By Jack Stubbs
Demand for industrial real estate in Portland remains strong towards the end of the year, with continued demand for industrial assets evident across a variety of metrics, including leasing activity, net absorption figures, demand for tenants, ongoing construction and rental growth.
According to a third quarter report on the Portland Industrial Market from CBRE, the Portland Industrial Market appears poised for a period of sustained activity in the months ahead, with various indicators suggesting a relatively healthy sector.
This demand translates into an overall vacancy rate of 2.8%; a vacancy rate of 3.9% in industrial parks; 4.1 million square feet of net absorption since the beginning of the year; and 3.1 million industrial square feet currently under construction.
Rental activity in Portland has historically been a key feature of the industrial market. According to the report, the city has over the years gained a reputation for a diversity of industrial uses among particular sectors.
“Portland is well known for its current economy focused on industrial manufacturing and high-tech warehousing, which lends itself to a well-diversified leasing business across multiple industries. Additionally, the region’s underlying fundamentals have been supported by recent growth in the e-commerce and logistics services sectors,” the report said.
The third quarter of 2022 was no different, as robust leasing activity across the region – and nearly 2.5 million square feet of industrial space was traded. Some of the most notable – largest – leases in the third quarter include Child Logistics’ 345,886 square foot lease at the Ridgefield Industrial Center in Clark County and Lam Research’s inking of a new 271,870 square foot lease. square feet at TS Corporate Park in the Southwest Submarket.
The Northwest submarket also saw a remarkable statement of intent, as Daimler Truck – headquartered in Portland and known for exploring emerging trends in the automotive industry – signed a five-year lease of 205,000 square feet in the former Columbia Distributing facility.
Another lease in Clark County demonstrates the wide range and diversity of tenant types looking to settle in the Portland metro area.
“Research and investment in the development of Extended Reality (XR) platforms is emerging in the Portland area…Jabil recently signed a 176,008 square foot lease for the entire Building 4 of the Innovation Center of Vancouver,” the report said.
Vacancy and net absorption rates in the Portland industrial market also hint at the relative health of the sector heading into the end of the year, and also reflect a diverse set of tenants looking to dismantle industrial space.
“Portland’s industrial market continues to be an attractive alternative for new and expanding businesses as steady growth in advanced manufacturing, e-commerce and logistics services has supported recent strong real estate fundamentals in the region,” indicates the report.
Portland’s industrial market posted nearly 1.4 million square feet of positive net uptake in the third quarter of 2022, bringing the year-to-date figure to about 4.1 million square feet and topping the rate absorption in the first three quarters of 2021, the report states.
Just as vacancy and absorption rates reflect a healthy situation for Portland’s industrial market, the outlook also looks positive for the market due to a robust and active industrial development pipeline, with nearly 3.1 million of square feet actively under construction.
Some of the notable projects underway in the Portland metro area, according to the report, include the 664,653 square foot Burnt Creek Logistics project in Clark County (the largest project to break ground in the third quarter) and the 646,274 square feet at Bridgepoint Vancouver 600.
In the Northeast submarket, 138 Logistics Center offers two state-of-the-art distribution warehouses – on a site of approximately 25.5 acres – totaling 489,700 square feet at Airport Way, which is one of Portland’s main industrial gateways. Other ongoing projects include the 435,107 square foot speculative development located in the Southeast Submarket at 21600 SW Oregon St. The Prologis Meadows – Building E., which is located at 1001 N. Schmeer Road and totals 285 000 square feet, is also expected to be completed by the fourth quarter of 2022.