SALEM, Ore. — A highly anticipated effort to redevelop the former J.C. Penney building in downtown Salem has been called off, marking a setback for one of the city’s most visible revitalization projects.
The three-story property at 305 Liberty Street N.E., vacant since the department store’s 2020 closure, had been slated for a complete transformation into a mixed-use destination featuring new shops, restaurants, and entertainment space. Plans also envisioned upper floors with small service businesses and professional offices.
The redevelopment had been led by Back Line Real Estate, a Salem-based investment group operating under 305 Liberty LLC, which includes developers Nat Borchers, Chris Blackburn of Clutch Industries, and real estate broker AJ Nash. The group had reached a preliminary agreement to purchase the 100,000-square-foot building for about $5 million and had positioned the project as a catalyst for renewed downtown growth.
However, after months of evaluation and negotiations, the deal quietly collapsed before construction began. Cost projections showed the structure required substantial upgrades to meet code and modern safety standards, including replacement of major electrical, HVAC, and plumbing systems. Those renovation costs, combined with the purchase price, ultimately rendered the project financially unfeasible.
Borchers said the team had hoped to make the project work but couldn’t overcome the financial hurdles.
“We wanted this project to work and invested a lot of time exploring it, but ultimately the numbers didn’t align,” he said. “The costs rose, and we weren’t able to reach a price adjustment that reflected the additional risks involved. While we’re disappointed not to be moving forward with the J.C. Penney building, we remain strong believers in downtown Salem and are excited for the projects ahead.”
The site sits within the Riverfront Downtown Urban Renewal Area, a key zone in Salem’s broader redevelopment framework. City officials and business leaders had viewed the J.C. Penney project as a cornerstone of Salem’s downtown revitalization, meant to breathe new life into one of its largest vacant properties.
Tom Hoffert, CEO of the Salem Area Chamber of Commerce, said the project’s collapse highlights the broader economic challenge of redeveloping large, aging retail buildings in smaller markets.
“News of the failed bid to redevelop the former J.C. Penney property comes as a disappointment, but also as a cautionary tale to just how challenging it will be for investors to retrofit these large big box stores after the national companies depart our market,” Hoffert said. “The Salem Chamber applauds the earnest work Back Line Real Estate placed into seeking a development solution and recognize that this is but one missed opportunity. Nat Borchers and his team are making very special projects a reality across Salem, which are impressive gifts to economic development in both downtown and northeast Salem.”
Despite the setback, those involved with the proposal remain active in local development and continue to express confidence in Salem’s long-term downtown recovery. The same investment group was behind The Forge, a nearby building now home to several retail and service businesses, and has previously redeveloped other prominent Salem properties.
With the deal now off the table, the building’s future again turns uncertain—leaving city leaders and local business owners weighing how to reactivate one of downtown’s most recognizable vacant spaces.
