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January 18, 2022
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Falling Vacancies and Shrinking Inventories Driving Portland’s Industrial Rental Rates Upward

1/04/22

Portland Industrial CRE Market Update – 4th Qtr. 2021
This report was provided by real estate services firm Kidder Mathews


Market Drivers

• Asking lease rates rose 4.4% year-over-year (YOY) from $0.69/SF NNN in 2020 to $0.72/SF NNN for 2021.
• Leasing activity climbed 15.6% YOY from 9.9 msf in 2020 to 11.4 msf in 2021. The most active submarket clusters for the year were Southeast and I-5 Corridor with 35.8 msf and 29.4 msf respectively.
• Direct vacancy rates decreased 22.4% from 4.0% in 2020 to 3.2% in 2021.
• Total net absorption for 2021 was 3.6 msf, 2.3 msf of which occurred in 4Q 2021.
• Sales volume dropped 24.2% YOY from 10.4 msf in 2020 to 7.9 msf in 2021.
• There is currently 4.9 msf under construction, while 1.8 msf was completed in 2021. The Bridgepoint I-5 development delivered 677.6k sf to the Airport Way submarket. Portside Industrial Park added 193k sf to the CBD/West Vancouver submarket.

Economic Review

• Manufacturing jobs for the Portland-Vancouver-Hillsboro MSA gained 2.9% YOY to 123,100 jobs. Transportation and warehousing jobs also rose 4.1% YOY to 231,200 jobs.
• Unemployment in Oregon stood at 4.4% for October 2021. During this period, the Sacramento – Roseville – Arden Arcade MSA reported a 3.4% unemployment rate.

Near Term Outlook

• The Portland industrial market continues to hum along as the economy recovers during 2021. Demand sparked by e-commerce and logistics companies drive vacancies downwards and stoke increases in asking lease rates. There is currently 4.9 msf under construction to help meet these requirements.

Source: CoStar, U.S. Bureau of Labor Statistics

Market Highlights

• Asking lease rates rose 4.4% YOY to $0.72/SF NNN.
• Direct vacancy rates stood at 3.1%.
• Total net absorption for 2021 was 3.6 msf.

This report was prepared by Kidder Mathews Director of Research Gary Baragona




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