What area is your expertise?
Apartment brokerage in Portland
What trends do you see presently in multifamily development in your area?
Downtown development is strong. Large, high-end transactions from late 2007 continued into first quarter 2008. The high level of acquisition activity on the institutional front will continue in 2008. By the end of 2007, activity of smaller (below $5,000,000) properties was down 20 percent from 2006. This will be the trend for 2008.
Who are the active multifamily developers in your area?
Opus Development, Trammell Crow, Unico and Gerding Edlen.
Please name one or two significant multifamily developments in your area. What impact will these projects have on the market?
The Wyatt — Northwest submarket — just completed — Bob Ball and Evergreen Signature, LLC, developers. It was converted from condos to high-end apartments – will fit growing demand for luxury apartments.
The Lovejoy — Northwest submarket — under construction — Unico, developer. Mixed-use with Safeway grocery store, 231 units of multifamily space and office. Supplying grocery to an area of Northwest/downtown neighborhood that has not had a grocery store.
Where is the majority of development taking place? Why is this area doing well?
Downtown core – close-in (to the Willamette River) East side and Interstate 5 corridor.
What area do you expect to be the next big development market? Why?
I-5 corridor due to the growth of new retail and housing demand.
What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing?
The downtown core, North/Northeast and Wilsonville submarkets have seen vacancy declines. The Gresham & Troutdale submarket, as well as the Lake Oswego & West Linn area, saw vacancy rates rise slightly First Quarter 2008.
Please give a measure of apartment vacancy rates.
Vacancy rate for Portland Metro was 3.8 percent in First Quarter 2008. This is for Portland and Vancouver, WA.
What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in the next year?
Multifamily lending is still very available. Still cautious, lenders are now underwriting more aggressively, requiring more and more detailed reports. As a result, borrowers are under more scrutiny than ever. However, investor interest in the Portland market is high, and multifamily is the product type of the moment within the housing market crisis. Capitalization rates still aren’t under too much pressure to increase. Rates should stay stable in the short-term.
What is the status of job growth/(un)employment rates and what bearing will it have on the multifamily market?
Manufacturing employment is sound, while unemployment is flat. We’re also strong in distribution, wholesale and retail trade, regional government and business services. Population growth is still strong in Portland. With the state’s population rising by 1.6 percent in 2007, the majority of it to Portland, demand for rental housing will remain healthy even if employment is lackluster.
Would you like to make any additional observations about the multifamily market in your area?
Strong fundamentals and growth. Portland’s diversified economy is broad-based, with the trade, transport and utilities sector as the state’s largest employer. But Portland’s manufacturing strength is its secret weapon. With the dollar weak, exports are strong – keeping our manufacturing and trade markets afloat.
Submitted by Robert Black , associate vice president with the Portland, Oregon office of NAI Norris, Beggs & Simpson. Posted Online 05/02/08.
Robert Black