Q2 Office Market Report – Portland 2018

The second quarter in the Portland Office market ended with a 6.6% vacancy rate. While net absorption totaled a positive 1,160,537 square feet, vacant sublease space increased to 334,810
square feet. The quarter finished with rental rates at $23.81, which remained the same from the first quarter. Five buildings were delivered to the market with 2,503,330 square feet under
construction at the end of the quarter.

Absorption & Deliveries
The office market was positive 1,160,537 square feet in net absorption, compared to negative 187,283 square feet in the first quarter of 2018.

The most notable tenants moving out of space include: Symantec Corp (300,000 SF) and Oregon Department Human Service (68,363 SF). The following tenants moved into large blocks of space: Fiserv (65,496 SF) and Vacasa (60,152 SF).

Class A: positive 960,030 SF
Class B: positive 163,340 SF
Class C: positive 37,167 SF

Net absorption for Portland’s CBD was positive 224,250 square feet and 936,287 square feet for suburban markets.

Vacancy
The vacancy rate was unchanged from the previous quarter at 6.6%, still slightly higher than the 6.2% vacancy rate at the end of 2017.

Class A: 8.0%
Class B: 7.0%
Class C: 4.6%

In the CBD, the overall vacancy rate was 10.0% and in suburban markets the vacancy rate increased to 5.7%.

Deliveries & Construction
Five buildings were completed in the second quarter, compared to 11 buildings in the first quarter. 2,503,330 square feet remains under construction at the end of second quarter.

Of the buildings completed, notable deliveries include the Nike North Expansion Building A (412,000 SF) and Field Offi ce (165,653 SF).

Both the Nike North Expansion Bldg B (1,003,585 SF) and Block 29 Center for Health & Healing (360,000 SF) are 100% pre-leased and still under construction.

Rental Rates
For all classes, the average quoted rental rate was $23.81.

Class A: $30.11
Class B: $22.27
Class C: $18.47

The average rental rate in Portland’s CBD was $31.57 and $21.26 in suburban markets.

Download the entire report here.