Portland's 16.4-million-sf CBD was on the low side of the average, at 11.7%, on the strength of 25,000 sf of positive net absorption. The Downtown submarket also showed slight positive absorption, but vacancy still jumped to 12.3% due to the delivery of new construction on the former Blitz Weinhard Brewery property.
The 22.7-million-sf suburban market, on the other hand, saw its vacancy rise to 17.9% on the weakness of 188,000 sf of negative absorption. The largest suburban submarket, the 3.8-million-sf Sunset Corridor, ended the quarter with a 30.2% vacancy rate, the highest in the suburbs.
The region's 11.9-million-sf class B market took the biggest hit in the third quarter, as more than 148,000 sf of negative absorption pushed vacancy to 14.6%. Class A space, totaling some 21 million sf region wide, saw just 4,600 sf of negative absorption to post a 16.7% vacancy rate. The 6.2-million-sf class C market saw 9,000 sf of negative absorption and posted an 11.7% vacancy rate.
"Vacancy has reached its highest level in a decade," says Dave Squire, SVP and managing director of Grubb & Ellis' Portland office. "However, there has been a subtle shift in the office market this quarter. Activity has picked up as tenants are beginning to plan for the future. Most leasing for the next several quarters will come from traditional business services and will be smaller deals. Large deals this quarter were primarily renewals, with tenants taking advantage of market conditions."
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