Portland Apartment Fundamentals Soften as Weak Demand Drags Performance Down
The apartment market is slowing down in a number of metros nationwide, with most markets falling into one of two buckets of underperformance. Metros in the southeast and southwest are experiencing some of the most new construction since the 1980’s resulting in immense new supply pressure, despite some of the strongest demand drivers in the nation. On the other hand, a few west coast markets are seeing property fundamentals decline as the result of reduced demand, even though new supply has not been a major issue. Portland falls into the latter category, with limited demand and moderate supply. Job growth has remained steady and the employment market is tight, however outmigration from the Portland MSA as well as some social and regulatory challenges has put a damper on performance. Leading apartment metrics are down in Portland and are indicating a challenging period ahead for the multifamily industry.
Portland rental performance has slowed, trailing the national average on most metrics. Traffic and leasing have shown some improvement over the past year but remain well below the national average. Rent and occupancy have also fallen, with net effective rents declining by roughly 4% over the past year. With soft demand, the new supply that is delivering will face additional pressure through lease up.
Traffic and Leasing
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