Plans to redevelop the former JC Penney building in downtown Salem have stalled. Back Line Real Estate, a local investment group, announced it has withdrawn its offer to purchase the vacant 100,000-square-foot property. The decision leaves a significant downtown landmark in limbo, four years after the department store closed its doors.
Nat Borchers, who leads Back Line Real Estate, stated that extensive and costly renovations were needed to bring the building up to modern standards. Despite efforts to renegotiate with the current owner, an agreement could not be reached that made financial sense for all parties involved.
Key Takeaways
- Back Line Real Estate withdrew its offer for the former JC Penney building in downtown Salem.
- Significant renovation costs, including HVAC, plumbing, and electrical upgrades, made the deal unviable.
- The purchase price was initially agreed at $5 million, but rising renovation estimates changed the financial outlook.
- The building, vacant since 2020, remains a key piece for downtown revitalization efforts.
High Hopes for a Downtown Hub Face Reality
Back Line Real Estate, a firm known for its involvement in other downtown Salem projects like The Forge, had envisioned transforming the massive space into a vibrant community hub. This vision included a mix of entertainment and shopping options, aiming to breathe new life into a crucial part of the city's core.
However, the initial optimism faced a significant hurdle when detailed construction budgets came in higher than anticipated. The firm's statement emphasized their commitment to quality, stating they don't want to simply put a "Band-Aid" on the building.
"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," Back Line Real Estate stated.
The investor group included Borchers, Salem developer Chris Blackburn of Clutch Industries, and real estate broker AJ Nash. They operated under the company name 305 Liberty LLC. All three were instrumental in the successful renovation of The Forge, a retail and service business complex located just south of the former JC Penney site.
Building Details
- Location: 305 Liberty St. N.E., downtown Salem
- Size: Approximately 100,000 square feet
- Current Owner: Company managed by Portland developer Stuart Lindquist
- Last Sold: For $2.9 million after JC Penney closed in 2020
- Current Assessed Value: $1.9 million (Marion County property records)
The Challenge of Extensive Renovations
Borchers explained that the building's core infrastructure required a complete overhaul. This included replacing multiple electrical transformers, completely redoing the heating, ventilation, and air conditioning (HVAC) system, and undertaking significant plumbing upgrades.
"The main guts of the building need to be replaced," Borchers confirmed. These substantial costs made the previously agreed $5 million purchase price unfeasible for the investment group. Investors met with the seller last week in an attempt to find a new agreement, but these discussions ultimately failed.
The current owner, a company managed by Portland developer Stuart Lindquist, acquired the property for $2.9 million after JC Penney ceased operations in 2020. Efforts to reach Lindquist for comment were unsuccessful.
Downtown Salem Revitalization
The former JC Penney building has long been seen as a pivotal piece in the ongoing efforts to revitalize downtown Salem. Its size and central location make it a prime candidate for projects that could significantly impact the area's economic and social landscape. Developers and local businesses alike have viewed its redevelopment as key to attracting more people and activity to the city center.
Impact on Downtown Vision
The news comes as a blow to those hoping for a swift transformation of the prominent downtown property. The building has sat vacant since 2020, becoming a symbol of the challenges facing urban retail spaces.
Borchers expressed his disappointment, acknowledging the emotional investment involved. "It’s so tough because you put your heart and soul into something, you want it to happen," he said. Despite this setback, he remains optimistic about the future of downtown Salem. He cited recent city council meetings and ongoing initiatives to enhance the area's cleanliness and vitality as positive signs.
"We’re still gung-ho about downtown. We’re still gung-ho about Salem," Borchers reiterated, indicating his group's continued commitment to the city's development, even if this particular project will not move forward.
Looking Ahead for the Vacant Property
The withdrawal of Back Line Real Estate's offer means the former JC Penney building will continue to remain vacant for the foreseeable future. The property's significant renovation needs and the financial gap between seller and potential buyer present a considerable challenge for any future developer.
The downtown area continues to be a focus for various revitalization efforts. The fate of this large retail space will likely remain a key topic as the community looks for solutions to fill the void and further enhance Salem's urban core.
- The building's large footprint makes it a unique opportunity for a diverse range of uses.
- Future developers will need to account for substantial infrastructure upgrades.
- Community leaders continue to explore options for downtown improvement.
