Overall Office Vacancy Drops for First Time in Three Years

PORTLAND-Regionwide office vacancy fell for the first time in three years, dropping from 17% to 16.7% during the third quarter on 246,637 sf of net absoprtion, according to the latest report from Grubb & Ellis. The last time overall vacancy in the region declined was during the second quarter of 2000, when it shrank one-tenth of one percentage point to 7.2%.

More than 80% of the absorption occurred in the class A office market, and three-quarters of that occurred in the Central Business District, the region’s largest class A office market with 9.3 million sf. “The Portland Office Market has officially rounded the bend and is now on the long road to recovery,” says Grubb & Ellis Research Director Patricia Raicht. “The CBD is leading the way and will be the first submarket to return to equilibrium.”

Class A office vacancy in the CBD fell from 13.2% to 11.6% during the quarter thanks to 151,000 sf of net absorption, according to the report. The only class A office market to experience a rise in vacancy was the tech-heavy Sunset Corridor, the region’s third largest class A office market with 2.6 million sf. Vacancy there rose from 37.9% to 38.9% as the market gave back 23,549 sf.