Outlook Steady for 2017
- Portland’s industrial market maintained its stride as 2016 ended with another round of elevated pre-leasing activity, strong absorption, and increases in quoted rental rates.
Excluding build-to-suit and owner/user, six buildings totaling 635,835 SF delivered in Q4. These projects were 92% leased at delivery.
- Pre-leasing activity on the 2.3M SF of market-relevant properties still in development is slightly bearish heading into the first quarter, with 19% of this inventory currently committed.
- Third-party logistics (“3PL”) users are a key source of demand for large segments of high-quality space. During the fourth quarter, existing 3PL tenants expanded their footprints, and new 3PL tenants also entered the market for the first time, contributing to downward pressure on vacancy.
- While tenants and their representatives may find a handful of more space options in the market as additional new product comes online, corporate users’ standards will continue driving demand toward the best available locations and building designs.
- Per the Oregon Employment Department (OED), the state’s manufacturing sector added 1k jobs from November 2015 to November 2016, a 0.5% growth rate. The U.S. lost manufacturing jobs over the same period. Growth among Oregon’s nondurable goods makers (+1,700 jobs) was mostly offset by losses in durable goods (-700 jobs). Reductions in semiconductor manufacturing employment contributed the most to these losses.
Quick Fact: $185 Million
Industrial investment volume totaled $185M in the fourth quarter, bringing 2016’s total to around $680M. Q4’s 14 transactions averaged $13M per deal and $98.42/SF.