X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

PORTLAND, OR-Like it or not, office tenants are in the driver’s seat, and this isn’t likely to change in the near term, according to a preliminary Q2 from Cushman & Wakefield.

After a small improvement in the first quarter–marked by the first positive absorption in 12 months–the region’s office market slipped backwards during the second quarter, with demand remaining sluggish, vacancy rising, and sublet space continuing to put downward pressure on rates. Portland’s YTD net absorption is currently a negative 304, 284 sf, while the suburban submarkets have total a negative absorption of 102,108 sf.

Noting that the area’s real estate market reflects the local economy, Terry Shanley, managing director of C&W’s Portland office, predicts that demand will remain slow, possibly through the middle of next year.

Vacancy in the CBD inched upward over the last few months, with the overall vacancy up from 14.6% to 15.7%. The vacancy rate in suburban markets rose from 19.9% to 20.3%, bringing the region’s overall vacancy rate to nearly 18%. The Sunset Corridor submarket continues to have the highest vacancy rate in the region at 40.3%, but that rate reflects a decrease from 41.3% in the previous quarter.

And with owners competing for a smaller pool of tenants and a substantial amount of sublet still in the marketplace since the dot-com meltdown, rental rates have continued to fall, notes the report. Rents throughout the region decreased slightly from the previous quarter, but Shanley notes that tenants are both reluctant to make a move and aggressively negotiating deals at renewal.

Rental rates in the CBD decreased on average from $25.74 to $25.61. The average rent in suburban markets stands at $22.82.

The report also notes that Portland-area market is continuing to see investors in search of investment opportunities due to availability of cheap money. He suggests that this activity will continue until at least the fourth quarter when the feds may close the cheap money window.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.