YVYV: Mike Wilkerson | Full Interview
Mike Wilkerson, director of economic research at ECONorthwest, discusses Portland’s uneven post-pandemic recovery, noting that while the central city’s foot traffic has reached about 85% of pre-pandemic levels, downtown remains significantly impacted due to its heavy reliance on office workers, with foot traffic still around 60% and thousands of jobs lost. He highlights the governor’s task force “All-In on Central City” report, which sets three key goals over five years: reducing office vacancy by 2 million square feet (through conversion or demolition), permitting 2,500 new housing units, and restoring foot traffic to pre-pandemic levels. Wilkerson emphasizes that Portland’s recovery requires a shift from its historically employment-centric downtown model toward a better mix of residential, employment, and visitor activity, noting that the residential construction pipeline is essentially empty for the next two years. He also points to persistent public perception challenges around homelessness, public safety, and property crime—both locally and nationally—as significant barriers to recovery, even as conditions have measurably improved. The interview concludes with discussion of broader economic risks, including Oregon’s vulnerability to tariffs as one of the most trade-reliant states in the country.
Transcript#
[00:00:00]
Interviewer: Joining me now, Mike Wilkerson, who is the director of economic research at Echo Northwest. Thanks for being here this morning.
Mike Wilkerson: Yeah, my pleasure.
Interviewer: You’ve done a lot of research on Portland and the progress it’s making. It is making progress in its recovery from COVID’s impact. What areas of Portland are doing well?
Mike Wilkerson: Yeah, it’s a great question and I think that the challenge you see in data is oftentimes it lives at the county level, the city level, and really we’re interested in what’s happening at the neighborhood level. And what we see in Portland is if you look in the central city, the central city has 10 neighborhoods. And so the central city as a whole certainly is recovering. Some neighborhoods were much less impacted early on and others were more drastically impacted. Downtown, Old Town, downtown for example. What we see is broad-based recovery, but there are still big differences in terms of the neighborhoods that have been less impacted and are more like what they were say in 2019 than, say, downtown which is still lagging.
Interviewer: Generally, what areas are struggling right now today?
Mike Wilkerson: Yeah. So the areas that are struggling are the places that were generally employment centric. So you take downtown for example pre-pandemic there were 20 jobs for every resident and with the hybrid work and unfortunately the nature of the economy in the sense that the sectors that have been most impacted are office. So we’ve lost thousands of jobs since the pandemic and in the last year have continued to lose jobs and so the overall demand for office is down. And so when you couple that with hybrid work, just the number of bodies that are downtown, let’s say versus pre-pandemic is still way down. We’re in the 60% range. Other places that had better balance, maybe almost one job for one resident are much more resilient. And it’s the visitors that really make the difference everywhere in the central city today as the main area for improvement. We should be clear what we’re looking at here when you look at comparisons is you’re looking mostly at foot traffic which has to do with how many people are there.
Interviewer: Yeah. Absolutely. So when you look at let’s say traditional economic indicators of employment that doesn’t tell the story today when we’re thinking about how is that helping retail, how is that helping restaurants? How is that helping events? Because employment is just account of this is where you are today. We know on average people work maybe two to three days in the office. And so when you have that reduction in foot traffic that really has lasting impacts in terms of the adjacent to the employment uses. So those are the retail, the restaurant, the hospitality, all of those things that are complimentary.
[00:02:23]
Interviewer: You mentioned some of the differences mainly being that employment centric spaces are having a tougher time. Are there any other key differences in the areas that are doing well compared to pre-pandemic versus the ones that are still struggling?
Mike Wilkerson: Yeah, certainly you when you look at the public and you survey and you say what are your top concerns in terms of quality of life, you’re going to consistently see and you have for many years homelessness, crime, public safety, cleanliness, etc. And there is a varied experience within the central city. And so unfortunately the places that were most hit were also having that same livability concern. And so those all have improved across the entirety of the central city. There is no place today that isn’t better than it was a year ago and no place that’s not meaningfully better than it was four years ago. Um, but again, you still have that varied experience within the central city.
Interviewer: The big question I think a lot of people have, especially downtown business owners, is will downtown Portland ever be what it once was? What do you think?
Mike Wilkerson: I think the answer is no. And that’s not to say that it can’t be great and thriving again. It’s just going to look and feel very different than it did at that point in time. Because again what we have learned in this kind of new normal post-pandemic period is you need a mix of uses. And so downtown if you look at our central city we were amongst the most balanced places in terms of residents to employees and actually probably a model for many places. And then we had about three to four employees for every resident. That’s well below most places. But our downtown was almost uniquely office certainly retail and a little bit of hospitality almost no residents. And so that new normal needs to get a better balance because you need that constant 18 to 24-hour activation that’s going on where employees alone can’t necessarily sustain a neighborhood like they could let’s say pre-pandemic.
[00:04:08]
Interviewer: Your firm shared a lot about the foot traffic and what we saw was the recovery post pandemic kind of flatten off.
Mike Wilkerson: Yeah. So what we’re seeing downtown today, is that the new normal you think for Portland? So we have seen on the employment side no improvement in foot traffic for the last two years and I would say that’s a little bit misleading because certainly you have some more people who have returned to office let’s say more frequently more days a week unfortunately you’ve also had a decrease in total employment and so when you’re counting just bodies there the people who were let’s say going to the office two days a week might be going three days a week but maybe we have several thousand fewer employees now so foot traffic is entirely flat. Residential has been the largest percentage gain everywhere in our central city and in the downtown. When we look at the permit data and the under construction data, we know that was a temporary gain and that’s going to stall out over the next at least two years because there’s just nothing in the construction pipeline. And so vacancy rates being relatively low, no new construction. Residential is flat. So the third component is the most crucial in let’s say next two to five year window which is visitors and those visitors are out of town visitors as well as let’s say people within the metro area.
Interviewer: We’ve seen poll after poll show that Portlanders and people in the metro are concerned about livability issues, homelessness, public safety. Do you see that subsiding or is the research saying pretty similar that people are still very concerned about that?
Mike Wilkerson: The latest polling and this is several months out of date still suggests those areas are top of mind for people. I think what you have seen I would say is an elevation of economic development, economic growth, jobs as a priority from from our elected leadership. So I think typically there’s a delay in that response and certainly the more people that come downtown and look and see and central city what it looks and feels like today, their perceptions are going to change to match the reality that it’s much better than it was let’s say a year ago.
[00:06:01]
Interviewer: Minimum wage went up on July 1st which raises labor costs. There are other costs going up for local businesses. Have you done research on how many businesses may have to close due to these increasing costs?
Mike Wilkerson: Yeah, so we’ve seen certainly a contraction already and you can look at the ground floor of many places as being vacant in essence maybe even at a higher extent than the actual offices themselves. So that consolidation occurred. But I think the challenge going forward is when you look across the central city, there are places that are again thriving because their foot traffic is where it was. It’s the places that aren’t. And if they were so reliant on employees and we know that’s not coming back, I think the key question there is what are the activations of art, culture, entertainment that can bring people into those neighborhoods that otherwise wouldn’t be there because without a more consistent, you know, foot traffic year round, day to day and year round, it’s going to be challenging to see the opportunity for growth for those businesses that have traditionally been there.
Interviewer: We’ve asked the city time and time again what they’re doing to bring people back, and they mention those events you just talked about. What type of impact do you think that will have on local businesses downtown?
Mike Wilkerson: It’s massive. So I mean when you look at for example the central city as a whole foot traffic is at about 85% of where it was pandemic and that continues to improve. The best performing neighborhoods like let’s take for example the central east side is almost back to where it was pre-pandemic. South waterfront, goose hollow, some of these other areas are doing well. The Pearl District is actually the most reflective neighborhood. It almost perfectly mirrors the central city. And so even within the Pearl District we see the opportunity for activations. I think that’s the key is again knowing that you have those three components and that two of the three are basically projected to be flat for the foreseeable future. It’s really that targeted intervention and an understanding of you know within neighborhoods what are those spheres of influence of those events. So if you do something in downtown that certainly benefits downtown but it also might benefit those adjacent neighborhoods.
[00:08:00]
Interviewer: In your economic research when you’re looking at other places and what other cities or places might be doing that’s working. Is there anything there that businesses here could take as advice?
Mike Wilkerson: Yeah, I mean I would say again there’s no secret sauce. There’s no mystery in terms of the components of success and unfortunately there’s no silver bullet. And so when you look at each city it’s going to be very unique in terms of for example the employment base. Do you have large headquartered workforce as the key? We don’t here in our downtown. And so in a place that has that that’s a very different strategy where return to work could be an effective tactic. Here we don’t have those large. It’s many small diverse industries of firms so you know a one-off decision doesn’t have the lasting impact that it does in other places so I think for us our challenge is a little bit different in the sense that the components of what historically have been our downtown and our central city are different again we have more housing than other places so for other places their playbook might be let’s look into housing for us we’ve been building a lot of housing the challenge for us going forward is how do we continue that pace of builds that’s a little different than a place where they historically haven’t had any housing as an example.
Interviewer: Is Echo Northwest looking at other cities and perhaps providing recommendations to the city of Portland?
Mike Wilkerson: Yeah. So, you know, we at a minimum every year work with the Portland Metro Chamber and we do a state of the economy report and in that state of the economy, we look at what we think of as our best four peers and Seattle. And so certainly we’re looking at those four peers and then also Seattle. And then the city also, you know, continuously looks at best practices and various other strategies that are being used across the country.
[00:09:40]
Interviewer: You mentioned public safety in the state of this state of the economy report. Are you seeing what the top public safety issue is for people? Is the polling consistent in that at all?
Mike Wilkerson: I don’t know that they get into the specifics of when people say public safety, but where we see the largest reductions are in crimes of property. So, a lot of that is, you know, people are feeling unsafe if their car is broken into, if their store is broken into, etc. The property category. It wasn’t necessarily that we had a huge elevation in violent crime or in other types of crime, although we have seen improvements in shootings and other types of violent crime that also I think people have the connotation of not feeling safe. But it’s the personal property piece that we’ve seen the big improvement in.
Interviewer: There was a lot made about the last state of the economy report. What is the state of Portland’s economy today?
Mike Wilkerson: You know, unfortunately, I think the challenge is identifying the problem now is relatively straightforward. And I think the solution set also is known. There’s a lag between you can be doing the right moves in terms of public policy, incentives, subsidies, etc., and there’s just going to be a lag period. And so I think we’re certainly headed on the right track. What we don’t see unfortunately is employment is not growing. Foot traffic is improving but at a rate that’s going to be many many years out. And so I think when we look at for example the all-in on central city report that is the culmination of the governor’s task force. There are three main goals. So I think those things can be northstar which are let’s look at office vacancy rate and understand adding to our supply of office or frankly reducing that through conversion or demolition is going to help with the overall challenge there. So that goal is 2 million square feet over the next five years. In terms of housing the goal is let’s permit 2,500 new housing units over the next five years. And in terms of foot traffic, let’s try to get back to where we were. So I think those are three things that we can track over time that are going to give us a sense of are we heading into the right direction even if employment for example isn’t. So that report came out last month and we’ll certainly be tracking that over the next coming years.
[00:11:44]
Interviewer: You’re certainly not a policy maker but what can the city do? Focus on those three things you talked about?
Mike Wilkerson: Yeah I think those are you know the three anchoring principles from which we can build and layer in other accompanying policies. You know I think the challenge is always the again that lag of you can be doing the right thing. Unfortunately for Portland, some of the problem is the perception and that perception is within region to where people historically who have come down to the central city aren’t and certainly it’s an out of region perception and that perception piece is real and it’s lasting and it’s very difficult to understand what specifically is going to change that perception.
Interviewer: A lot of businesses, a lot of people are focused on tariffs and will the president implement them if those go into effect on August 1st. What kind of impact do you think that could have on Portland?
Mike Wilkerson: Oregon is one of the most trade reliant states in the country. There are only six states if we think about trade surplus where people are states are exporting more than they’re importing. In Oregon is one of those and in fact it’s the third largest contributor to net import of any state behind Texas and Louisiana and they’re doing that through petroleum exports. And so Oregon because of the nature of its economy we import a lot of goods and then we add value and then we export those. And so when that supply chain is disrupted, Oregon is going to be more impacted than most other states.
Interviewer: Let’s talk about job growth right now. Where does it stand in Portland today?
Mike Wilkerson: Unfortunately, jobs are not growing in the county and in the city. We look out at the region, we’re even starting to see some contraction. The few bright spots that we had previously were government and healthcare, whereas most of our private sector industries were contracting a year ago, and they still are, unfortunately.
Interviewer: Big Pink was up for sale recently in Portland, the front page of the Wall Street Journal. This month, the building sold to a person who paid all cash for it. What kind of impact do you think that sale will have on the state of downtown and also the real estate in the office sector?
Mike Wilkerson: Yeah, you and I have talked about this before. I think you know the challenge in the market is nobody really understood what the bottom of the market valuation looked like and so having a transaction of that scale where people now understand yes this is a value and I think more importantly that someone is making a statement of saying yes I believe in downtown Portland I’m buying this asset my goal is to invest in that because I believe in the long-term future I think sends the right message to the rest of the region and the rest of the country that you know this is a place that investments can be justified.
[00:14:15]
Interviewer: When we talked about Big Pink, you said it’s actually a good sign. A lot of people thought, “Oh, it’s another black eye for Portland.” Why do you think it was good that that building was for sale and now it’s actually sold?
Mike Wilkerson: So, I think a lot of the challenges is when you have vacant buildings because of the debt on those buildings, the owners don’t have the ability to certainly invest in the building and even reduce rents. And so really what we need is the market to establish a basis from which it can clear and then more investments can be made. And so buildings that are transacting at a new lower basis then have that flexibility to do things. And so it’s going to be a period of the some buildings are doing extraordinarily well. We have some buildings that are in need of investment and we have some buildings frankly that are obsolete. And so it’s that middle category of buildings that are in need of investment. And as we get owners that are able to do that that’s going to be to the benefit of the broader region.
Interviewer: We’ve been talking about this with Portlanders and city officials for the last couple years is when will the city’s central core hit its bottom and pick back up. Does the research give people optimism about the city’s central core and its future?
Mike Wilkerson: Yeah, I think we have hit the bottom comprehensively. So, if we look narrowly at the office market in terms of the transactions, we’re probably at or approaching that. But if we look at public safety, if we look at foot traffic for example, all of those things have been steadily improving for the last several years. And so I think for us this is the challenge of not necessarily when was the bottom. The challenge I think is how quick does the recovery look like and what is needed to accelerate that recovery.
Interviewer: Any prediction or too tough to tell.
Mike Wilkerson: I mean I tend to try to be optimistic but I would say I think you know the recovery is going to be challenging. We’re still many years away from I think getting back to where people who have lived here for a long time know Portland can be at its best.
Interviewer: Mike Wilkerson with Echo Northwest. We really appreciate your time this morning.
Mike Wilkerson: Absolutely.