From derelict to desirable: downtown Salem continues to transform

Diana Cureton had a chance to take over a small convenience store and Mediterranean restaurant in downtown Salem a few years ago.

Cureton, who’s lived downtown for about five years, said she’s long wanted to run such a store in the downtown core, catering to residents and workers who wanted a quick bite to eat.

But she passed – the space was too big and she didn’t think enough people lived downtown for the business to be viable. The property instead became the current home of Browne’s Towne Lounge and Bar on Liberty Street.

“It wasn’t quite the right time,” she said.

Since then, Cureton has watched as more Salemites have moved downtown, filling new apartment and condo developments along Front Street.

On July 2, she and her husband James opened Munchies Market in a newly renovated space on the west end of Reed Opera House. They’re still waiting for a beer cooler to arrive, but even after two weeks in business, Cureton said she already has a regular customer base of people who live nearby and stop by to eat.

Diana and James Cureton, owners of Munchies Market in downtown Salem on July 14. (Amanda Loman/Salem Reporter)

Their new business is a sign of a shift in downtown Salem that’s been underway for several years as developers have built hundreds of apartments and the area has been buoyed by new restaurants and locally owned shops.

Hundreds more apartments are in the works, including a plan to tear down the vacant Nordstrom building and build 162 apartments in its place. That’s set to open by April 2023.

Residents, business owners and developers say the increase in housing is shifting the neighborhood’s character, transforming downtown from a place people visited during the day to shop at large department stores to a vibrant neighborhood in its own right.

“Salem used to roll up its streets at 5 o’clock and now sometimes it’s hard to find a parking place at 9 o’clock. The city has been undergoing a quiet transformation to a much more hours-extended district,” said Ken Sherman Jr., a retired attorney who moved into a condo overlooking Riverfront Park in 2016.

Major developments added or slated for downtown Salem since 2014. (Map by Saphara Harrell and Rachel Alexander/Salem Reporter)

Developments start to pencil

City grant programs have buoyed the area’s redevelopment, but city officials and developers said it took years for market conditions to make downtown development pencil out, even with incentives in place.

When Sheri Wahrgren was hired by the city of Salem 18 years ago as the downtown revitalization manager, she said many of the historic buildings downtown were vacant.

There are 92 buildings in a seven-block historic district, she said.

The push at the time she was hired was to come up with incentives to preserve and utilize those buildings.

There was a grant program that was solely for awnings at the start. Those grants, which are now called capital improvement grants, have steadily increased in scope and amount over the years.

The former Nordstrom building boarded up on June 29, 2021. (Saphara Harrell/Salem Reporter)

Six developments have been awarded grants over the $300,000 maximum in the past five years, including the apartment project in the former Nordstrom building.

But city funds are a small piece of projects costing tens of millions of dollars, Wahrgren said, and the developments are more a reflection of the confidence in the Salem market.

“What it says to me is that Salem is a place they want to invest in because they’re going to be successful,” Wahrgren said.

The recently announced Holman Riverfront Park Hotel is the latest example. In June the city’s Urban Renewal Agency (which is comprised of Salem City Council members) approved a $750,000 grant to the hotel.

The developer, Sturgeon Development Partners, said city funds were needed to assist in the financial viability of the development with lumber costs increasing earlier this year by 50% and steel by 25%.

In 2019, they bought what had formerly been the Marion Auto Garage.

When the auto business closed, Wahrgren, said a car rental company used the ramps and parking and different nonprofits utilized the ground floor.

“It was derelict, it was boarded up, it was being broken into all the time,” she said.

Wahrgren said it was a lengthy process to get to a point where a developer would spend $43 million, the proposed cost of the Holman, to build a hotel at that site.

Salem has had a tax incentive to build housing within the downtown core for decades, but it’s only been used recently.

Kristin Retherford, the city’s urban development director, said that’s because of a combination of factors: there wasn’t demand, interest rates were high and there weren’t a lot of parcels to develop. She said it was a number of years before the city started to see an increase in demand for downtown housing.

“As we’ve seen a growing shortage of housing within the community, downtown projects have started to pencil and become more financially feasible,” Retherford said.

The Rivers Condominiums on Front Street Northeast in downtown Salem on Friday, July 9, 2021. (Amanda Loman/Salem Reporter)

The redevelopment of the former Boise Cascade Mill, which left town in 2007, into the South Block Apartments in 2014 marked a turning point.

“We started to see the complexion of downtown Salem change dramatically,” said Nick Williams, one of the brokers selling the former JCPenney building and past chief executive officer of the Salem Area Chamber of Commerce.

The new downtown residents

The number of people living downtown has jumped as nearly 200 rental units have come online since 2019, Wahgren said.

“In my time we’ve gone from less than 50 residents to hundreds. That’s huge and it’s going to be hundreds more,” Wahrgren said. 

Cathy Reines, president and CEO of Washington-based Koz Development, said her company started looking at a second location to build a micro-apartment complex in downtown Salem before its first location, Koz on State, was completed.

That complex offers 148 units of studio, one- and two-bedroom apartments between 240 and 650 square feet costing between $920 and $1,600.

It opened in March and is now 70% leased.

“We’ve had phenomenal demand for housing in the downtown core,” she said. “That’s what attracted us to Salem.”

She said her company was drawn to Salem when the Peter Courtney Minto Island Bridge was completed in 2017.

A sign for koz on State apartment building on Saturday, July 17. (Amanda Loman/Salem Reporter)

Reines said Koz has properties in Everett, Seattle, Tacoma and Portland and typically attracts people between 26 and 28 years old, usually split equally between men and women.

“I think that the Salem core is just very inviting. It is a fun place to live, you’ve got bands playing in the street,” Reines said. “That’s what we’re looking for. It’s not necessarily size of the market. But what it does need to have is demand for housing. It felt like Salem was going to explode.”

She also applauded Salem city staff, who she said were willing to work with developers in support of projects.

Reines said that translates to dollars quickly, because it can move a development forward one to two years faster. 

In 2019, the Urban Renewal Agency agreed to give a $750,000 grant to the project.

City documents show the 10-year tax break could save Koz $40,000 in its first year. Those taxes would have been paid into the downtown urban renewal area. The city’s general fund, which pays for services like police and firefighters, would not be impacted.

From big box to local boutiques

Though some new downtown developments are targeted at young renters, there’s also a market for empty nesters or retirees who don’t want the responsibility of maintaining a large property.

Sherman said that’s what prompted him and his wife to downsize from their 10-acre property south of Salem.

Their condo in The Rivers building on Front Street overlooks Riverfront Park, and Sherman said it’s been a joy to see the park become more developed and lively in recent years.

“I think it can be a very viable neighborhood. We love living down here and every time something new opens, we kind of celebrate that,” Sherman said.

A view of Liberty Street in downtown Salem on Thursday, April 2. (Amanda Loman/Salem Reporter)

Tom Hoffert, chief executive officer of the Salem Chamber of Commerce, said as more housing comes online, the variety in unit size and amenities makes downtown living attractive to a larger segment of residents.

“That diversity of offering allows many different residents to see a home in downtown Salem,” he said. “At the heart of most very successful cities is a very vibrant downtown core.”

He said the 2018 loss of Nordstrom downtown concerned the chamber, but the redevelopment proposal is “indicative of a community that can pivot, and find great opportunity.”

While the business closures and capacity restrictions during the Covid pandemic hurt restaurants and local businesses, Hoffert said in general, downtown businesses fared better than feared.

“Although there were some casualties, we have also really had some success stories and our restaurant scene is going to be as vibrant as ever,” he said.

Retherford said the changes downtown reflect a more nationwide shift as big box retailers move to online shopping.

That opens up downtown for more boutique-like shopping, for items not available easily online. Recent business additions include Winslow Boutique, Sun Bear Den and Flowers in the Alley. 

Retherford said encouraging housing will continue to be a top priority for the city because there are shortages, especially of affordable housing.

She said building new units, even if they’re not priced for low-income residents, will help bring down rental prices as more units come online.

“A lot of that is a supply and demand situation. We don’t have enough supply for demand. We need housing of all levels. That will help organically address pricing,” she said.

Cureton said downtown business owners have a tight-knit community, working together to plan events like First Fridays that get people out and walking around. That community is something customers can see and appreciate, she said.

As someone who’s been waiting for downtown to grow, Cureton said it’s gratifying to see the neighborhood take on a new character.

“Salem’s becoming kind of cool,” she said.

Contact reporter Saphara Harrell at 503-549-6250, [email protected]Contact reporter Rachel Alexander: [email protected] or 503-575-1241.

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Rachel Alexander is Salem Reporter’s managing editor. She joined Salem Reporter when it was founded in 2018 and covers city news, education, nonprofits and a little bit of everything else. She’s been a journalist in Oregon and Washington for a decade. Outside of work, she’s a skater and board member with Salem’s Cherry City Roller Derby and can often be found with her nose buried in a book.