Brett Johnson

The greater Portland office market experienced negative net absorption for the 12th consecutive quarter in Q4 2022, with quarterly negative net absorption of 483,000 square feet.

Marking the halfway point of 2022, Q2 brought about deepened challenges to Portland’s office market. Impacted by a growing list of headwinds, 523,000 square feet of space was given back to the market through negative net absorption, bringing the year-to-date net absorption total to -701,000. The conclusion of the quarter marks 10 consecutive quarters of market-wide negative net absorption. Since Q1 2020, over 4.5 million square feet of occupancy has been lost, increasing the vacancy from 10.5% to 17.5% over the same period. For perspective, Portland’s net negative absorption since the start of COVID-19 is equivalent to the US Bancorp Tower fully vacating nearly four times over. Prior to the pandemic’s start, the market historically recorded 186,000 square feet of positive net absorption per quarter on average over a sixteen-year period. Sporting a causal relationship with net absorption, vacancy in the Greater Portland market has also reached a new 20-year high, with a vacancy rate of 17.5%. The vacancy rate is highest in the Central Business District (CBD), where just under 25% of the space is vacant.

The start of the new year brought minor change to Portland office market fundamentals. Most notable is the confluence of rents in the CBD and Portland’s suburbs with the delta between asking rents in the two market sectors being $0.66 for Class A product and only $0.22 across all building classes. Market-wide vacancy saw a 2.3% uptick year-over-year, from 14.6% in Q1 2021 to 16.9% this quarter.