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.