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1/16/18
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Here’s a quick snapshot of the Portland industrial market at the end of 2017, provided to us by real estate services firm Cushman & Wakefield:
• Thanks to Amazon, 2017 was the year of the mega-lease in greater Portland with three warehouse/distribution transactions of over 850k sf by the online giant including one in Salem. All of these deals were pre-leases with deliveries expected in mid to late 2018. New leasing for Portland closed the year at 5.8 msf, still just slightly lower than the 6.2 msf recorded for 2016.
• The Portland overall industrial vacancy rate increased 40 basis points (bps) in the fourth quarter to 3.9%, though still 10 bps below the year ago figure of 4.0%. The rise was due to scattered increases in availabilities in several submarkets including Southeast Portland and Vancouver/Clark County. The North/Northeast submarkets recorded a 10 bps dip in vacancy to 4.7% driven by activity in Rivergate and East Columbia.
• The net absorption total (the net change in occupied space) for 2017 was almost identical to the previous year, closing at +2.3 msf.
• The overall asking rent for all industrial space closed the fourth quarter at a record high of $0.71 per square foot per month on a triple net basis (psf), up from $0.67 a year ago.
OUTLOOK: Though there are significant deliveries in 2018, don’t expect too much movement in the vacancy rate as 70% of that will be build-to-suit. It’s very likely that asking rents, particularly for warehouse/distribution will continue to rise as well with fulfillment centers continuing to circle the newer available big blocks of space.
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