The Portland industrial market continues to be strong despite softening from a few leading indicators. The overall market vacancy rate is 4.3 percent, which is up from 3.4 percent in the third quarter of 2018, while absorption during this period was 832,000 square feet. Historical absorption during the current cycle has averaged 3.8 million square feet. Almost 5 million square feet came on line in 2018, 2 million of which was speculative space that was 85 percent available in July 2019. This impressive amount of growth expanded the existing overall market size by 2.2 percent. Top tenants have been Amazon’s fulfillment centers, which occupy 918,000 square feet in the Rivergate Industrial Park in North Portland and 857,000 square feet in Troutdale. Both facilities were developed by Trammell Crow. Amazon also signed a lease in Hillsboro in 2016 for 303,000 square feet of space that was developed by Majestic. A United States Postal Service processing and distribution facility moved from a confined, central city location into 818,000 square feet in the Airport Way industrial area in Northeast Portland. Other large users include third party logistics, retailers/wholesalers and local market distributors. Intel announced an additional 1.5-million-square-foot expansion of its existing 2.2 million …
As brokers, we are often asked our opinion on the local market. The topic seems to have garnered even more interest than normal as of late. There is a multitude of variables investors will point to as they attempt to define what is happening in the market. The new legislation coming down the pipeline has probably caused the biggest challenges to the local multifamily market. Nationally, there are a lot of people worried about a recession because of the inverted yield curve. However, a recession hasn’t occurred every time the curve has inverted. There is no crystal ball to look at and make our investment decisions, but I think the outlook for Portland is still rosy. What appears to be happening is we are going from a rising market to a more normalizing market. In a rising market, prices increase, buyer demand increases, velocity increases, yield spread narrows and inventory moves fast as investors speculate on the market. In a normalizing market, prices become more realistic for in-place yield, there are fewer buyers in the market, velocity drops and the buyer/seller gap widens, which causes assets to sit or not sell. This seems to be the case here in Portland …
Portland’s office market is experiencing strong growth as it continues to benefit from an influx of Bay Area and Seattle tenants moving into the city. This is due to the relatively affordable rental rates and positioning between the two booming tech hubs along the West Coast. The city is seeing an increase of large tech tenants making their home in Portland, starting with Intel, which is Portland’s largest employer. Other companies, such a Genentech, Google, Oracle, Salesforce and many others have also taken up tenancy in the Portland Metro area. Seattle-based Amazon recently leased 83,995 square feet in Portland’s newest Class A office building, Broadway Tower, while Amazon’s AWS Elemental division leased 101,000 square feet in the former Oregonian headquarters, which is adjacent to Broadway Tower. The office market continues to perform well with a vacancy rate of 7.3 percent, beating out the 10-year average of 8.65 percent. All of these new companies making their way to Portland are creating substantial job opportunities for Portland’s ever-growing population. Portland is home to several large industry-leading companies, such as Nike, Intel, Columbia Sportswear and Adidas, which attract workforce talent across the world. This has helped spur the growth of Portland’s economy, which …
The retail market in Portland remains competitive. Vacancy rates are staying low at 3.1 percent, compared to about 5.5 percent just five years ago, leading to healthy competition among tenants for space. Retailers and brands are thriving across the board in this market. We’re seeing food halls, outdoor apparel, athletic brands, brew pubs, schools, banks, value brands, homegrown food concepts and many franchise concepts entering or expanding. Competitive socializing and esport lounges are growing in popularity across the country, taking up about 32 percent of the leisure tenant market. Competitive socializing concepts like Voicebox and Punchbowl Social are quickly becoming some of the most popular leisure tenants in the Portland area. Live Nation has recently signed a lease for a new entertainment venue at Lloyd Center, which will soon offer more small-venue live entertainment options. Brands like Pendleton, Nike, Columbia Sports, Apple, Nordstrom, H&M and Zara have flagship stores in the downtown core. Patagonia, Anthropologie and a local favorite, the Mercantile, have all expanded their footprints taking prime real estate in the Portland CBD/West End. The desire for wellness and a balanced lifestyle has led to a boom in demand for retail space. Wellness tenants like medical clinics, dental offices …
Strong economic growth on the West Coast from the booming tech industry has benefited Portland’s economy. As a result, considerable employment and population growth, particularly from the Millennial generation, has elevated the industrial market significantly in recent years. According to CBRE, demographic growth and the national shift to online consumption have contributed to a steadily decreasing industrial vacancy rate since 2010, which reached 3.3 percent in early 2019. Demand for industrial space began to pick up speed about five years ago and has since boosted asking rents 45 percent. Build-to-suit construction projects were a growing trend in 2018, delivering more than 2.9 million square feet for existing tenants, the largest developments being the Troutdale Reynolds and Rivergate. To date, 2019 construction has been exclusively speculative with half a million square feet delivered thus far and 41 percent preleased. An additional 1.4 million square feet is under construction and expected to deliver by year-end 2020, none of which is pre-committed. At the same time, demand for industrial space of 100,000 square feet or greater accounts for 20 percent of users in the market. The speculative construction projects delivering during the next 18 months should provide some supply options for users of …
Consistent investment trends, a steady demand for tenants, stable in-migration and several new additions to the skyline have provided Portland with a strong first half of 2019. With more than 100,000 square feet of positive net absorption this year, the Portland office market shook off any lingering negative sentiment from 2018 and started the year strong. Portland has built a reputation as a second outpost to cities like Seattle and the Bay Area. Companies tend to initially set up small offices before quickly realizing Portland is a viable alternative to other larger hubs. In-migration remains strong but the major growth the market has experienced recently has been from homegrown companies ramping up or expanding their operations. We’re continuing to see office rents grow at almost 12 percent year over year. Portland office rents average $32.12 per square foot, making them nearly 60 percent cheaper than San Francisco and 25 percent cheaper than Seattle. The city is also well situated to attract companies that are being priced out of primary markets but still need to be geographically close. When you layer on our cost of living and high quality of life, Portland becomes even more attractive, which also contributes to its …
Portland’s retail market is supported by steady employment gains that are luring new residents. Employers have created almost 23,800 jobs over the past 12 months, while the metro added nearly 27,400 people. This is a population growth rate that is nearly double that of the U.S. Household income also advanced at a faster clip than most of the country. Portland’s median household income jumped 5.3 percent over the past year. This is well above the national level of 3.6 percent, providing residents with more discretionary spending power. Retail sales have surged 5.8 percent year over year as a result, which is significantly higher than the U.S. rate of change. These growth trends are expected to continue through 2019, boosting the retail sector. The need for retail space may be escalating, but construction remains measured. This has funneled expanding retailers into the dwindling supply of existing space as vacancy tightens. Developers added 319,000 square feet year over year in March, slightly lower than the 327,200 square feet 12 months earlier. Deliveries will remain sparse as builders have less than 300,000 square feet under construction. Much of the new supply is ground-level space in mixed-use office or apartment projects in walkable, urban …
The population in the Greater Portland metro grew by more than 80,000 between 2016 and 2019, while the total number of all housing units permitted was 31,538, according to the Census Bureau. This ongoing housing shortage both inside and outside Portland city limits is expected to keep property values and rents growing as demand continues to outpace supply for the foreseeable future. Since 2015, there has been an increase in the vacancy rate as thousands of new apartments have been added and absorbed. Rent and other concessions that grew during 2018 have decreased in close-in Portland, East Vancouver and Oregon City. They have increased, however, in neighborhoods where new units were delivered. After experiencing flat rents two years ago, rent increases averaged 3.7 percent between April 2018 and 2019, according to the Multifamily NW Apartment Report. Portland saw an overall transaction volume increase with a total of 38 institutional transactions in 2018. Properties valued at less than $10 million experienced only a slight increase in transactions between 2017 and 2018. Oregon also became the first to adopt statewide rent control on Feb. 28, 2019. Rent increases are capped at 7 percent plus inflation annually. No-cause evictions are limited. The Portland …
PORTLAND, ORE. — Union Investment Real Estate GmbH has acquired The Porter, a 294-room boutique hotel in downtown Portland, for $148.8 million. The 16-story hotel is located at 1355 SW 2nd Ave. in the city’s Central Business District. The asset is part of the Curio Collection by Hilton brand. Syracuse, N.Y.-based Widewaters Hotels is the hotel’s developer, vendor and operator. Union Investment purchased the property from Widewaters via its open-ended real estate fund Unilmmo: Global. “The Porter is the ideal addition to our U.S. portfolio, which is set to grow at a similar pace going forward as in recent years,” says Andreas Löcher, head of investment management hospitality at Union Investment. The Porter, which opened this past January, features an upmarket restaurant on the ground floor, a coffee bar and a grab-and-go market, as well as a rooftop restaurant and lounge. The hotel also provides about 1,200 square feet of conference space, in addition to a heated indoor pool and a fitness center, which offers individual meditation and yoga rooms. Portland is Union Investment’s sixth targeted hotel location in the U.S. and its second on the West Coast. The Hamburg, Germany-based real estate investment manager acquired the Hilton Garden Inn …
PORTLAND, ORE. — Starwood Capital Group has purchased the 40-story Wells Fargo Center in downtown Portland. The transaction includes an adjacent five-story former data processing building. The price was not disclosed, though county tax records put the value of the tower at $163 million and the adjacent property at $33 million, according to The Oregonian. In June, Wells Fargo announced plans to sell the buildings and relocate some of the 900 employees working there to other local offices, added The Oregonian. The two structures total 725,000 square feet. The asset is located at 1300 SW 5th Ave. The Class A creative office space is the tallest building in Oregon. It offers views of Mt. Hood, the Willamette River, Mount St. Helens, downtown Portland and the West Hills. Starwood plans to reposition the property into a premier Class A asset. The lobbies and entries will undergo major renovations. The investment firm will also add new tenant amenities, including conference facilities, a tenant lounge, reimagined retail areas, fitness center and bike hub. “We are confident that our ambitious renovation plans will restore this building to its former status as one of the most iconic Class A office towers not just in Portland, …
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