Salem real estate group backs out of plans to buy former JC Penney
Downtown Salem’s shuttered JC Penney will continue sitting vacant after a local real estate investment group announced it’s pulling out of a plan to purchase and renovate the building.
Back Line Real Estate, the firm led by Salem real estate investor Nat Borchers, announced in a statement Monday it would not move forward with buying the building at 305 Liberty St. N.E., several months after publicly announcing the pending deal.
“While we had high hopes for transforming the space into a vibrant community hub, our evaluations revealed that the building requires significant investment to bring it up to code and meet the quality standard that Salem deserves. We worked with the sellers to find fair solutions and shared detailed estimates to make the project viable; however, we were unable to reach an agreement that made sense for everyone involved,” Back Line Real Estate said in a statement sent Monday to news outlets.
The building is owned by a company managed by Portland developer Stuart Lindquist. Efforts to reach Lindquist Monday were unsuccessful.
His development company bought the site after the department store shut its doors in 2020.
Lindquist’s firm bought the building for $2.9 million, Salem Reporter previously reported. The building is valued at $1.9 million, Marion County property records show.
Borchers announced plans to purchase the building over the summer and renovate it into an entertainment and shopping destination.
He said in July that the buyers had agreed on a $5 million price for the 100,000-square-foot building.
But the group got a construction budget back several weeks ago that included more costly renovations than they’d hoped for. Transforming the building required replacing multiple transformers, redoing the HVAC system and plumbing upgrades.
“The main guts of the building need to be replaced,” he said.
Those figures made a $5 million purchase price unworkable, he said. Investors met last week with the seller to try to reach an agreement, but couldn’t.
“We’re a community builder. We don’t just want to go in and put a Band-Aid on everything,” Borchers said.
The investor group included Borchers, Salem developer Chris Blackburn of Clutch Industries and real estate broker AJ Nash. They’re operating under a company called 305 Liberty LLC. All three were involved in the renovation of The Forge, a building of retail and service businesses downtown which occupies the block south of JC Penney.
Borchers also owns the 45th Parallel Building in north Salem.
The shuttered store is a major piece of the downtown landscape, and has long been viewed by developers and business as key to revitalizing the area.
“It’s so tough because you put your heart and soul into something, you want it to happen,” Borchers said. He said he believes in the future of downtown Salem and that the city is moving in the right direction, citing recent city council meetings and efforts to put more resources to cleaning and revitalizing downtown.
“We’re still gung-ho about downtown. We’re still gung-ho about Salem,” Borchers said.
This story was updated following an interview with Nat Borchers.
Contact reporter Rachel Alexander: [email protected].
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Rachel Alexander is Salem Reporter’s managing editor. She joined Salem Reporter when it was founded in 2018 and covers education, economic development and a little bit of everything else. She’s been a journalist in Oregon and Washington for over a decade and is a past president of Oregon's Society of Professional Journalists chapter. Outside of work, you can often find her gardening or with her nose buried in a book.
