When travelers step into the stunning wing of the Portland International Airport (PDX), which opened to the public in August, they’re greeted with a massive tree-lined hall and a showstopping timber roof, made with wood sourced from regeneratively-managed Northwest forests. But the terminal includes another unique element: All of its shops and concessions—from bustling Loyal Legion beer hall to the irreverent greeting-card maker Paper Epiphanies —are local.
PDX has always been known for showcasing beloved local businesses—Powell’s bookstore, Elephant’s Deli, and women’s clothing boutique ccMcKenzie have long had a presence here. The airport is also unusual in ensuring street pricing at all of its shops and restaurants. But in this new terminal, every single one of the nearly two dozen businesses is a local brand.
“It’s the desire of the Port of Portland to keep the revenues local. And to make sure that the brand authenticity is carried through all the way out to the customer experience,” says Abby Carey, concessions development manager at the Port of Portland, which operates PDX. That means that local favorites like Blue Star Donuts, Grassa pasta restaurant, and Straightaway Cocktails have set up shop there. Not only that, 60% of the new businesses are owned by women or people of color—much higher than the bar of 15% that the Port had set for itself. With the opening of the new terminal, more than 80% of the stores in PDX are now locally owned.
The focus on Oregon brands was intentional and baked into the operations of the new terminal from the start. Unlike at most airports, the Port of Portland uses a direct leasing model, which means the Port itself manages all the leases for concessions, rather than hiring an outside operator to oversee them. “It’s a lot more work for us to do it that way—we’re managing 60 leases instead of one,” Carey says. But this ensures that each brand is able to apply its own personal touch to the space.
With the “Master Concessionaire” model that many airports use, the airport contracts with a massive food, beverage, and retail operator (usually a multinational like HMSHost or SSP). The concessionaire will then subcontract with brands, which can often lead to message and quality being watered down, according to Carey. In the Port of Portland’s model, the founder-owners who have nurtured these companies since the beginning are the people running the airport shops. “It’s their livelihood—it means everything to them,” Carey says.
It’s also more affordable to rent a space at PDX than at most airports. That’s because the Port only charges lessees a percentage of sales and foregoes what is known in the industry as a “minimal annual guarantee” or MAG. (Basically, a minimum rent that businesses owe even if their shops are underperforming.) Most businesses at PDX pay a tiered percentage of sales. “As their sales increase, that percentage ticks up a couple percent,” Carey says. “The more successful they are, the more successful we are.”
This differs from most airports nationally, says Jon van der Veen, a partner at Bain & Company. “It’s unusual for a landlord to contract only variable payment, in essence taking on more risk,” van der Veen says.
The Port also did a lot of mentoring and coaching of smaller businesses before it even issued a request for proposals to fill the retail spaces. “The little guys here locally have no idea how it [an RFP] works,” Carey says. “It’s an intimidating process and an intimidating environment to develop.” Once the proposals were in design review, the Port asked PDX engineers to collaborate with tenants’ engineers on ways to bring costs down, and even assumed the cost of certain elements, like security gates, that would typically fall to the tenant. “We try to lower barriers and reduce costs everywhere we possibly can,” Carey says.
Still, the cost of building out a space at PDX is not cheap. For Victoria Venturi, the founder of Paper Epiphanies (PiPH for short), the airport location ended up costing a total of $700,000 to build out, which Venturi financed with a friends and family round of fundraising. The build-out costs included design, architecture, construction, as well as inventory and operating needs. There are also access and security considerations at an airport location—each member of the design/build and construction teams needs to be background checked and badged, which takes time and money. (Knowing this is a requirement is why construction firms charge more for airport bids.) But for Venturi, it was a worthwhile investment. “If you amortize that over a 10-year lease, it’s $70K per year,” she says. She also has a prime location: a 1,000-square foot space under Market Hall, the central pre-security area that surrounds the terminal’s two wooden grandstands. “You get what you pay for,” she says.
For Venturi, a presence at PDX is a game-changer. “The number of greeting cards we’ve sold over the last month at PDX has been staggering,” she says. (She sells both PiPH’s own line of letterpress cards plus other cards made by women writers and artists.) She estimates that her sales at the airport are already at least 4x as much as those at her flagship shop, in Southeast Portland—maybe even higher. That’s partly because of the foot traffic—airports get some of the highest foot traffic anywhere—but it’s also because people are often traveling for important family events such as weddings, birthdays, funerals, or anniversaries. “That’s one of the reasons it [PiPH] makes the perfect fit for the airport,” says Venturi. At the PDX shop, she also curates a selection of periodicals edited by women, books by women authors, and writing accessories.
Being at PDX also gives Venturi what every small business needs most: exposure. Venturi’s flagship store opened quietly during the pandemic on Clinton Street in Southeast Portland. But while Clinton is a bike boulevard, it doesn’t get a ton of pedestrian foot traffic. Now she finds that many Portlanders discover her brand because it’s at PDX. “People will say, ‘Oh my god: This is the coolest store I’ve ever seen—but there’s not one in Portland, right?’ And I’m like, no, there is!”
To make PDX more accessible to emerging businesses, the Port of Portland also created two “pop-up” spaces for smaller brands. Unlike permanent tenants, these businesses don’t have to pay for the shop’s build-out, and they’re only charged a flat percentage on sales. The Port builds the fixtures, installs the lighting, shelves, and so on. “The tenants just move their products in,” says Carey. “That gives them a great springboard into immediately paying off their minimal investment in signage and to be able to build on their revenue from their gross sales.”
The first two businesses to win the pop-up spots are Orox Leather Co. and Missionary Chocolates, both of which have 18-month leases. After that, pop-up tenants will have leases for just a year, allowing many mom-and-pop businesses to cycle through PDX.
“It’s been a complete change for a family business to showcase our leather goods inside the airport,” says Martin Martinez, the CEO and 4th generation leather craftsman at Orox. (The company, which was founded in Portland in 2012, is a neologism of Oregon and Oaxaca, where the family is from.) The airport store, unlike Orox’s Old Town shop, also curates gifts made by other local Latino-owned businesses: Nico’s ice-cream, Katie Mudd Ceramics, and chips from Botanas Michoacanas. “A lot of people consider Portland to be a white city,” Martinez says. “But we want to show you a glimpse of how there is a Latino culture in Portland and Oregon. We want to showcase that Portland is diverse—the diverse City of Roses.”
Over the past two months, his PDX shop has been selling 4x more than the company’s Old Town store. Being at the airport has also boosted Orox’s mailing list by 20%, in part due to a new monthly giveaway, where the company randomly selects a subscriber to win a belt, purse, or wallet.
Martinez says he and his family feel very fortunate to be at PDX and they hope to build on this experience, gaining a permanent post-security shop in the future. “When you come through this [pop-up] program, it allows us to grow together with the airport,” Martinez says. “We’re at the gates of Portland—people are coming and going and they have an opportunity to discover us.”