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Report Predicts Improving Portland Office Market

PORTLAND, OR-A national office report predicts that region-wide vacancy in the metro area this year will drop to its lowest point since 2001.

By Brian K. Miller | Updated on March 23, 2005

PORTLAND, OR-Office vacancy in the Greater Portland region this year will dip below 16% for the first time since 2001, according to the latest national office report by Marcus & Millichap Real Estate Investment Brokerage Co. The positive outlook helped the region hold onto the 28th spot in the report’s national office index, which ranks 42 office markets based on a series of 12-month forward-looking supply and demand indicators. “Leasing will remain strong in the Downtown urban office market in 2005,” predicts Gary Lucas, regional manager of the firm’s local office. “We expect mild gains in effective rents in urban area throughout the year. Among the suburban regions, the Kruse Way submarket will remain the leader with both the lowest vacancy, at less than 8%, and the highest rents, at an average of $23 per sf.”The report predicts that job growth in the region this year will outpace the national average and result in 22,770 new jobs, led by manufacturing, health care and retail trade. The growth will spur one million sf of leasing in 2005, resulting in positive net absorption for the second year in a row despite 700,000 sf of new development, according to the report.The absorption will push down region-wide vacancy by 70 basis points, giving the Greater Portland area an average office vacancy below 16% for the first time since 2001, according to the report. With still too much space on the market, the average asking rent in most submarkets will move very little in 2005, the report predicts. However, effective rents will rise by 1.9% to an average of $16.21 as concessions begin to burn off.

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