📈 Business Matters 05/05/26

Bellingham’s retail extremes: Call this a tale of two percentages — 27.9 and zero. And of how the most visible of commercial property vacancies, retail stores, are influenced over time by a wide variety of factors.

A new quarterly commercial real estate vacancy report from Ryan A. Martin, broker and co-owner of Pacific Continental Realty, has a straightforward topline for Bellingham as a whole.

Between the first quarter of last year and the most recent report’s end of Q1 2026 tally, vacant retail square footage in Bellingham gradually increased from 3.6% to 5.8% overall. That’s also up from the most recent low point of 3.1% in the second and third quarters of 2024.

But the hikes weren’t evenly distributed over the city, or even that one-year span.
At one extreme, Sunset Square had the most empty retail square footage and a stunning 27.9% vacancy rate for the first quarter ending this March, up from 1% a year earlier. At the other end, West Bakerview — with Costco anchoring it— was stable, ending the same period at 0%. After starting at 0%.

In between, downtown Bellingham with its complex challenges rose from 9.6% to 12.2% in that year’s time, and Bellis Fair from 6.6% to 8.7%. Barkley Village went in the other direction, decreasing its retail vacancy from 5.4% to 3.1%.

Yet each, Martin explained to me by email and in conversation as we looked back over multiple quarters’ reports, had its own set of distinct considerations.

As I walked around Sunset Square, a current poster child for retail vacancy, I tried to view it how Martin described it: as a “T” shape, with Goodwill at the top center where a Regal Sunset Square 6 used to be. The movie theater’s former entry plaza now is a series of covered side doors for the thrift store, but in its cinematic days spilled filmgoers out and down the T in both directions to parking, restaurants and smaller shops.

A shuttered At Home (itself a replacement for a defunct KMart) sat on the T’s top left, the vacant Rite Aid along the T’s top right, and at the base of the T, an empty Joann fabric and crafts store. All three went bankrupt and closed in 2025, vacating about 156,000 square feet according to a listing brochure from First Western Properties.

“Sunset Square got caught up in a perfect storm with their large vacancies hitting all at once,” said Martin. “There are not many retailers that seek space that large.”

First Western appears aware of that challenge, now marketing the huge, 104,000-square-foot At Home building as home for up to five retailers.

“The recent vacancies are providing us an opportunity to upgrade the tenant lineup at the center,” wrote Brennan McClurg, president and principal of First Western, when I asked about the strategy for filling the empty space. Without going into details, McClurg said he’s hopeful to have something to announce “later this summer.”

West Bakerview is on the other end of the retail spectrum with a vacancy rate of zero percent. Bordered by Interstate 5 on the west and Cordata Parkway on the east, both Costco and Fred Meyer are firmly inside.

Costco had once been in a Meridian Street center where you can currently find Hobby Lobby and HomeGoods. But “when Costco moved to West Bakerview in 2016,” Martin said, “the 50-yard line for Bellingham retail shifted.”

After West Bakerview, he said Barkley Village has been among the most-favored, lowest-vacancy-rate areas for retail since the start of the decade.

One key factor for successful local retail is what Martin calls “synergy,” having enough different retailers and restaurants for shoppers to visit all in one place. It can benefit all of the tenants and keep occupancy high.

“When all the businesses are busy and full, and there’s one space, two spaces left, people are going to fight for it,” he said. But if a shopping district empties, “it can become very tough to stop the slide and harder to turn things around.”

Downtown Bellingham appears to be especially tricky, because a lack of residents or office workers in or near the urban center directly affects ground-floor retail traffic.

“People only consider their favorite restaurants or shops,” Martin said. “But really, it’s the second story or above that facilitates all those ground-floor businesses.”

It can be hard to rebound and get synergy back. Downtown’s vacancy rate rose from 9.6% to 12.2% between the ends of March 2025 and 2026. But he said “it’s possible, and there are smart people over there” working to solve what he called downtown’s “big, complex problem.”

Martin’s quarterly reports also cover office and industrial space. For Bellingham as a whole, office vacancies dropped from 4.3% at the end of Q1 2025 to 4.1% in Q1 2026, tying its most recent low point. Of note, Barkley Village office vacancy declined from 7.8% to 4% over that period. Downtown’s increased from 6.6% to 7.7%, now accounting for more than half of the city’s vacant office space.

Industrial availability remained the tightest of the three commercial real estate sectors, ending Q1 at 1.2% vacant for what Martin said was its lowest level since 2023.

Tracking all of this — across 26 areas within Bellingham — appears to be a labor of love and curiosity for Martin. He said he learned an appreciation for both Bellingham and economic statistics when he moved here in 1997 to attend Western Washington University. Martin recalled he started volunteering on the now-defunct Whatcom Real Estate Research Report “around 2012, plus or minus” and continued with the data gathering even after that report ended in 2015.

He told me he’s asked why no other group or agency analyzes and shares the same data. His straightforward response? “Because it’s hard and expensive.”

Martin finds it fascinating.

“There are so many different aspects of commercial real estate, which can make the subject seem broad and overwhelming,” he said as we wrapped up this deep dive into one more quarter’s effort. “But that complexity is interesting to me.”

Perhaps it was too early, or Business Matters subscribers aren’t into “the beautiful game.” But April’s business poll results were a blocked shot if one goal was getting everyone to take part in a World Cup-related event or activity hosted by a local business.

Of the nearly 100 responses (admittedly self-selecting, so unscientific results), 73% indicated they wouldn’t do so, 18% were maybes and 9% said yes.

Typical of the April poll comments: “More congestion of any kind is unwanted and unwelcome,” and “I'm interested in the World Cup but not in fighting crowds or drunk/high people.”

For May, let’s focus on another kind of game: retail, with the intent to browse as much as buy. Options include the mall and all of the City of Bellingham’s designated urban villages.

The Bully Pulpit: Theodore Roosevelt, William Howard Taft, and the Golden Age of Journalism: Historian Doris Kearns Goodwin is always a good read — and, for me at least, a long one. Amazon tells me I purchased this Kindle book in November 2013. But I’ve kept going back to it for its history of corporate regulation, investigative journalism and the insights into one of my childhood heroes, Teddy Roosevelt. I’m at 50% of its 909 pages and still reading.

The Extra Mile Newsletter: This free, daily newsletter from the travel deals site Thrifty Traveler is much more than promotion for its paid service. It has a solid summary of the day’s hotel and airline news, focused on prices and loyalty programs. The onetime frequent flyer in me finds it a useful morning scan for traveler news of note.

May 6: National Fusion Energy Week, Northwest Innovation Resource Center, IRC-Lab SWIFT Sedro-Woolley
May 7: 2nd Annual Tourism Summit, Skagit Tourism Bureau, Cascade Flats Sedro-Woolley
May 14: Legislative Review, Bellingham Regional Chamber of Commerce, Four Points by Sheraton Bellingham
May 19: Eat Local First Spring Mixer, Sustainable Connections, Sustainable Connections Bellingham
May 21: Waterfront Festival Poster Unveiling After Hours, Anacortes Chamber of Commerce, Anacortes Yacht Club
May 27: Taste of Tourism & Annual Meeting, Visit Bellingham Whatcom County, Bellingham Cruise Terminal
May 27: The New World Order: Canada’s Perspective and Leadership, Bellingham City Club, Bellingham Yacht Club