Portland Industrial Figures Report Q1 2024

The Portland industrial market kicked off 2024 with negative 1,041,878 sq. ft. of net absorption, a sobering figure for a market that had grown accustomed to strong positive absorption in recent years. Vacancy rose 50 basis points (bps) quarter-over-quarter (QOQ), owing both to the negative absorption and the delivery of Meadowlark Industrial Center, a 155,500 speculative development in Cornelius, OR.

While the continued uptick in available spaces made industrial landlords a bit more eager to lock down deals with potential tenants in Q1, the increase did not translate to a fully comfortable environment for occupiers. Finding suitable spaces remained an uphill task for occupiers looking for most combinations of submarket, size range, and space-use needs. While an increase in overall market vacancy may prevent Class B and C product from seeing the strong rent growth of the 2020-2022 era, institutional landlords remained bullish and continued to push rental rates for new construction, Class A product in Q1.

Over half of the negative net absorption can be attributed to third-party logistics (3PLs) moving out of space. 3PLs and wholesalers saw a significant demand increase in 2021 and 2022, when consumers were spending significantly more on goods than services and supply chain constraints led occupiers to double down on warehouse space to accommodate demand spikes. As macroeconomic headwinds persist and supply chains have stabilized, 3PL and wholesalers are reconsidering their space needs, causing the overall market to shed occupancy. Still, Q1 ended with more total occupied square feet than any quarter in Portland market history before Q2 2022.