WESTERN SNAPSHOT, AUGUST 2004

Portland & Salem, Oregon Multifamily Market

Robert Black Senior Market Consultant NAI |Norris, Beggs & Simpson

Downtown Portland’s Pearl District is seeing a multifamily building boom of high-end, for-rent product, with some 700 units currently in lease-up or slated to come online this year. The most significant apartment developments in this urban submarket include the 300-unit Brewery Block complex developed by Gerding/Edlin Development Company, the 178-unit Trammell Crow Company property on Hoyt Street and The Lexis apartments developed by Hoyt Street Development. The Lexis and Gerding/Edlin developments are due to be completed this month and in November, respectively, while Trammell Crow’s Hoyt Street property is in lease-up.

The majority of multifamily development can be found on downtown sites or those close to downtown. These include affordable deals being built along the MAX Light Rail line and on the last of the larger developable sites within Portland’s Urban Growth Boundary. All significant multifamily development in Portland is high-end product downtown, affordable tax-credit suburban properties or in-fill projects along the light rail.

Occurring predominantly in Gresham to the east of Portland and Hillsboro to the west, suburban development is composed mostly of large, affordable buildings of 150 units or more. Currently, GSL Properties Inc. is completing Wyndhaven, a 396-unit apartment property in Hillsboro. Small entrepreneurial developers are factors in this submarket, typically building between 20 and 50 units of market-rate, B-grade product.

Forty-seven miles to the south of Portland, Oregon’s capital of Salem has seen very little multifamily development in the past 12 months. Currently, phase I (170 units) of the 360-unit Willamette Estates complex is in lease-up in the capital city, and the 130-unit phase II of Gateway Village is under construction. As in the Portland suburbs, it is the smaller, entrepreneurial developers building between 20 and 50 units of market-rate product that keep pace with new product demand in the slower growth market of Salem.

The overall multifamily vacancy rate for Portland decreased 31 basis points in the second quarter to 6.38 percent. This marks a 2.3 percentage point decrease in vacancy from the end of last year. The overall average rental rate increased $7 in the second quarter to $753 per unit.

Most of the multifamily developers currently in the northwestern Oregon area are local ones that have a high level of experience developing market-rate or affordable product. As the economy continues to improve, new developers will gain interest and start looking for multifamily opportunities in the Portland and Salem markets.

— Robert Black is a senior market consultant in the Multifamily Division of NAI | Norris, Beggs & Simpson in Portland, Oregon.


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