We all know the song, “I’m Dreaming of a White Christmas….Just like the ones I used to know…”, which is what the Portland real estate industry was dreaming of for Q4, a dynamic market just like the ones we used to know. Unfortunately, what we heard was “Jingle bells, Batman smells Robin laid an egg Batmobile lost a wheel and Joker got away!” With the continuation of negative absorption for the year (-470k), continued increased sublease space (2.3 M SF) and the continued challenges of Portland’s recovery, there’s good reason to be a Grinch at year end. Shadow vacancy is still likely near 40%, while the numbers have the vacancy rate hovering in the mid-high 20%. In the midst of the vacancy, we are all eagerly awaiting the completions of Block 216 (Ritz Carlton) and 11W, Downtown Developments mixed-use project at SW 11th & Washington, both of which plan to deliver in mid 2023. While both projects are speculative (meaning not built for a specific user or pre-leased), it will be interesting to see the tenants’ and market’s reactions, as companies consider a flight to quality, when evaluating renewals.
