New Report on Downtown Office Vacancy Includes Some Rays of Hope

One of the nation’s leading commercial real estate brokerage firms sees some positive signs in the downtown Portland office market.

Jones Lang LaSalle released a research report on the Portland market Jan. 11, taking a look at activity in the fourth quarter of 2023. The report, written by senior research analyst Galen Miller, says more potential renters are looking for space.

“Overall leasing volume held steady in Q4 as the market saw a noticeable increase in tour activity,” the report says. “Decision-makers, who opted for short-term renewals from 2020 to 2022, are now showing more confidence in making long-term commitments for their office space needs, driving increased activity.”

The strongest interest remains at the high end of the market. “Tenants in older Class A space are moving to newer Class A/Trophy buildings,” the report notes. “Downtown tenants have become more focused on the Pearl District, West End and South End, while steering away from Old Town and the North End. When considering buildings in the urban core, safety, amenities and parking remain top priorities for occupiers.”

While the downtown vacancy rate, which Jones Lang LaSalle pegs at just over 20%, remains high, there are a couple of reasons for optimism. First, the amount of new office space coming to market slowed markedly in the fourth quarter (blue bar, below).

The second reason for optimism harks back to one of Portland’s historical relative advantages: things are cheaper here than in other West Coast cities.

“Portland’s office vacancy is among the lowest of markets JLL tracks nationally,” the report says. “The city’s low cost of living make it an economical option on the West Coast. The implementation of the Chips Act is expected to increase the formation of start-up companies and boost investment in established semiconductor players, creating demand for office and flex [space].”