Office Investment in Portland
Portland office is two different markets right now. Downtown Class A trophy stuff — think Park Blocks towers and new Pearl builds — trades at 6.8% to 7.2% caps when it trades at all. Everything else? You're looking at 8.5% to 9.5% caps, and that's if buyers show up. The flight to quality isn't just happening, it's accelerated. Sublease space hit 3.2M SF last quarter, which means your Class B property better have a story about why tenants won't bolt for newer space or cheaper suburbs.
Market Context
Cap Rate Range
6.8%-9.5% depending on class and location, with Class A downtown at the low end
Current Vacancy
21.3% direct vacancy, 26.8% including sublease space
Rent Trend
Down 12% from 2022 peaks, Class B seeing steeper declines than trophy assets
Absorption
Negative 850K SF annually over past 18 months
Price Per Unit Trend
$385/SF for Class A, $220/SF for Class B, suburban flex down to $180/SF
Transaction Volume
Down 68% from 2021, mostly smaller suburban deals and distressed situations
Submarket Analysis
CBD/Downtown Core
6.8%-7.5% capVacancy
24.2%
Avg Rent (1BR)
$38.50/SF NNN
Stabilizing but slow recovery
OM Tip
Include proximity to MAX lines, parking ratios, and any recent capital improvements
Pearl District
7.0%-7.8% capVacancy
18.1%
Avg Rent (1BR)
$42.20/SF NNN
Best performing urban submarket
OM Tip
Tenant mix matters — creative vs tech vs traditional office
Lloyd District
8.2%-8.9% capVacancy
22.7%
Avg Rent (1BR)
$28.40/SF NNN
Mixed, depends on specific asset
OM Tip
Transit access and parking are deal breakers
Kruse Way/Lake Oswego
7.8%-8.4% capVacancy
19.8%
Avg Rent (1BR)
$31.80/SF NNN
Corporate users prefer this over downtown
OM Tip
Parking ratios and freeway access drive value here
Washington County/Beaverton
8.5%-9.2% capVacancy
20.4%
Avg Rent (1BR)
$29.10/SF NNN
Nike corridor still has activity
OM Tip
Proximity to Intel and Nike campuses, MAX Blue Line access
Performance by Vintage
0
2
1
0
2
1
3
0
4
s
5
6
c
7
o
8
n
9
s
10
t
11
r
12
u
13
c
14
t
15
i
16
o
17
n
18
19
h
20
o
21
l
22
d
23
s
24
25
u
26
p
27
28
b
29
e
30
s
31
t
32
33
—
34
35
e
36
f
37
f
38
i
39
c
40
i
41
e
42
n
43
t
44
45
f
46
l
47
o
48
o
49
r
50
51
p
52
l
53
a
54
t
55
e
56
s
57
,
58
59
p
60
a
61
r
62
k
63
i
64
n
65
g
66
,
67
68
m
69
o
70
d
71
e
72
r
73
n
74
75
s
76
y
77
s
78
t
79
e
80
m
81
s
82
.
83
84
A
85
s
86
k
87
i
88
n
89
g
90
91
r
92
e
93
n
94
t
95
s
96
97
1
98
5
99
-
100
2
101
0
102
%
103
104
a
105
b
106
o
107
v
108
e
109
110
o
111
l
112
d
113
e
114
r
115
116
s
117
t
118
o
119
c
120
k
121
.
122
123
2
124
0
125
0
126
0
127
s
128
129
v
130
i
131
n
132
t
133
a
134
g
135
e
136
137
n
138
e
139
e
140
d
141
s
142
143
c
144
a
145
p
146
i
147
t
148
a
149
l
150
151
b
152
u
153
t
154
155
c
156
a
157
n
158
159
w
160
o
161
r
162
k
163
164
a
165
t
166
167
t
168
h
169
e
170
171
r
172
i
173
g
174
h
175
t
176
177
b
178
a
179
s
180
i
181
s
182
.
183
184
1
185
9
186
8
187
0
188
s
189
-
190
9
191
0
192
s
193
194
s
195
t
196
u
197
f
198
f
199
200
i
201
s
202
203
t
204
o
205
u
206
g
207
h
208
209
u
210
n
211
l
212
e
213
s
214
s
215
216
y
217
o
218
u
219
'
220
v
221
e
222
223
g
224
o
225
t
226
227
t
228
r
229
o
230
p
231
h
232
y
233
234
l
235
o
236
c
237
a
238
t
239
i
240
o
241
n
242
243
o
244
r
245
246
r
247
e
248
c
249
e
250
n
251
t
252
253
r
254
e
255
n
256
o
257
v
258
a
259
t
260
i
261
o
262
n
263
s
264
.
265
266
P
267
r
268
e
269
-
270
1
271
9
272
8
273
0
274
275
b
276
u
277
i
278
l
279
d
280
i
281
n
282
g
283
s
284
285
d
286
o
287
w
288
n
289
t
290
o
291
w
292
n
293
294
h
295
a
296
v
297
e
298
299
c
300
h
301
a
302
r
303
a
304
c
305
t
306
e
307
r
308
309
b
310
u
311
t
312
313
a
314
l
315
s
316
o
317
318
h
319
a
320
v
321
e
322
323
p
324
r
325
o
326
b
327
l
328
e
329
m
330
s
331
332
—
333
334
H
335
V
336
A
337
C
338
,
339
340
e
341
l
342
e
343
v
344
a
345
t
346
o
347
r
348
s
349
,
350
351
A
352
D
353
A
354
355
c
356
o
357
m
358
p
359
l
360
i
361
a
362
n
363
c
364
e
365
.
What Your OM Needs to Address
Return-to-office metrics
Buyers want badge swipe data, not just lease rolls
Data to Include
Monthly utilization rates by tenant, parking usage, weekend/evening activity
Sublease competition mapping
Show every competing sublease within 1 mile
Data to Include
Sublease asking rents, TI packages, lease terms, expiration dates
Tenant improvement obligations
TI reserves are eating returns alive
Data to Include
Remaining TI allowances by lease, upcoming renewal TI expectations, recent TI costs per SF
ESG and energy efficiency
Portland tenants actually care about this stuff
Data to Include
Energy Star scores, recent efficiency upgrades, bike storage, EV charging stations
Parking analysis
Parking ratios can make or break suburban deals
Data to Include
Spaces per 1,000 SF, reserved vs unreserved, monthly parking revenue if applicable
Transportation connectivity
MAX access and bike infrastructure matter to tenants
Data to Include
Distance to MAX stations, bike score, freeway access times during rush hour
Investment Outlook
Short Term
Distressed opportunities will keep coming through 2026. Lenders are extending and pretending but some borrowers can't make it work. Best deals are off-market from owners who need to sell.
Medium Term
Bifurcation continues through 2028. Trophy assets with strong tenant rosters will recover first. Everything else needs to find new use or accept commodity pricing. Conversion to residential will accelerate downtown.
Long Term
Office demand stabilizes at 75-80% of pre-pandemic levels by 2030. Winners are buildings that can adapt — flexible floor plates, good parking, strong amenities. Portland's sustainability focus could be an advantage for newer, efficient properties.
Buyer Profile
Value-add funds looking for distressed situations. Some local investors picking up smaller suburban properties at replacement cost. REITs mostly sitting out until cap rates hit double digits.
Marketing a office property in Portland?
DealDraft generates professional offering memorandums with market-specific data and property-type expertise built in.
Create Your OM