First Quarter Portland Office Report Shows Rising Vacancy

Central City office vacancy rose to 10.46%, with negative absorption of 162,069 sf. The Central Business District had 10.61% vacancy, with a tight market for Class A space. Northwest’s vacancy rose to 12.85% overall, largely due to the 68,538 sf Machine Works building sitting entirely vacant. Although, this area also saw considerable leasing activity. Law firm, Ater Wynne leased 36,276 sf at The Lovejoy, which came online this quarter. Northwest Evaluation Association announced it will move from its current Lake Oswego offices to occupy the entire 104,000 sf Port of Portland Building in 2011.

Suburban vacancy increased to 17.32%. One consequence of the economic climate is sublease space is becoming more prevalent, and when taking that into account, the vacancy rate is 19.56%, with -122,161 sf absorbed. Vacancy in Lake Oswego/West Linn increased to 15.81%. Southern 217 also saw a significant rise in vacancy, partially because new buildings were added. All 96,870 sf at Triangle Pointe (formerly the Farmer’s Insurance Building), which got a new owner in late 2008, is currently vacant and the building is being remodeled. Kruse Way vacancy fell by about 1.5 percentage points, and EthicsPoint leased 22,654 sf at 6000 Meadows.

Vancouver vacancy fell more than a percentage point to 16.11%, with 62,242 sf absorbed. More than half of that absorption was in Class A space, with some sizeable leases. Seton Catholic High School took 13,938 sf at Sunrise Professional Plaza and Office Ally leased 10,993 sf at McGillivray Place. Vacancy in Class B space was 22.75%, but Vancouver Square saw significant absorption with the American Red Cross leasing 9,480 sf and the U.S. Veterans Affairs Department taking 8,280 sf, both in Building 3.

The full report is available on our Web site.