Net absorption of Industrial space across the Portland market equaled 1.5 million square feet in the final quarter of 2022. Over the last 12 months, net absorption totaled 4 million square feet, a 25% increase over the prior 12 month period. As a result of the continued trend of positive net absorption, the total vacancy rate fell from 3.7% to 3.4% in Q4 2022. While the rate of vacancy is far below the trailing 12-year average of 5.3%, it remains 50 basis points higher than the 12-year historic low of 2.9% recorded in Q3 2017. In total, 9.4 million square feet is vacant and 9.8 million square feet is available in the Portland Industrial market. In response to elevated demand and a limited available space, the average asking rate on a triple net basis (NNN) moved to a new high of $0.86 per month per square foot, representing 12.2% year-on-year rent growth. The year saw record levels of development activity as developers raced to meet demand. However, Q4 ended with a slightly depressed development pipeline with 7.1 million square feet of industrial space under construction, down from 9.8 million square feet in Q2 earlier this year. Of the active projects, 2.1 million square feet represents speculative construction. New construction starts will be a key metric in 2023 as changes in the greater economic environment have resulted in project pauses, and as a significant amount of square footage is expected to deliver in the new year. At the year’s end, more than 3 million square feet has been delivered. The final quarter of the year brought a flurry of capital markets and sales activity with Pacific Lumber & Truss Co.’s portfolio sale of 10515 SW Allen Blvd and 5695 SW Western Ave to Site Solutions, LLC leading the way. The 105,429 square foot portfolio sold for a total of $31.7 million or $300 per square foot. Colliers represented the buyer.
Portland Metro Industrial Market Report Q4 2022