Demand for industrial space in the Portland market remains elevated through Q3 2022 with 766,000 square feet of net absorption occurring during the quarter. This is a 59% increase on the prior quarter but reflects a slight 3.1% dip year-on-year. Year-to-date net absorption totals 1.73 million square feet, a sum which is 16% greater than the same period of 2021. Q4 will be critical if 2022 is to outperform 2021, as 1.92 million square feet of net absorption was recorded in Q4 2021 alone. Across the Portland market, 9.22 million square feet of industrial space remains vacant, bringing the total vacancy rate to 3.6%. This is the lowest rate of vacancy since Q1 2019. Average asking rates on a triple net basis (NNN) continue to climb, posting a new 12-year record at $0.84 per month per square foot. This new high-water mark represents a 7.7% year-on-year increase. The NNN average asking rates for sublease space have jumped 29.7% compared to the same period last year. The development pipeline remains robust and well above historical levels with 8.82 million square feet of industrial space under construction, of which 2.7 million square feet represents speculative construction. Through Q3, 4.62 million square feet has been delivered, with another 580,000 square feet forecasted to reach substantial completion by year end.
Portland Metro Industrial Market Report Q3 2022