Portland Industrial Figures Q1 2023

Absorption Veers Negative as Overall Industrial Fundamentals Hold Steady

May 17, 2023 5 Minute Read

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‒   Portland’s industrial market posted negative 149,176 sq. ft. of net absorption in Q1 2023, a significantly slower start than the ~1.6 million sq. ft. posted in Q1 2022 and the first negative quarter since Q1 2020. Industry professionals note isolated moveouts that cast doubt on negative absorption becoming a trend, but there is a sense of a market-wide slowdown.
‒   Five leases over 100,000 sq. ft. were signed in Q1 2023, including two renewals and three new leases. Significant new deals include SureWerx’s 154,648 sq. ft. lease at Prologis PDX 19, and Modomi Modular Housing’s 120,000 sq. ft. lease at the Port of Portland’s Terminal 2.
‒   The industrial development pipeline in Q1 2023 totaled 2.5 million sq. ft., all of which is expected to deliver no later than Q1 2024. Vancouver Logistics Phase II broke ground, with construction underway at the North Building, a speculative 175,119 sq. ft. light industrial property next to the Phase I building that Thermal Supply leased in Q1 2022.
‒   Market-wide vacancy remained low at 2.3%, down 50 basis points (bps) year-over-year (YoY).
‒   Overall Class A average asking industrial warehouse shell rates ended the quarter between $0.80 - $0.90 per sq. ft. on a monthly triple net (NNN) basis for spaces 50k sq. ft. and larger, a 13.3% increase YOY.