Construction at record high
Although the boom cranes are still up in record numbers, that isn't helping affordability, according to a new study.
Downtown Clean & Safe released its annual Development/Redevelopment Report in late May, finding that although a record number of buildings are under construction, affordability is still at risk in every downtown neighborhood.
The report, prepared by Heritage Consulting Group, intended to provide a five-year window on real estate development in downtown Portland. It included the districts of Downtown, West End, University, River, South Waterfront, Central Eastside and the Lloyd.
It found that while hotel construction is up, the number of multifamily housing units in the pipeline is down due to last year's Inclusionary Housing policy.
"As in recent years, the real estate marketplace has been extraordinarily active in a large number of projects across all sectors in nearly every geographic area of the city and region. With high demand and less supply, particularly within the housing sector, this has presented a challenge around affordability," the study read. " Current projects providing notable additional supply may mitigate this challenge in the longer term, while the city continues to explore strategies to spur additional housing development."
The annual report, which began more than 15 years ago, shows there are 48 active construction projects in the Central City, a record number that tops last year's 45 projects.
"Seeing continued investment and growth across the Central City is encouraging," said Peter Andrews, vice president of Melvin Mark Brokerage and chair of the Downtown Clean & Safe board of directors. "This report is a critical reminder that downtown Portland is a vibrant, thriving place to live, work and play, but there is still work to do when it comes to housing affordability throughout the city."
The report is created by Downtown Clean & Safe to gauge economic vitality and activity in the Central City. It informs developers, real estate brokers, property managers, property owners, prospective tenants, institutional investors and other business stakeholders.
The study found persistent housing affordability challenges across all the downtown neighborhoods.
Roughly 5,200 residential units have been built in the Central City since 2011, with another 3,300 units currently under construction and an additional 2,000 units in the design phase — but only 10 percent of those units are considered affordable compared to median family income.
The study named the 2017 Inclusionary Housing (IH) policy as a major factor.
Prior to IH going into effect in February 2017, developers submitted permits for 19,000 units citywide in a rush to permit projects to ensure financial viability. During the first year of the program, only 17 new permits were filed, signaling the city should reevaluate both the inclusion rate and the incentives offered under the program to make the requirements more effective at incentivizing supply of additional housing to meet the incredible demand, the study said.
Tourism is still a huge economic indicator of the city that's trending worldwide. In the last five years, 1,756 hotel rooms were added and nine hotels are under construction with plans to add another 1,500 more room over the next two years — including the recently opened Porter Hotel and the upcoming Hyatt Regency at the Convention Center.
"Portland is in the midst of a significant period of hotel growth that will result in more than 3,000 new hotel rooms in the city center by the end of 2019," said Jeff Miller, president and CEO of Travel Portland and a Downtown Clean & Safe board member. "These additional rooms not only help meet business and tourist visitor demand, but, for the local market, they directly expand on the more than 35,000 tourism-related jobs the industry already supports in Portland, which shows the tangible impact the tourism industry has on the Portland community."
By Jules Rogers
Reporter, The Business Tribune
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