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. This is a continuation of the vacancy rate increases experienced since the start of the COVID-19 pandemic. However, a reversal of trend in availability provides a sense of intrigue. The amount of total space available, inclusive of both the direct and sublease market, decreased slightly from last quarter to 19.6%, following a 13-year-high of 20.1% availability in Q4 2021. This positive outlook should be considered with caution as this quarter saw net absorption move further from positive figures, reversing the progress made last quarter. The CBD was the primary driver of the -227,567 square feet of net absorption that occurred during Q1. While this reversal is discouraging following the positive movement from last quarter, these numbers are nowhere near the pandemic’s peak in Q4 2020 and Q1 2021, which saw -1.7 million square feet of net absorption combined.
