Q3 2023 - Portland Office Market Report

As we began looking over the sentiment of Q2, unfortunately not much has changed from the previous quarter(s). Sure, some of the CRE metrics (vacancy rates, rental rates, etc.) have moved slightly up, down, and sideways, but the reality is that we remain on the same hamster wheel, so the message is generally the same. We are still seeing significant incentives for rent abatement, tenant improvement costs, move allowances, etc., while face rents are attempting to stay strong. As future leases get set to expire in the coming 18-24 months, many tenants will likely rightsize their footprints or relocate to higher quality assets (flight to quality), and we believe buildings with high vacancies may start to default and become troubled assets, and in some cases be returned to the lenders. This is something we are making sure to keep an eye out for. We’ve seen some of this happen already with more on the horizon.