REAL ESTATE NEWS

Also, vacancies were at a record high.

So much for office hitting bottom — at least for the sake of Portland. A fourth-quarter sector report from Kidder Mathews finds that leasing activity plummeted 50 percent in the last three months of 2024 to 524,000 square feet. That's the lowest number on record for the city, according to the CRE firm.

To make matters worse, vacancy has not only continued to increase over the past eight quarters — but the 13.5 percent level at the end of the year was at a record high.

Additionally, asking rents were down versus the year before at $28.44 per square foot full-service gross. Overall, Kidder notes that the tenant demand has been "soft," leading to challenges in the office market.

There are just a couple of positives to take out of the report. One, 282,000 square feet of space was positively absorbed — ending five consecutive quarters of the category being negative, although the entire year resulted in negative absorption of 964,000 square feet. That was the fifth year in a row the figure was in the red. Also, Portland has remained one of the fastest-growing local economies in the country over the past decade and attracts residents from more expensive markets including Washington State and California.

In the short term, Kidder doesn't see Portland's office market showing much improvement — even with its record-low construction pipeline.

"The Portland office market is expected to continue to face challenges into the new year," it said.

"Many companies have announced they will be trimming footprints even if they don’t intend to move spaces. As such, vacancy and availability rates are projected to climb and rent growth will be minimal."

Source: GlobeSt/ALM