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 market has remained relatively healthy and under built, aside from some significant building downtown. This leaves Portland’s multifamily market in a strong position, primed for a robust recovery when the economy improves.
— Robert Black is an associate vice president at NAI Norris, Beggs & Simpson in Portland.