By Jack Stubbs
The multifamily market in Portland saw an active period in the final quarter of last year, with several metrics suggesting an intriguing period ahead. According to Kidder Mathews Q4 2022 Portland Multifamily Report, overall vacancy rates were down, rental rates saw an increase, and construction deliveries saw a decrease -all representing year-over-year change.
Average asking rents saw a 4.43 percent increase year-over-year from fourth quarter 2021 at $1,716 per month to fourth quarter 2022 at $1,792 per month. Overall, vacancy rates stood at 6.7 percent in fourth quarter 2021, decreasing to 5.3 percent in third quarter 2022. Most recently, fourth quarter 2022 posted a vacancy rate of 5.6 percent.
There were several noteworthy transactions in the fourth quarter, suggesting that investor interest in the City of Roses remains relatively robust. Three of the largest multifamily transactions included Abacus Capital Group’s acquisition of the 347-unit One Jefferson property – located in the West Portland Park submarket – from Security Properties Inc. for $124 million, or about $357,349 per unit; and Aukum Group’s acquisition of the 154-unit Meadow Brook Place in the Ogden submarket for $38.38 million from Meadowbrook Place LLC, marking a $249,250 per-unit price.
In late October, as The Registry reported, Southern California-based real estate investment and management firm SR Watt Company announced the $60 million acquisition of a two-building multifamily portfolio in Portland – from Madison Park Financial Corp. – which includes the 101-unit Cannery Row, at 22550 SW Highland Drive in Sherwood, and the 87-unit Westline, at 4545 SW Angel Ave. in Beaverton.
Acquisitions such as that of the Cannery Row and Sherwood properties reflect ongoing interest in the multifamily market, both in Portland and the Pacific Northwest more generally.
“The Pacific Northwest is the ideal market for SR Watt to expand its multifamily footprint thanks to its strong market fundamentals that include migrating population and high-growth employment in a suburban metropolitan area. Plus, we see great opportunity to enhance placemaking opportunities in these communities that further enhance resident quality of life,” said Courtney Trujillo, president, SR Watt, at the time of the announcement.
In addition, figures for under-construction multifamily properties in fourth quarter 2022 mark a significant 85.17 percent annual change. In total, there were 7,566 properties under construction in fourth quarter 2022, compared to 5,853 under construction in third quarter 2022 and 4,086 under construction in fourth quarter 2021.
According to the report, some of the projects under construction include The Linda M Price Trust’s 501-unit River Terrace Town Center property in the Bull Mountain submarket at 13794 SW Roy Roger Way; and Lennar Northwest Inc.’s Brynhill Development at 32055 NW North Ave in the Outlying Washington submarket, which upon completion, will comprise 500 units.
In mid-October, as The Registry reported, Security Properties and Urban Renaissance Group announced the start of construction for the second phase, and the larger of its 341-unit Press Blocks development in Portland’s Goose Hollow neighborhood. At the time of the announcement, the project was fully capitalized and construction had begun, according to John Marasco, Chief Development Officer with Security Properties, who emphasized how the now-underway project would serve multi-faceted needs of the evolving neighborhood – particularly relative to other surrounding neighborhoods.
“As Downtown Portland, the Pearl District, Northwest, and Slabtown have developed rapidly, Goose Hollow has lagged slightly behind until now,” Marasco said. “The Press Blocks will bring not only much-needed rental housing to the area but also provide an anchor for Portland’s next great neighborhood, replacing the massive concrete print facility that has dominated the area since the ’50s.”
There were also several completed projects in fourth quarter 2022 that indicate recent efforts to provide significant multifamily inventory for the City of Portland.
In November alone, there were three projects delivered: these included JT Smith Companies Inc.’s 196-unit The Reserve at Fern Hill in the Outlying Washington County submarket; the 144-unit East Fork Commons property in Outlying Clark County (the owner of which is Luke & Lars Sasse); and the project owned by Holland Partner Group, which comprises 110 units and is located at 803 Washington St. in Downtown Vancouver.
Considering the robust sales activity and, indeed, the broad array of properties under construction as of last quarter, Portland’s multifamily market seems set for active times ahead.
