Bill Poehler | Statesman Journal

Lee Clarkson, Statesman Journal

Even when developers can't build new homes fast enough to keep up with demand in Salem and Keizer, home and garden stores are in the midst of a major expansion into the area.

Coastal Farm and Ranch, Cascade Farm and Outdoor and Jerry's Home Improvement are all entering the Salem/Keizer market, officials with SVN Commercial Advisors announced at the company's annual Real Estate Economic Forum Wednesday morning.

"Coastal Farm and Ranch has finally found a location in Salem," SVN managing director Curt Arthur said, identifying the former ShopKo location at 1230 Lancaster Drive as the home and garden retailer's new home.

Cascade Farm and Outdoor opened a location in Keizer last year at the former Roth's grocery store location on River Road.

And Jerry's Home Improvement, a retailer with stores in Eugene and Springfield, is in the process of developing a new location at the former Capitol Auto dealerships on Mission Street.

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Overall, the local construction industry is booming as homes, retail stores and businesses expand.

Vacancy rates for offices in Salem is at a historically low 1%, vacancy for commercial buildings is 1.7% in a time when there was over $600 million in commercial development in the community in the last year.

"We are in fact booming in this community," Salem Mayor Chuck Bennett said.

Here are highlights from Wednesday's conference:

New tenants for Toys R Us and Sears

There have been three significant vacancies of large commercial properties on Lancaster Drive with the former Toys R Us, Shopko and Sears stores sitting empty for years.

Arthur said the former Toys R Us location is under contract. Its future tenant has not been revealed, but he hinted "there's a strong demand in that area for medical offices."

Economic news: Former NORPAC workers could get extended unemployment

At the Willamette Town Center, the former Sears building "has been leased," Arthur said. Again, the tenant's identity wasn't revealed, but T.J. Maxx has told city officials it is moving out of downtown Salem and its parent company owns Sierra Trading Post and HomeGoods at the East Salem shopping center.

He also revealed Panera Bread will have a new location at Willamette Town Center in a new building along Lancaster in front of the former Sears; and Mod Pizza and Crumble Cookies will be opening locations in the mall.

New home construction lags

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For every 100 new residents in the area, there were 26 new houses built in 2019.

Erik Andersson of SEDCOR said approximately 700 new homes were sold in the Salem area in 2019.

But that puts the area on par with 1989 levels.

"We are still not building the number we need for absorption," said Mike Erdmann of Home Builders Association of Marion & Polk. "We continue to underbuild."

Salem's homelessness problem has worsened, and leaders from the business community urged Salem's political leaders to take steps to address the problem.

Rent control not hurting new apartment construction

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Many in the real estate community were concerned Oregon's new rent control law, which caps rent increases at an inflation adjusted 7% annually, would impact construction of new apartments.

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"The good news is it really hasn't had much of an impact," said Katherine Powell Banz, of Powell Banz Valuation.

Most new apartments being constructed in the area are being leased before construction is completed.

But older units haven't been sold as much as in previous years.

"In those projects, we are seeing less demand because that income stream is capped," Powell Banz said.

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Amazon, Salem Health, Union Gospel

Other significant projects under way or planned for this year include:

A new tenant for the former Panasonic Building in East Salem is expected to be officially announced in early 2020. Permits previously showed Amazon is the new tenant; Economic Forum officials described the facility as a sorting station where final deliveries will be sorted for a 50-mile radius.

In the past two years, Cumberland Holdings has made $21.4 million in commercial real estate purchases in Salem, including buying the Reed Opera House, the building the Masonry Grill occupies and the Sunnyslope Shopping Center in South Salem.

With most available office space in Salem under lease, a new building, the Bridges on Hawthorne, for the state is being built behind Denny's on Hawthorne Avenue.

Carmax is expected to open its Lancaster Drive location in March.

The former Nordstrom building was purchased by private individuals last year, but due to the persistent homeless camping on the sidewalks in front of the building have had place fences around the building. "If you really want to see the impact this is having, go see Salem Center," Arthur said.

Salem Health broke ground on a new seven-story, $235 million expansion that will add 150 beds by 2022 and will increase its bed count to 650, the largest in Oregon. "Not only is our community growing, but our community is aging," said Salem Health CEO Cheryl Wolfe.

Union Gospel Mission is building a new 300-bed, $15 million building north of downtown. And the YMCA is building a $26.5 million 68,500 square foot building at its downtown location.

On the same block of downtown Salem on Commercial Street, a new six-story hotel is being built across from the Salem Convention Center and a 148 unit, six-story apartment building is going in at the former McMahan's Furniture location.

bpoehler@StatesmanJournal.com or Twitter.com/bpoehler