The explosive growth of e-commerce that has hurt the retail market was boosting industrial assets even before the COVID-19 outbreak. Portland's current vacancy rate of 4.9% remains significantly below the metro's long-term average, and in-line with the national average of 5.1%. Portland's industrial rents have grown at a healthy clip despite lingering effects of the pandemic, continuing a decade-long run that saw cumulative industrial rent growth of nearly 60% since the start of 2011. That's far stronger than comparable rent gains for retail, office, or even apartments in that time.
The frenzied speculative development pipeline of recent years is beginning to thin out, and a notable percentage of new industrial development now underway will be owner-occupied. Along with substantial build-to-suit construction, tight vacancies triggered Portland's first significant spec development wave since the recession. Of all space under construction, about 25% is available for lease.
The industrial sector's stability in the face of economic turmoil continued to draw investors to the region. Average pricing, which more than doubled over the past decade, spiking from around $65/SF in 2010 to $155/SF today, and average cap rates compressed below 6%. Favorable demographics, a structurally low vacancy rate, and exposure to trade by way of a moderately sized port continue to underpin the health of the local industrial market. (Source: CoStar)