Has Portland's commercial real estate market peaked?
Several new office towers have opened in downtown Portland recently and more are being built, yet the absorption rate for office space remains healthy despite the city having passed its peak activity, according to local commercial real estate specialists.
"People have been concerned that we're getting overbuilt, but the absorption figures demonstrate that we continue to have a strong market," said Kevin Kaufman, first vice president at CBRE. "A strong job market certainly helps that as well. Companies are looking to hire across all sectors."
Kaufman said a key factor driving the success of Portland's office market over the last several years is the technology, advertising, media and information (TAMI) tenants. Members of creative sectors are seeking buildings with enhanced amenities to attract and retain the best talent. Some of the most popular amenities include bike storage areas, locker rooms, fitness rooms and space for yoga, spin and other classes, as well as outdoor decks and rooftop terraces.
One example is Tanner Point, previously known as 9North, in the Pearl District. The eight-story tower features flexible office space, floor-to-ceiling operable windows, several outdoor balconies with views of the Willamette River and a pair of rooftop terraces. CBRE acquired the building for $76.6 million, or nearly $459 per square foot, during the last quarter of 2018, according to Colliers International.
Kaufman said the appeal of such amenities is spreading well beyond the TAMI tenants. "Initially, many of these types of environments were seen as specifically for creative or technology companies. We're truly finding that employers across all sectors appreciate amenities like access to natural light, outdoor space and comfortable spaces to work."
Another example is [email protected] Blocks, now under construction at Northwest 18th and Yamhill. The eight-story building boasts 140,000 square feet of customizable office and retail space with exposed ceilings and open floor plans. Its rooftop deck looks onto Providence Park, it has indoor conference and events space, and it is served by two light rail lines. Other amenities include bike storage, a fitness center, showers and lockers, ground-floor retail and sidewalk dining, and underground parking.
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