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Demand for Industrial Real Estate in Portland Remains Strong, According to Q3 2022 CBRE Report

CBRE, Portland, Child Logistics, Ridgefield Industrial Center, Lam Research, T-S Corporate Park, Daimler Truck, Columbia Distributing, Burnt Creek Logistics
Courtesy of Elena Kuchko

By Jack Stubbs

Demand for industrial real estate in Portland remains strong heading toward the end of the year, with ongoing demand for industrial assets evident across various metrics, including leasing activity, net absorption figures, tenant demand, in-progress construction and rent growth.

According to a third quarter Portland industrial market report from CBRE, Portland’s industrial market looks set for a period of sustained activity in the coming months, with various indicators suggesting a relatively healthy sector.

Said demand is epitomized by a 2.8 percent overall vacancy rate; a 3.9 percent industrial park vacancy rate; 4.1 million year-to-date (YTD) square feet of net absorption; and 3.1 million industrial square feet currently under construction.

Leasing activity in Portland has, historically, been a mainstay feature of the industrial market. According to the report, the city has over the years garnered a reputation for a diversity of industrial uses among particular sectors.

“Portland is well known for its existing high-tech industrial manufacturing and warehousing driven economy, which lends itself to well-diversified leasing activity across multiple sectors. Additionally, the region’s underlying fundamentals have been supported by the recent growth in the e-commerce and logistics services industries,” the report states.

The third quarter of 2022 was no different, as robust leasing activity across the region – and nearly 2.5 million square feet of industrial space transacted. Some of the most notable – largest – leases in third quarter included Child Logistics’ 345,886 square foot lease at Ridgefield Industrial Center in Clark County and Lam Research’s inking of a new 271,870 square foot lease at T-S Corporate Park in the Southwest submarket.

The Northwest submarket also saw a noteworthy statement of intent, as Daimler Truck – which is headquartered in Portland and is known for exploring emerging trends in the automotive industry – signed a five-year, 205,000 square foot lease at the former Columbia Distributing facility.

Another lease in Clark County demonstrates the broad array and diversity of tenant types that are looking to establish themselves in the Portland metro area.

“Research and investment in the development of Extended Reality (XR) platforms is showing up in the Portland area…Jabil recently signed a 176,008 square foot lease for all of Building 4 at the Vancouver Innovation Center,” the report states.

Vacancy and net absorption rates in the Portland industrial market also hint at the relative health of the sector heading toward the end of the year, and also reflect a diverse set of tenants looking to take down industrial space.

“The Portland industrial market continues to be an attractive alternative for new and expanding occupier businesses, as the steady growth in advanced manufacturing, e-commerce, and logistics services has supported recent strong real estate fundamentals in the region,” the report states.

Portland’s industrial market posted nearly 1.4 million square feet of positive net absorption in the third quarter of 2022, bringing the year-to-date figure to roughly 4.1 million square feet and outpacing the rate of absorption through the first three quarters of 2021, states the report.

Just as the vacancy and absorption rates reflect a healthy state of affairs for Portland’s industrial market, the prospects also look positive for the market due to a robust and active industrial development pipeline, with nearly 3.1 million square feet actively under construction.

Some of the notable underway projects in the Portland metro area, according to the report, include Burnt Creek Logistics’ 664,653 square foot project in Clark County (the largest project to break ground in the third quarter), and the 646,274 square foot project at Bridgepoint Vancouver 600.

In the Northeast submarket, 138 Logistics Center offers two state-of-the-art distribution warehouses – on a roughly 25.5-acre site – totaling 489,700 SQFT in Airport Way, which is one of Portland’s premier industrial gateways. Other underway projects include the 435,107 square foot speculative development located in the Southeast submarket at 21600 SW Oregon St. The Prologis Meadows – Building E., which is located at 1001 N. Schmeer Road and totals 285,000 square feet, is also expected to be complete by the fourth quarter of 2022.