PDX Industrial Vacancy Increases, But Some Positive Signs

Overview

Industrial market vacancy increased less than a percentage point to 12.95%, with a negative absorption of 159,471 sf. Vacancy in Southwest I-5 increased about 5 percentage points to 11.22%, partially because 278,920 sf at the new Commerce Park came online. Absorption in Southwest I-5 was a negative 195,907 sf, due in part to 49,900 sf vacant at Nelson Business Center, previously occupied by DHL, and 130,000 sf vacant space at Lakeview Business Center. North/Northeast vacancy decreased to 16.19%, with one tenant leasing 151,050 sf at Rivergate Corporate Center III and OIA Global Logistics expanding by 60,102 sf at Bybee Lake Logistics Center.

Flex market vacancy increased slightly to 13.63%, with a negative 47,392 sf absorbed. Vacancy in North/Northeast decreased nearly 6 percentage points to 9.76%, with CentiMark Corporation leasing 8,831 sf at Columbia Gorge Corporate Center, and other smaller spaces leased up. Vancouver flex vacancy increased to 12.93%, with nearly 16,000 sf newly vacant at Columbia Tech Center.

Market Trends

First quarter 2009 saw a multitude of strategies for dealing with the economic recession in the industrial market. The increased vacancy and negative absorption indicate that tenants are downsizing and right-sizing, putting considerable space back on the market. Other users of industrial space took a wait-and-see approach, holding steady while putting off making long-term decisions.

We are seeing some companies investing in facilities in the area, while others are even expanding and planning for growth. Just weeks after Intel said it will close its Fab 20 plant in Hillsboro later this fall, leaving about 1,000 people jobless, the company announced that it’s investing $1.5 billion into improving two other plants in Hillsboro. The Port of Vancouver bought 110 acres on NW Lower River Road to expand its current facilities. SolarWorld, which opened its nearly 500,000 sf solar manufacturing facility in Hillsboro last October, will build a new 210,000 sf building on the campus to be finished in November. Oregon provides tax incentives for solar companies, meaning more of them are putting down roots here and requiring industrial space.

The full report is available on our Web site.