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 …
In many ways, Portland’s industrial market has experienced a dramatic shift over the past five years, emerging as a market to be reckoned with. Demand has exceeded supply for the past six years, pushing vacancy to a 25-year low and rents up 18 percent year-over-year. Industrial users have grown in size, and large users have grown in number. Developments are bigger and migrating further from the traditional industrial submarkets. Investors are keen on Portland assets and are willing to pay a premium for quality product with a solid tenant roster. Portland’s population grew by 8 percent from 2010 to 2015, ranking it among the top 20 of the 50 largest U.S. cities. This growth in metro-area population has propelled strong demand from large e-commerce and distribution companies as they expand into new locations to service our growing consumer base. In 2010, we saw 11 users lease or build spaces of 100,000 square feet or more, and our average size lease was 24,854 square feet. By 2016, our average-sized industrial lease had grown to 39,218 square feet, an increase of 57.8 percent. We also saw 18 users build or lease space greater than 100,000 square feet. Portland’s industrial market users are …
The Portland multifamily market continues to slowly improve in spite of the unemployment rate stalemated at 10.6 percent — now entering its 10th month. When Portland headed into the recession, many believed its multifamily market would experience a similar plight to that seen in the Southern California and Arizona multifamily markets. It certainly dipped, but fortunately didn’t hit their low values estimated to be 50 to 60 percent below the original prices for some properties there. Rents have returned to pre-recession levels, concessions temporarily came into the market and net operation income went down, causing apartment values to decrease between 15 to 20 percent. But through the worse of the recession, and even today, vacancy has held around 5 percent. However, it should be noted that in some pockets of the Portland market, like Gresham, certain areas of Beaverton and outer Hillsboro submarkets, vacancies are somewhat higher. At first glance, when comparing Co-Star year-to-date multifamily sales numbers (August measure for transactions ≥ $1 million) of $196 million with $116 million in 2009, it appears that transaction sales numbers are up by 59 percent. Yet, on closer inspection, a different story emerges. Since the beginning of the year, there have been …
With a population of 2.2 million, Portland is the 28th largest metropolitan area in the country, the fourth largest city on the West Coast and the largest city in Oregon. Sportswear and equipment businesses Nike, Adidas-America and Columbia Sportswear are all headquartered in Oregon. National publications often cite the Portland area for its coolness factor. In 2009, Men’s Journal named Portland the third “Best Beer Town in the U.S.,” the Wall Street Journal dubbed it the fourth best “Youth Magnet City” and it was third in the Forbes annual list of safest major cities. Unfortunately, it’s not all positive news for the area. Oregon has the fourth highest statewide unemployment rate in the country. During the past year, Oregon has lost 100,000 jobs, and the unemployment rate is now holding steady at 11.5 percent. However, for the real estate sector, the state had the foresight to have well thought out land-use planning laws, and this has benefited the region in these tough times. In the early 1970s, Governor Tom McCall commissioned a study on the future of the Willamette Valley, whose farms and forests were being threatened by a wave of new growth and poorly planned development. Knowing that Oregon’s …
Three significant Portland multifamily buildings delivered downtown in the first two quarters: Cyan/PDX (352 units developed by Gerding Edlen Development) and the Ladd (332 units developed by Opus Northwest) and the Riva on the Park (294 units developed by Trammell Crow). Downtown Portland has historically been a healthy submarket for multifamily, and much recent construction has been centered there, so the area is now becoming very competitive. All three of the aforementioned projects are also pursuing LEED certification, which appeals to Portland’s urban tenant. Vacancy is an important factor in Portland’s multifamily market as it is an indicator of the overall market’s health. The vacancy rate has been trending upward in recent quarters, which should continue in the second half of the year. It’s important to note that the increase in vacancy is due to economic pressure on tenants, not migration of people out of the metro area. Expect vacancy to regain its footing next summer or when economic conditions improve. Portland’s Urban Growth Boundary sets it apart from other multifamily markets in the West. The UGB has prevented overbuilding in both the single-family and multifamily markets in the last 5 years. This means that despite the recession, Portland’s apartment …