Report: Office Market has Protracted, Discounted Road to Recovery

PORTLAND-Overall Portland office vacancy held relatively steady in the first quarter of 2003 with by far the lowest increase in vacancy in the past two years, according to the latest report from the local office of Grubb & Ellis. Vacancy in the 40.6-million-sf market rose two tenths of a percent during the first three months of the year compared to an average increase of more than one full percentage point over the previous eight quarters.

“History tells us that this is the stage in the real estate cycle where recovery starts with job growth and six- to nine months later, the office market begins to show signs of improvement,” reports G&E Research Director Patricia Raicht. What history doesn’t tell us, however, is how to account for all the conflicting variables now in the mix such as the slowdown in the technology sector, low interest rates, war, increased capital flowing to real estate and the aftermath of recent corporate scandals.

All this points to a slow, relatively jobless recovery, which means any rebound in the office market will lag behind further than normal, causing Raicht to predict that “it may be at least three years before the Portland office market sees vacancy rates back below 10%.”