absorption (product absorbed by new occupants) of 187,000 square feet. Economic demographics are strong in this zip, which bodes well for occupancy and rents.
97304 commands the highest rents in Salem with an average rent per square foot of $18.57 annually. This translates as well into the highest average sale price per square foot of $208. Vacancy has remained flat year over year at 1.4% and positive absorption of 8,200 square feet. Again, economic demographics are particularly strong here and West Salem tends to be somewhat of its own economic engine with the river barrier keeping much of the commercial activity acutely local.
97305 currently has zero product under construction but has remained relatively flat from an absorption standpoint with retail spaces only giving back 142 square feet year over year. Population density is high in this section of Salem, and rents are strong at $16.58 per square foot per year, but down 3.8% when inflation is adjusted. You can buy more building for a dollar here, with the average sale price being $168 per square foot. Vacancy again is flat, remaining at 2% year over year.
97306 is another economically strong section of the community and will continue to grow as housing follows the buildable land supply in the deeper south portion of Salem. Vacancy again is very low here at 1.1% and market rents average $17.80 per square foot per year. Sale prices follow the rents – and we see a high value per square foot with an average of $192 per foot.