After a small improvement in the first quarter--marked by thefirst positive absorption in 12 months--the region's office marketslipped backwards during the second quarter, with demand remainingsluggish, vacancy rising, and sublet space continuing to putdownward pressure on rates. Portland's YTD net absorption iscurrently a negative 304, 284 sf, while the suburban submarketshave total a negative absorption of 102,108 sf.

Noting that the area's real estate market reflects the localeconomy, Terry Shanley, managing director of C&W's Portlandoffice, predicts that demand will remain slow, possibly through themiddle of next year.

Vacancy in the CBD inched upward over the last few months, withthe overall vacancy up from 14.6% to 15.7%. The vacancy rate insuburban markets rose from 19.9% to 20.3%, bringing the region'soverall vacancy rate to nearly 18%. The Sunset Corridor submarketcontinues to have the highest vacancy rate in the region at 40.3%,but that rate reflects a decrease from 41.3% in the previousquarter.

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