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Portland Multi-Housing Market to Stay Elevated in 2015

Monday, May 11, 2015

Employment growth in Portland is expected to average 2.5 percent or 26,700 jobs in 2014. Employment and Population Totals Portland has enjoyed stable job growth since 2010, as it remains a center of the global clean energy economy with an increasing concentration of clean technology firms, experienced manufacturers engaged in supply chain across a variety of sectors and international recognition for innovation in urban development.

A robust entrepreneurial environment is helping foster the growth of startup companies in industries such as software and athletic and outdoor. The metro area is expected to produce 32,300 jobs, or 3 percent, in 2015, keeping multi-housing building occupancy elevated and effective rent growth healthy.

According to Axiometrics, “Portland is a place young people want to be, and they’re the ones who drive the apartment market. The new jobs, hip lifestyle and environmentally-conscious philosophy are tailor-made for apartment growth.”

Portland Multi-Housing Development

New multi-housing building supply has been steadily increasing since 2011, and 3,173 units were delivered in 2014. Apartment deliveries are forecast to reach their peak of 5,028 units in 2015 and decelerate after that. Northeast and Northwest submarkets are expected to deliver over 1,200 units during 2015.

Multi-Housing Building Occupancy and Absorption

Occupancy was 95.9 percent at the end of 2014 and is expected to moderate somewhat to 95 percent in 2015. Portland’s long-term average occupancy rate is 93.7 percent, the metro is expected to stay above this for at least the next few years. Apartment absorption was 2,511 units in 2014 and is expected to increase by approximately 500 units to 3,005 units in 2015.

Class C properties had the highest multi-housing building occupancy rate in 2014 of 96.9 percent. There was close to a 100 bps spread in occupancy between the different class properties; Class B had an average occupancy of 95.8 percent, and Class A followed with 94.8 percent.

Portland OccupancyPortland Completions and Net Absorption 

Rental Rates for Multi-Housing Buildings

Annual effective rent growth ended 2014 at 7.1 percent. Though remaining robust, rent growth is expected to moderate to 3.5 percent in 2015. Portland’s 1997-2014 average effective rent growth is 2.4 percent, the forecast effective rent growth is expected to remain above this rate during the short term.

Portland’s Class B properties showed the strongest performance in 2014 with an effective rent growth of 7.8 percent. Class C had the second highest rent growth; 6 percent, followed by Class A at 5.9 percent.

Portland Rental RatesPortland Annual Rent Growth 

Contact HFF Portland for more information regarding multi-housing properties on the market in this area.

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