Market Insights | Summer 2024 | Portland
Summer 2024
Average
Rent
Average
Occupancy
YTD Sales
Volume
YoY Rent
Change
Occupancy
Change
Portland-Vancouver-Hillsboro is the 25th most populated metro region in the US, with about 2.5 million residents. Oregon's largest city, Portland, the "City of Roses," reported a 2023 population of roughly 652,000. The area continues to attract new people, with Vancouver, Washington, across the Columbia River, experiencing the most population growth last year. Vancouver's population rose by 4,500 from 2022 to 2023, reaching 196,000.
Technology, healthcare, manufacturing, and professional services underpin Portland's diverse economy. Portland is known as the "Silicon Forest." for its sustainability and innovation, especially in tech. The region's economy remains strong. Nike, headquartered in Beaverton, and Intel, which has one of its major sites in Hillsboro, are among the Fortune 500 corporations in Portland.
Portland has one of the 12 Federal Reserve Bank branches, highlighting its economic importance. Over 45,000 enterprises make Portland a magnet for innovation and entrepreneurship. The area's most significant employers include Oregon Health Sciences University, Daimler Trucks North America, Columbia Sportswear, and Precision Castparts.The Portland metro area attracts multifamily investors with its unique blend of cultural appeal, geographic quality of life, economic stability, and expansion potential.
Employment
Nonfarm jobs employ 1,311,250 individuals in the region, as reported by the Oregon Employment Department. The local unemployment rate is 4%, slightly below the national average of 4.3%. Nike and Intel have obtained favorable tax accords through 2042, and both have recently expanded. Despite some recent layoffs at the area's major businesses, Nike recently completed an expansion of 1.4 million SF of office space, and Intel completed a $3 billion D1X Fab plant. Intel is currently planning to break ground on a $3 billion+ further expansion expected to open in 2028. OHSU has begun construction of a $650M hospital expansion that will create 3,000 new jobs when it opens in 2026. Job growth is also seen in the biotech and mass timber industries.
| % ∆ from July 2023 | |||
|---|---|---|---|
| Metro Area Employment (Thousands) | July 2024 | Portland | National |
| Total Nonfarm | 1,241.3 | 0.1% | 1.6% |
| Mining and Logging | 1.1 | 0.0% | -1.3% |
| Construction | 81.5 | -2.2% | 3.0% |
| Manufacturing | 125.4 | 0.3% | 0.1% |
| Trade, Transportation, and Utilities | 223 | -0.7% | 0.8% |
| Information | 26 | -5.5% | -0.8% |
| Financial Activities | 73 | -1.5% | 0.2% |
| Professional and Business Services | 197.6 | -0.8% | 0.6% |
| Private Education and Health Services | 195.9 | 4.0% | 3.9% |
| Leisure and Hospitality | 120.8 | -2.7% | 1.5% |
| Other Services | 43.5 | 0.5% | 1.4% |
| Government | 153.5 | 2.7% | 2.4% |
Source: U.S. Bureau of Labor Statistics
Rental Market
Multifamily demand in Portland/Vancouver remained resilient in the first half of 2024, supported by the area's stabilized economy and population. Key submarkets like Vancouver, Washington have seen significant interest due to job opportunities and tax advantages. Certain renters have recently been gravitating toward more affordable submarkets such as Yamhill County, outlying Washington County, and Clackamas County, where lower levels of new construction and relocations for affordability are driving occupancy levels higher.
In the past decade, downtown Portland and surrounding urban submarkets had the most dramatic shift in development in the past ten years with new 4- and 5-star projects. Increased deliveries in competition have resulted in downward pressure on rent growth for high-end offerings, with market-wide 12-month asking rent growth at 1.8%.
Despite a slight recovery in demand for mid-tier properties, rent growth in this category has also been muted, reflecting price sensitivity among renters. Vacancy rates for mid-tier properties have stabilized at lower levels compared to the luxury segment, with 3-star properties reporting 2.4% annual rent gains.
CoStar expects Portland rent growth to rise to slightly under 4% by 2024 and 5% in the back half of 2025. The vacancy rate is expected to tighten slightly, especially in suburban and exurban submarkets, as new supply continues to fall and demand stabilizes.
Average Monthly
Mortgage Payment
Average Monthly
Rent
Source: Bankrate. Median SP $550K, 20% down, 30-year fixed, APR 6.5%, credit score 720+. Estimated taxes and homeowner's insurance included.
Average Rent / Vacancy
Asking Rent / Bedroom
Multifamily Construction
Multifamily Completions
Past 12 Months
Single Family
Permits
Multifamily Permits
(5+ Units)
Median Single
Family Price
Completions / Net Absorption
Portland has always been a leader in multifamily construction, but recent economic and demographic trends and increased financing and development costs have slowed permitting and construction starts. Through June 2024, Portland permit applications for buildings of 5+ units are down 83%, the lowest since 2011. Metro area permits for buildings of 5+ units dropped 77% from 2023 to June 2024. This slowdown suggests that while demand will persist, the rate of new supply entering the market is falling significantly.
Units by Submarket Delivering in 2024
Units Under
Construction
Units UC Delivering
in the Next 12 Months
| Submarket | Units Under Construction | % of Total UC | Units UC Delivering in Next 4 Quarters |
|---|---|---|---|
| Aloha | 452 | 5.8% | 556 |
| Beaverton | 582 | 3.6% | 22 |
| Central Northeast | 0 | 0.0% | 42 |
| Clackamas County | 0 | 0.0% | 104 |
| Clark County | 0 | 0.0% | 180 |
| Columbia County | 0 | 0.0% | 0 |
| Damascus | 0 | 0.0% | 289 |
| Downtown Portland | 0 | 0.0% | 134 |
| East Portland | 19 | 0.2% | 15 |
| Hillsboro | 326 | 1.6% | 47 |
| Lake Oswego | 158 | 3.9% | 15 |
| North Portland | 0 | 0.0% | 433 |
| Northeast Portland | 313 | 3.9% | 292 |
| Northwest Portland | 467 | 3.4% | 880 |
| Oregon City | 0 | 0.0% | 243 |
| Outlying Washington County | 0 | 0.0% | 0 |
| Sherwood / Tualatin | 0 | 0.0% | 118 |
| Skamania County | 0 | 0.0% | 0 |
| Southeast Portland | 1,213 | 5.3% | 430 |
| Southwest Portland | 616 | 7.8% | 604 |
| Tigard | 38 | 0.5% | 98 |
| Troutdale / Gresham | 449 | 2.6% | 246 |
| Vancouver | 930 | 2.5% | 1,460 |
| Wilsonville | 0 | 0.0% | 100 |
| Yamhill County | 0 | 0.0% | 58 |
Multifamily Sales
YTD 12 Mo. Transaction Volume
12 Mo. Change
Price Per Unit
Annual Price Change
Average Sales PPU / Cap Rate
Portland metro area multifamily sales volume dropped to $859 million over the past year, a significant decline compared to the 10-year average of $2.3 billion. For well-located Class-A and Class-B properties, cap rates are holding in the upper 5% range, with some Class-C assets trading above 6%. Transaction activity has slowed sharply since early 2022, when the market saw sales totaling $4.6 billion.
Despite this decline in transactions, Portland's multifamily market is poised for long-term success. The continual demand for affordable housing, combined with a persistent shortage of housing supply, positions the market for future growth. Additionally, local government reluctance to expand the urban growth boundary, the rising cost of homeownership, and a steady influx of younger generations entering the rental market all contribute to the outlook for sustained stability. These factors are expected to support the market's ongoing resilience in the years ahead.
Sources: CoStar, HFO Investment Real Estate Services, Bureau of Labor Statistics, U.S. Census, PMAR, Bankrate
Team
Greg Frick
Founding Partner
Cody Hagerman
Founding Partner
Rob Marton
Partner
Tyler Johnson
Partner
Jack Stephens
Partner
Lee Fehrenbacher
Broker
Adam Smith
Broker
Todd Tully
Broker
William Thompson
Broker
Yuriy Chubok
Broker