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PORTLAND- Since occupancy in Portland’s larger apartment complexes fell from 96% in mid-2001 to 92% in the first quarter of 2002, it has remained largely unchanged; as of the end of March 2003, it was 92.7%, according to the latest report from San Francisco-based Real Facts.

“This lengthy softening of occupancy is probably related to ongoing unemployment problems and negative job growth in the area,” states the report. “With an economy that was once propelled by high tech industry, Portland shows lingering weakness, and many analysts predict that when national recovery comes, Portland will lag behind.”

Rents are a similar story: Despite the average rent for an apartment in Greater Portland dipping by $3 in the first quarter–moving from $748 in December to $745 at the end of March–rents over the past year have been essentially flat. Overall rent growth in the past year has been just 0.5%, though studio rents have risen 7.7% to $586 a month over the last year and rents for one-bedroom townhouses have jumped 5.4% to $921 a month, according to the report.

The good news is there has been self discipline on the part of lenders and investors, as development in Portland has slowed to match demand. Nearly half of the Portland region’s rental housing stock was built in the 1990s, but it has since slowed way down. Development in the year 2000 was half that of any of the previous five years, yet still more than combined total from the past two years.

As a result, net absorption in the first quarter 2003 was positive, albeit it only to the tune of 142 units. If absorption could stay positive throughout the year, it would be the first time since 2000. In 2001 and 2002, the market gave back about 2,100 units. In 1999 and 2000, the market absorbed more than 8,000 units.

On the investment front, Real Facts says the average price per unit of complexes sold in 2002 went down slightly due to increased demand for class B and C product rather than class A product.

The Portland area’s three largest apartment markets are: the City of Portland, with 15,837 units in 74 properties; the City of Vancouver, WA, with 13,335 units, and; Beaverton, OR, with 11,777 units. Of those markets, Vancouver has the best average occupancy (93.7%) but the lowest average rent ($691) while Portland has the lowest average occupancy (91.8%) and the highest average rent ($797).

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