The national forecast predicts that job growth will result in 80 million sf of net absorption in the office sector despite 25 million sf of new supply, which will reduce the average national vacancy rate to 12.8% by year end from 14.5% at year-end 2005. In turn, that will push the national average asking rental rate up 5% in CBD markets.

With no new supply expected in Portland until 2007 at the earliest, G&E predicts that Portland's average class A asking rate in the CBD will more than double the national average. The rate will have risen to $25.21 per sf per year by the end of 2006, up $3.08 per sf or 13.91% from the current average of $22.13, according to the G&E.

Like Downtown, many of Portland's suburban class A office markets will see vacancy continue to fall throughout 2006, but rental rate growth is not yet enough to warrant new construction. South of the city, however, in the Washington Square/Kruse Way submarket, the recovery is complete and the expansion has begun. Vacancy is in the low single digits and new office developments are in the works.