Portland State University’s – Center for Real Estate released its Spring 2015 quarterly report on commercial real estate and housing markets.
Topics covered in the report include Oregon’s legalization of marijuana for recreational use and the impact on the real estate market, including significant growth in the demand for small industrial space with large capacity for electricity and ventilation. With most commercial loans preventing property owners from renting to marijuana growers, the demand by growers will remain limited to a small segment of the industrial market.
A column on the US economy shows steady increases in employment, particularly in business services, transportation, and government services. The national unemployment rate has reached a new five-year low of 5.5%, with the numbers for Oregon and the Portland metro area at 5.4% and 5.2%, respectively, more than a full percentage point below last quarter.
PSU’s single family housing report shows that the Portland area’s median existing home price has reached $276,500, a 3% increase from 12 months ago. The market in Bend continues to be the hottest real estate market in the state with an average price increase of 26% per year compared to the same time last year. The neighboring market of Redmond experienced a 17% increase as well. The median price for existing homes was $315,000 in Bend; $260,590, suburban Clark County; $225,000, City of Vancouver; $215,000, Eugene-Springfield; $209,974, Redmond; $209,000 Jackson County (Medford); $189,950, Salem; and $183,500, Josephine County (Grants Pass).
The multi-family housing report, cites that apartment owners were able to achieve 5.0% effective rent growth nationally and 9.3% in the Portland market, making Portland the 5th fastest appreciating market out of 50 US metropolitan areas. Vacancy rates have dipped to 3.1%, representing the strong bargaining power in landlords’ hands. Over the past five years, the average rent in the Portland market has risen from $871 to $1,213, or an average of 6.8% per year.
Apartment construction in the region remains brisk with the number of units in the 3-county region rising by 27% from 2013 to 2014 and in the 4-county region (adding Clark County) rising by 17%. At the same time, almost all of that increase is occurring in the close-in neighborhoods in the Portland market. Essentially, no apartments are being built in Clackamas County or east Multnomah County. And the increase in apartment construction in the last five years doesn’t make up for the decline in single family home construction in the region over the last decade.
In the office market report, the Center for Real Estate S reports that Portland area market continues to be strong. Office vacancy rates ticked up in the last quarter from 8.2% to 8.4%, but the bigger picture is how they have steadily declined from their peak of 12% in 2010. Professional and business service jobs in the Portland region have expanded by 5.3% in the past year.
Read more from the report including updated vacancy and absorption rates for the retail, office and industrial markets in the Portland metro-area.