Troubled commercial markets bring lower rents

| Print |  Email
Thursday, July 23, 2009

If you’re considering negotiating your lease for a more affordable rent, the time is now.

Two recent reports from Portland commercial real estate specialists Norris Beggs & Simpson and Marcus & Millichap offer a window into a market in serious decline, with vacancy rates rising, construction slowing and rents falling. Even the until-recently soaring market for rental housing has turned sour as job losses spread and the conversion of failed condo projects to apartments creates a bulging oversupply problem.

An excess of inventory is already devastating metro Portland’s industrial market. The vacancy rate for industrial properties has soared to 13.87% and rents are projected to drop 5% by the end of 2009. Building has all but halted, with 633,000 square feet expected to be completed this year compared to 2.7 million last year.

The office market may be even worse off. Rents are projected to drop by 6.4% by the end of 2009, the suburban vacancy rate has soared to 19%, Tom Moyer’s Park Avenue West tower is on hold due to lack of financing and new mortgage originations for office properties are down 66% year over year. With 3 million square feet in the planning pipeline, expect more projects to be delayed or abandoned.

Rents have held up slightly better in the retail market, but they are still expected to fall by 3.8% this year. The recent liquidation of Joe’s sporting goods stores and other key tenants leaves gaping holes that will be difficult to fill with anything remotely upscale. Two of the largest lease deals closed in recent months have been with the Salvation Army and the Dollar Store.

But there are bright spots, particularly for those rare cash-rich investors who have not gone the way of the passenger pigeon and the dodo bird. Among the areas of opportunity are the coming extension of MAX light rail from downtown Portland to Clackamas Town Center, the expansion of the Portland Streetcar to the Central East Side, SolarWorld’s growing presence in Hillsboro and a new FedEx facility due to be completed in Troutdale by July 2010, creating hundreds of increasingly precious new jobs. 

BEN JACKLET
 

More Articles

Hall of Flame

June 2015
Friday, May 22, 2015
BY JACOB PALMER

A Power Lunch at Oswego Grill.


Read more...

Queen of Resilience

June 2015
Friday, May 22, 2015
BY AMY MILSHTEIN

Astrid Scholz scales up sustainability.


Read more...

The Backstory: Portland Youth Builders

The Latest
Wednesday, June 03, 2015
blog002 1BY JASON E. KAPLAN | STAFF PHOTOGRAPHER

As part of our green workplaces story, Oregon Business checked out a community service project undertaken by Portland Youth Builders, a nonprofit alternative high school. In partnership with Whole Foods, PYB built garden boxes for a Home Forward  housing site. Home Forward is a government agency that provides housing for low income residents and people with disabilities.


Read more...

100 Best Green Workplaces announced

News
Wednesday, May 27, 2015
OBM-100-best-Green-logo-2015-1000pxwBY LINDA BAKER | EDITOR

More than 250 people turned out today for Oregon Business magazine’s seventh annual celebration of the 100 Best Green Companies to Work For in Oregon.


Read more...

Credit Unions Perspective

June 2015
Tuesday, May 26, 2015
BY KIM MOORE

A conversation with Gene Pelham, CEO of Rogue Credit Union.


Read more...

Up in the Air

June 2015
Friday, May 22, 2015
BY ANNIE ELLISON

Portland tech veteran Ben Berry is leaving his post as Portland’s chief technology officer for a full-time role producing unmanned aerial vehicles (UAVs) aimed at first responders and the military. Berry’s AirShip Technologies Group is poised to be on the ground floor of an industry that will supply drones to as many as 100,000 police, fire and emergency agencies nationwide. He reveals the plan for takeoff.


Read more...

Undersea Power

June 2015
Friday, May 22, 2015
BY JACOB PALMER

Mike Morrow and Mike Delos-Reyes first came up with the idea of an ocean power device 23 years ago, when they were students at Oregon State University. They realized a long-held vision last summer, when their startup, M3 Wave, successfully launched the first ocean power device that works underwater.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS