REAL ESTATE RISING
The economic recovery has peaked and the real estate market is slowing down, but there are no signs of a coming crash and enough life in the market to support additional commercial and multifamily housing projects in the Portland region for years to come.
That was the consensus of a panel of commercial real estate experts who spoke at the Westside Business Alliance breakfast forum on Thursday, March 7.
"While there's caution right now, there's still a lot of optimism about the Portland market," said CBRE Senior Vice President Paige Morgan.
Harsch Investment Regional Leasing Director Steve Barragar compared the current economic recovery — the longest in recorded history — to the 12th inning of game three of the 2018 World Series between the Red Sox and the Dodgers, which lasted a record seven hours and 20 minutes.
"We're near the end, but we could still have a lot of time," said Barragar.
The other panelists were Rembold Properties manager Kira Cador and Gramor Development manager Jonae Waldroop. It was moderated by NBS Financial Services vice president Blake Hering. All agreed that thePortland region is widely viewed as a desirable place to live, drawing more residents and investment capital to it. Residential and commercial rent increases have slowed in recent months, but not enough to discourage new projects, including high-end apartments in Washington County.
"There are more jobs than housing in Washington County, and that's creating a demand for Class A apartments with amenities," said Cador, whose company is completing work on two large apartment complexes with ground-floor retail near The Round. Her company moved from downtown Portland to the Cedar Mills area to be closer to their construction sites.
Waldroop, who moved to Tigard in 2005 to manage Washington Square, debunked the conventional wisdom that shopping malls and centers are dying because of online shopping. She said that Gramor Development projects in the region are all doing well, including the multi-level Progress Ridge shopping, dining and entertainment center, which serves a growing population in the Murryhill and South Cooper Mountain areas of Beaverton.
"People shop online and they shop in stores," said Waldroop.
Hering said that many people are understably nervous about the end of the economic recovery because the last three decades ended with major financial corrections. But Hering noted that new sources of investment capital are now available for developments, including funds owned by institutions looks for bigger returns.
"Real estate yields are still outperforming other returns, like bonds," Hering said.
Two audience members asked how the statewide rent control program recently passed by the 2019 Oregon Legislature will affect the construction of future rental housing projects. Cador said it was too soon to know for sure, but it could prevent some projects from going forward.
"Millennials and baby boomers are willing to rent more than before, and there are a lot of people who can't afford to buy a place, so there is still a lot of demand. But investors don't like limitations they can't do anything about," said Cador.
All four speakers were more optimistic about the future than two economists who spoke at the Portland Business Alliance breakfast forum on Feb. 20.
ECONorthwest president John Tapogna and project director Mike Wilkerson both said new multifamily housing construction could all but stop in Portland in 2020 because of increasing costs and regulatory requirements in the city. They spoke during the presentation of the 2018 Economic Check Up commissioned by the Value of Jobs Coalition, which includes the alliance.