With Kmart’s closing in September, what will become of the 13.5-acre site?
STAFF/2018

The Kmart in Parkrose is not long for this earth. What comes next is still very much in the air, but Peter Finley Fry, a land-planning consultant working on the property, spoke to the Parkrose Neighborhood Association meeting on June 19 to help fill in the blanks. 

Congregated at the Russellville Grange, just a stone’s throw from the site in question, a dozen concerned locals sat and listened to the vague plans unfold. Fry’s work concerns getting his clients the permission they need from local government to develop land. In the case of the 13.5-acre parcel on which the Kmart sits, this is a complicated and still-developing scenario—so much so that the development plans are still amorphous until the issues are resolved. Garden Homes, a New Jersey company, owns the land, and their business is traditionally in building housing and mixed housing/retail centers. They employ Fry in this project to consult on land-use planning and permitting.

For most of Fry’s talk, which lasted less than half an hour with Q&A, he avoided committing to or speculating on the future of the Kmart itself. But he was clear that in the short-term, there will be three “pads” built in the massive parking lot (which is of course vastly underpopulated due to low customer flow at the Kmart), and they have an approved variance for escaping the strictures of Zone EG2. Those three pads will be home to restaurants, cafes or banks.

“Two things happened to [Garden Homes]: one is in progress, which is that Kmart and Sears are struggling. Right now they are still our tenant and will be for the foreseeable future,” said Fry to the meeting, diving into the hairy details with few pleasantries. He kept things very official in regard to the Kmart’s future, which was unnecessary, considering the May 31 publishing of Sears’ hit list, which named the Parkrose store and slated it for September closure along with over 60 other Sears and Kmart stores. Considering it’s well known the store will be closing in September, it’s unclear why Fry would neither confirm nor deny any knowledge beyond what he’s heard about the industry’s troubles.

This graphic is a projection of where the three new “pads” will be built, each home to a new business.
COURTESY PETER FINLEY FRY

The other issue with the redevelopment of the site that Fry referenced stems from the 2035 Comprehensive Plan, a 20-year land supply and zoning declaration published in 2015.

“To be blunt, we ran into a problem with [former] Mayor Hales: we wanted to have a commercial zone—there’s one directly south of us on 122nd Avenue. It’s a mixed-use commercial zone, and we wanted that applied to our property, but the city was running into a severe shortage of industrial land,” says Fry, “so the mayor looked for every possible site that was big—and ours was big—with not a lot of development on it, and they re-designated it as General Employment.”

In short, despite being tucked in among the residences on the opposite side of Sandy from the industrial stretch, the parcel is zoned for General Employment 2 (EG2), which is essentially for industrial firms or large office buildings: no retail, no housing/apartments and no open spaces.

According to Portland’s zone definitions, characteristics of such lots are that “the area is less developed, with sites having medium and low building coverages and buildings which are usually set back from the street.” While the Kmart location certainly fills some of the requirements, Fry contends it’s just not what that location should be for, considering its proximity to so many houses.

“That site is not a good employment site because it’s south of Sandy and surrounded by that neighborhood. We feel the only employment use of the site would be a back office or a call center,” said Fry to the meeting. Garden Homes’ holdings in the Northeast, primarily in New York and Connecticut, are mostly apartment buildings. This was an issue that caused a significant amount of resistance from the Argay Terrace Neighborhood Association, as covered in these pages (“Changes threaten neighborhood livability,” MCM April 2016), who were resistant to a massive influx of residents in a relatively small area. Far fewer families would be fit on 13.5 acres in houses, as opposed to high-rise apartments. There’s also resistance to additional low-income housing in east Portland.

“That’s not what Garden Homes does,” said Fry about low-income housing projects, reassuring the Parkrose Neighborhood Association member who asked if that was the future of the location.

Pressed for details about what will be on the three pads being built in the lot, Fry gave up little information. “Our preference would be restaurants, but that depends on the market,” said Fry. “We were originally talking about something called a ‘lifestyle center,’ which is housing and retail mixed together,” said Fry. These lifestyle centers are something Garden Homes does more and more of these days and was what they had planned for the Parkrose location. Without housing being allowed, they have pivoted to the current plan of building the three pads and finding a development plan for the Kmart itself once it is empty. “I think the bottom line for us is that there are two factors important to Garden Homes: what they can do and the market,” said Fry in the meeting.

Fry predicts spring of next year as the start of construction for the three pads. “We’ll get our permits by the fall, and then we have to work on tenant improvements,” said Fry. There are no specific businesses confirmed for the three spaces yet, but Fry confirmed Garden Homes is in negotiations with perspective tenants. But the final disposition of the Kmart is still in question. And it doesn’t sound like Garden Homes are going to give up on their residential development goals for the location just yet.

“It’s always up in the air” said Fry in an interview after the meeting. “We could always ask for a zone change or a comprehensive plan amendment. I don’t know.”