Office demand contracted as most employees shifted to a work-from-home approach. And a surge of sublease space in 2020 indicates many employers are looking to downsize or exit existing lease commitments. Negative net absorption caused office vacancies to creep upward for most of 2020, now sitting at roughly 11.1%. This led to the first year-over-year rent losses in the local office market since the last recession. Year-over-year, Portland office rents are down about -0.8%, while national office rent losses are about -1.6%.
The speculative development pipeline is mostly empty, so there won't be much competition from new supply. Most of Portland's ongoing office development is build-to-suit, primarily campus expansions for Nike and Adidas.
Portland office investment slowed sharply as the pandemic upended the local economy. Annual sales volume exceeded $1 billion each year from 2015–19, but that run came to an end in 2020. Office properties here sell at lower prices than comparable assets situated in alternative West Coast metros, including San Jose, San Francisco, and nearby Seattle.