Exodus From Portland and Rise in Office Vacancies Likely to Continue, Big Global Real Estate Firm Says

But mountains, beaches, food, wine and beer will save Stumptown in the long run, Colliers says.

SLEEPY HOLLOW: The Starlight Parade marches up Southwest 4th Avenue. (Chris Nesseth)

People are leaving Portland, they’re taking their money with them, and it’s going to get worse before it gets better.

Those are the conclusions of a new report from analysts at Colliers, the Toronto-based real estate firm.

“Portland and Multnomah County face a grim near-term outlook,” Jamison Shields and David Kotansky say in their report. “Vacancy rates downtown, especially among office and retail properties, will continue to climb. Concerns about a lofty tax burden, public safety, and changing realities around how and where people work has resulted in businesses looking outside of the city to the surrounding suburban counties.”

They peg the vacancy rate for downtown offices at 26.2%. In square feet, it’s enough to fill the U.S. Bancorp Tower (aka “Big Pink”) eight times.

While some companies remain downtown, “they have significantly downsized and relocated the majority of their operations,” Colliers says. “In total, these companies represent over 1 million square feet of vacated space.”

Another grim statistic: Between 2020 and 2021, Multnomah County lost $1.08 billion in aggregate adjusted gross income because people moved and took their taxable income with them, Colliers says. In the three years before, the county lost an average of just $96.6 million a year, Colliers says, which is typical because “residents will often leave urban counties for the more suburban counties as they begin to earn more.”

Colliers is the latest of many firms and organizations to raise the alarm about Portland’s population decline. Like others, the firm cites a combination of rising crime and rising taxes. (Other analysts point to high housing costs as the most significant factor.) Once a boomtown that attracted new residents the way a Phish concert attracts Deadheads, Portland more recently has been losing people to other parts of the state and to Vancouver, Wash., which has no income tax.

Citing the U.S. Census Bureau, Colliers says Multnomah County’s population dropped 2.6% between 2020 and 2022, while Washington County’s fell just 0.2%. Clackamas County grew by 0.2%, and Clark County, just across the Columbia River, saw its population jump by 2.3%.

As goes population, so goes business, Colliers says.

“Local, regional, and national businesses occupying office, industrial, and retail spaces have left for Portland’s surrounding suburbs, left for other markets, or closed altogether,” the report says. “The vacancy rate of office space is nearly twice as high downtown, compared to the suburbs. Industrial vacancy is 108% greater in the central city than the suburbs. Suburban retail vacancy rates stand at less than 5%, while the vacancy rates of comparable space downtown have surpassed 12%.”

But all is not lost, Colliers says. Portland’s proximity to Mount Hood, the Oregon Coast and the “world-class wine country of the Willamette Valley” will always be a draw for people, the firm says. And: “Portland’s food and beer scene is consistently rated among the best in the country,” Colliers says.

Multnomah County is full of smart people, too: Some 49% of adults over 25 have a bachelor’s degree or better, Colliers says.

“Despite Portland and Multnomah County’s bleak short-term outlook, the underlying demographic base provide reason for long-term optimism,” Colliers says. “A collaborative effort involving the area’s many stakeholders will be required to reverse the tide and return Portland and Multnomah County to its former reputation: a vibrant city where people and businesses want to live and work.”

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