Downtown Portland's office vacancy rate reached nationwide high in 2023

PORTLAND, Ore. (KOIN) — Real estate market experts reported that Portland’s central city had the highest vacancy rate for office space at the end of 2023 compared to other downtown areas.

Colliers published its latest research on commercial real estate trends earlier this month. The Portland-based real estate firm found that 30.2% of offices in the central business district were vacant late last year, with about 2.4 million square feet of office space open for subleasing.

“Portland’s office market will benefit from a diminishing development pipeline,” researchers wrote. “The delivery of The Offices at 11W and Block 216 in 2023 represented the last of pre-pandemic speculative office construction downtown. The only active office projects under construction are across the Columbia River in the Clark County submarket.”

Although slowing construction could help with Portland’s oversupply of office space, Colliers expects the demand to be negative through 2025.

According to the real estate firm, 57% of leasing activity happened outside of the central city in 2023. The market experts also reported that more than 4.2 million square feet of office leases will expire within the next five years, and the current tenants are likely to downsize instead of renewing — pointing to another down year for downtown.

While the number of people who work from home has declined since 2020, the pandemic-era shift to remote jobs has played a role in office vacancy rates. Portland Mayor Ted Wheeler addressed this last November when he urged central city employers to enforce an at least 20 hour in-person work week to encourage downtown foot traffic.

Colliers' report also included market overviews highlighting the Salem, Eugene and Medford-Grants Pass areas, where vacancy rates don’t exceed 8.5%.

“The bright spots of the market are still the suburban/rural periphery with continued demand for their quality of life,” Colliers Vice President Sean Worls said.