The uptick in economic activity due to stimulus and post-COVID reopening is likely to keep the Portland industrial market very active. For the occupiers/tenants, this means elevated rent, limited options for new space, and higher overall occupancy costs. Over 2 million SF was leased up last quarter and demand for space has remained strong since summer of 2020. NNN asking rents are slightly lower compared to the peak 12 months ago at the beginning of the pandemic. However, NNN rents have recovered and are expected to increase in the near term.
Lack of supply has been an ongoing factor in the Portland industrial market. Most new speculative projects are preleased near completion of construction or sooner. As a result, landlords continue to hold the leverage in the market because of this high demand/low supply dynamic. New construction in the pipeline will alleviate some of this pressure, but it brings higher rents and fewer concessions for occupiers. Given these factors, occupiers should take early looks at their facility needs (at least 18-24 months in advance) to create flexibility with potential alternatives, including consideration of build-to-suits.