In a Facebook post last night, the Orenco Tap House management announced they are closing after a 10-year successful run. The beloved tap house on Orenco Station Parkway has been one of the city’s most successful businesses for a long time. People from around the area would congregate with their dogs and friends to raise pints of Oregon’s best beers. During the Pandemic, tents were erected outside, and the business stayed very busy, keeping a lifeline going for those who needed a human connection in those dark days. Here is what the business posted.
“It’s with heavy hearts that we share this news. We never wanted this farewell, but we’re being forced to close Orenco Taphouse. Our lease wasn’t renewed, and we have to be out at the end of this month. We’ve had over ten years of unforgettable moments, toasts, and loyal patrons in this incredible neighborhood. Our future might be uncertain, but for now, let’s cherish the memories and share a few more pints together. Join us in our final days as we raise a glass to the past and embrace the uncertainty of tomorrow. Your support has meant the world to us, and we’re thankful for the friends and family we’ve made. We’ll post additional updates here.”
The Herald has reached out to ownership for a further explanation, but the early word is that rents have skyrocketed- so much so that the location can no longer work. Against all efforts, a renewal can not be worked out. Read the wonderful comments being left at the OTH Facebook Page. Dirk and his wife (not me), who are the owners, have always been revered for their energy and creativity. This one hits hard, and we sure hope they find a way to stay in the area.
Staying in the Area
The issue that seems to be hitting so many businesses right now across our City is Commercial Rent Gentrification (CRG). As many of you may know, my work here at the Herald is my non-profit venture. I make my living as a real estate broker and do a very brisk amount of commercial real estate in addition to residential and investment properties. The term CRG is a term I have originated because of what I have experienced as a broker. When economic growth comes at a fast pace, like that we have seen in Hillsboro, both residential lease rates and commercial rates can rise much faster than residents and business owners can accommodate. This is precisely what is happening in Hillsboro.
Less than a decade ago, Holland Development built the Hub 9, The Vector, and the Rowlock apartments. These three projects flank the MAX station and are gorgeous. Having said that, they hit the market at rents 30-40% higher than anything else had rented for in the Orenco area. They eventually filled up, and the resulting gentrification set off what I called a “Rent Bomb,” which sent a rent-increasing shockwave across the City. Other owners soon realized that Studios should not be $850 but $1,300 and that a nice 2 BR could go for $2,000. Under the vertical housing initiative, these projects also qualified for ten years of no property taxes. These new tenants would become customers of the Orenco Tap House. As time passed, those rent increases affected all the hard-working commercial businesses and their owners.
This is the cost of economic stimulus. The hundreds of Millions that the City and the State have given to Intel and companies like that directly caused this. It makes one wonder what things would be like without all of that money and stimulus. Less jobs, lower housing costs, and more stable commercial rents; that is what life would be like. People would make less but would not need as much to live. Maybe those people could still share pints at a world-class place like the Orenco Tap House. Maybe. But not here in Hillsboro.
Orenco May Be At the Tip of The Spear, but Downtown Is Next
Many of you have heard that Sizzle Pie on 2nd Street is closed. They made it just four months. A story released by the Oregonian last week stated that the Hillsboro Sizzle Pie location was financially unviable. Some of that commentary centered around the high lease rates being paid. The City of Hillsboro put $1 Million dollars in grant money into the US Bank redevelopment, which now features Grand Central Bakery, Backwoods Brewing Company, and Sizzle Pie. The rooftop decks, which will open soon, are fantastic. That is why the City will continue to put money into places like old town Hillsboro.
Plans for Calle Diez or 10th Avenue are designed to beautify and make those older businesses/properties along TV Highway from Shute Park to Main Street more vibrant. No doubt that will happen with the stimulus and planning efforts going on. Have a look at the plans for yourself.
You can find this graphic from the City of Hillsboro web pages dedicated to Calle Diez. That is all good stuff. But you will not find any guarantee that the rents will not skyrocket, forcing out those businesses that have built that area. Rents will most certainly rise. This is the same thing that happens with residential rents when an area is stimulated. The process of economic vitalization raises rents – while not the central goal, it is what happens. The winners in all of this are the property owners. The bottom line is that when property rents skyrocket, that is what happens.
Block 67 Is Next
The next Rent Bomb and CRG will land on the east end of the old town, where Block 67 is located. The Herald covered that story last year – Block 67 Focused On Housing As Massive Project Moves Ahead. In that story, we supported the project and concluded:
The project must provide housing and retail in a way that reflects who and what the area is and supports and enhances it- not alter and eliminate it. A project like this one can get an ultimate gentrification machine or the harmonic source of new meeting old. Finding the balance is one that will take all of us, as a community, to see realized
Check out these new sketches just released for Block 67, and you will see why the rents in downtown Hillsboro are about ready to go nuts!
Saying goodbye to Orenco Tap House will be very, very hard for many of us. It will make some of us slow down for a minute and reflect on the state of play in Hillsboro today. Maybe you will think about this when you are at your favorite stores and eateries. It could happen to them, too. Perhaps it is time we think about all of this.
Maybe it is time for some new ideas and a pause.
Maybe.
Calle Diez or 10th Ave needs help. The area looks shoddy and traffic through there is awful. I welcome what is happening in downtown and look forward to updates to 10th Ave and Block 67.
Yeah, I feel like a massive-sized multi-lane traffic circle or two there might move things better than they move now. Certain directions as certain times are making a lot of gridlock.
We need to stop feeding the narrative that Sizzle Pie closed because the location was “financially unviable.” That’s Sortis’ story.
While the pattern of downtown property owners seeking astronomical commercial rents based on nonexistent comps isn’t new, Sortis’ inability to even complete payment on development of the site is noteworthy. We’ve seen that on 2nd before.
I wouldn’t be surprised to see both the OTR and Sizzle Pie spaces sit for a while. Unless someone is on the phone to Kurt Huffman in France, there aren’t a whole lot of players out there willing to pay those kinds of rents in an unproven market.
Hoping other Dirk finds another spot…and that the pizza gods smile on us again someday.
Agreed, this article seems premature. There’s no direct input from either Sortis or Orenco Taproom at this point indicating that rents are the issue. OTR cited the lease not being renewed, which happens for a myriad reasons; and Sortis simply said “unviable”, not even financially unviable. Sortis’s whole story is a near-endless litany of financial and managerial malfeasance, so I’d say the lack of viability there extends *far* beyond the rents simply being too high. I look forward to comments from both parties, on the record, addressing rents specifically.
I hope so too. Orenco is a tough area for commercial space as there just into much of it. Sortis was created by someone I knew in the 90s and early 2000s quite well. He is all about the numbers all the time. He would not and will not kill Sizzle Pie nor any of these entities he bought without strategy. Let’s see what he does with the rest of the entities the company bought. There is no doubt that filling the space may take the right tenant- of course market forces will find the right tenant and it is unlikely it sits empty very long. An adjustment in the monthly rent is all that would be required should it prove too much for new comers. Money and demand for space dictate the outcomes. I can tell you, and you already know, that Downtown Hillsboro has been a revolving door of new businesses. The businesses that have made it the longest have landlords who are in it for the long haul. I have intimate knowledge because of my business as to who is paying what. There are some folks paying $1 a month or less. Others are at $3 or higher. I can draw a direct line between rents and those that have stayed as can anyone. Had the City not provided that stimulus other buyers would have bought the bank and rented it to a different tenant group. That would not have been a bad thing. A vintage record store, a winery that provides storage, and a resale clothing shop were all tenants who wanted to be there had the sale gone in a different direction. They would have been able to adapt the space without all the upgrades and the rents would have reflected that.
I susepct Sortis likely went after Federal grants and PPP that were provdied under Pandemic relief. That may have provided the profits they needed at the time and now the fall out has happened. The 4 Season Bowling alley on Washington Street is an example of how that process went- get the relief money and then close.
In the end I have no doubt the Main Street Commons ownership group will find a new batter, and I am guessing it will be in short order.
” vintage record store, a winery that provides storage, and a resale clothing shop.” Dammit.
I can think of one record shop that just moved from Hawthorne to Beaverton (way out on Canyon), and they would’ve been far better served by a downtown location. That’s a shame.
I’m thinking that the whole subject of under or over stimulation of an economy is more about the limited ability of the human mind to think strategically . . Think of an economy as a sewer project, build it too big too soon, and you bankrupt the existing sewer users; build it too slowly and you bankrupt the eventual users with cost escalation, and strangulation. We all have to live and work somewhere, and we all need people to buy what WE have to offer a community . . if we rely on the initiative of landlords to invest, yet still expect them to think ahead to the long term effects of their short term profits, we are living in a fantasy, not unlike the noble fantasy of equality and the American Dream itself . . long term success of an economy is on the shoulders of people who actually live and CARE about where they live, and with whom they live . . So hats off to you Dirk, and all the pizza owners and electricians out there who want to live in a community, build their lives there and most importantly, not at the expense of everyone else . . I’m wondering if the tax incentives are just too tilted towards the passive investors and corporate agents of those investors . . we’re all at fault for this, it’ll take a community of villagers, like YOU, committed to their neighbors, to get what we all really need; someplace for everyone to succeed based on their hard work and loyal contribution to us all. What won’t work is egregious short term policies that tilt their support to the impassive, uncommitted investor and their corporate agents . . .
Thank you , Larry. I think your points are well thought out. This process of stimulating jobs and then being shocked with the outcome is a sick game really. Those who are playing it either do not care or do not know what they do. Very sad really- and MORE is not a way that society can survive.
It’s strange that you completely absolve the only culpable parties here without any argument. When the rent goes up, the buck stops at a greedy landlord trying to squeeze maximum value for minimum effort.
When you say “Other owners soon realized that Studios should not be $850 but $1,300…” you really mean that one landlord’s greed made others realize they could get away with more. Shelter is a necessity with a fixed supply, so supply and demand economics can only trend toward infinity.
pretty much property owner greed. “why should I settle for a comfortable profit”? Screw you good tenant if you can’t pay enough for me to buy my 5th beemer. Or more realistically, the property owner/corporation is based thousands of miles away and couldn’t care less about about the local business
This is the issue. Orenco Taphouse had no problem paying rent and were ready to sign the new lease. The owners (who have probably never stepped foot in Hillsboro) simply were not happy with the rent cap and decided not to renew, as they found someone who would pay more.
Thank you – so- this was about Money and a new and much higher rent?
No, this is not the cost of economic development, this is the cost of pure unbridled greed. Raising rents 30-40 percent? Talk about class warfare. Not sure whose class is winning? Warren Buffet will be glad to help.
Now as to the Sizzle Pie issue specifically, the takeaway here is that the types of restaurants that might be popular in southeast Portland will not necessarily be popular in Hillsboro. People have different tastes in those two different places. And it’s really not very good pizza. Would much rather see a Flying Pie.
It’s takes like this, and the fact that it spawned Papa Murphy’s, that give me zero respect for Hillsboro’s opinions on pizza.
P.S. Half the city goes to Southeast Portland, North Portland, Northwest, the Pearl or Beaverton for pizza and most other dinners out anyway. If you want to keep that money out of town, keep being this charmingly provincial.
Oh… and when had there ever been a Sizxle Pie in Southeast? Asking for a friend..,
My Dad in the 60’s said to me: “The greed of man will bring him down”.
Unfortunately, INVADERS of Hillsboro don’t understand saavy landlords like Gene Zurbrugg, IOOF, Marlyss Carter, Kit Jensen, and other longtime local building owners and why they are sucessful landlords.
City Hall certainly IS NOT wise as to how to to Own, Operate, and Survive in business. They’re safe in their decisions to throw taxpayer money away on bad investments withpout repercussions.
Dirk, thanks for the acknowledgement and kind words! Bri is correct about us wanting to stay, but I can’t confirm a rent cap. Our original lease (66/60 months) saw incremental yearly rent increases. When we signed our LOI for the new lease, rent was higher, but not drastically so. We’d have been happy to proceed with the new lease, but weren’t afforded that opportunity. All I can say is if I thought offering more than was being asked would have “sealed the deal”, we wouldn’t be on our way out. 😉
Thank you Hillsboro for all the love, wishing you and your families a safe and happy Holiday Season!
Judging by their Instagram, Deep Space Brewing is also gone.