Home Archives August 2009 Troubled commercial markets bring lower rents

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

Back to School

September 2014
Wednesday, August 27, 2014
BY LEE VAN DER VOO

By now we’ve all read the headlines: Starbucks is giving away free degrees. Except it isn’t.


Read more...

Launch

September 2014
Tuesday, August 26, 2014
BY JESSICA RIDGWAY

September's Launch article features Orchid Health, BuddyUp and Inter-Europe Consulting.


Read more...

Register for 100 Best Companies survey

News
Wednesday, August 20, 2014
OBM-100-best-logo-2015 150pxwBy Kim Moore | OB Editor

The 2015 survey launched this week. It is open to for-profit private and public companies that have at least 15 full- or part-time employees in Oregon.


Read more...

Poll Wrap-Up

News
Friday, August 15, 2014

2014 NewPoll-report-newsletterthumbIn this week's poll, we asked readers: "Who should pay for the troubled Cover Oregon website?" Here are the results.


Read more...

What I'm Reading

September 2014
Wednesday, August 27, 2014

Kim Ierian, President of Concorde Career Colleges, and Deborah Edward, Executive Director of Business for Culture & the Arts, share their recent reads.


Read more...

Podcast: Interview with Steve Balzac

Contributed Blogs
Tuesday, August 19, 2014

082014BalzacBY TOM COX | OB BLOGGER

Tom Cox interviews Steve Balzac, author of "Organizational Psychology for Managers."


Read more...

South Waterfront's revenge

News
Thursday, July 24, 2014
MoodyAveBY LINDA BAKER | OB EDITOR

Remember the naysayers?  Those who called the South Waterfront aerial tram a boondoggle?  Those who rejoiced at the massive sell off of luxury condos at the John Ross and Atwater Place?


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