"Although rental rates have not gone up, concessions have been eliminated, and indications are that increases in rental rates can be expected in 2001," reports Grubb & Ellis in its annual year-end review and forecast. The prediction backs up a fall report by Marcus & Millichap that says the multifamily sector is predicted to grow through the next five years.
Leading a national boom in central city apartment development, Portland proper is seeing an increase in both rental and condominium projects, and still maintains a sleek 3.6% vacancy rate, the lowest in the region. Two primary phenomena will continue to contribute to this trend, according to the report: "1) Portland has made a concerted effort to grow a thriving downtown (a 24-hour city where people want to live, work and play), and 2) the growing number of dot-coms and other creative companies located downtown will continue to hire workers who want to live in urban areas."
As well, new office and industrial developments announced by suburban players like Intel and Merix Corp. should help breathe some life back into a heretofore oversupplied suburban market. Six months ago, rents were being discounted 2.3% on average. Recent numbers have rents discounted only 1.8% on average.
Headed into 2001, Lend Lease Real Estate Investments expects an increase in apartment investing. A fall report by the company showed that while the apartment sector makes up 34% of commercial real estate's "Investable Universe," it represents only 16% of current pension fund holdings.
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