Portland, Oregon’s strong economy last year offered a robust foundation for the area’s office market, despite leasing challenges for speculative developments.
Nike, Adidas and Northwest Natural are all building large, build-to-suit office expansions in Portland. Office vacancy has consistently held below 8% since the end of 2015, benefiting from strong tenant demand and, until lately, limited speculative supply.
But, more than a year after delivery, some high-profile creative office developments are lingering on the market, and more speculative space is under construction. While net new supply in 2019 was limited, the pipeline is formidable: At the close of 2019, nearly 3 million square feet of office space was underway. But despite substantial new supply, Portland’s dependably strong vacancy performance has contributed to robust cumulative rent growth.
With $1.7 billion in sales volume over 2019, Portland office investment reached a decade high. The confidence of investors has been undergirded by Portland’s strong job growth, the growing profile of its tech workforce, the breadth and depth of local employers and many large, ongoing corporate expansions.
But as the coronavirus impacts the global economy in 2020, the office sector will face an array of challenges in the months to come. For the full breakdown of all Portland submarkets, see details in the Latest Market Report.