Net Effective Rents in Focus: Portland (May 2023)

Economic disruption from the COVID-19 pandemic and downsized office footprints due to hybrid work policies pushed asking rents in the Downtown Portland office market down slightly through Q3 of 2021. They had generally recovered by mid-2022.

Net effective rent (NER) is the true measure of a NNN lease’s cost in today’s dollars. This report reveals recent NER trends, which we calculated to account for the time value of money and its impact on the real value of rents landlords collect in future years. Landlord concessions, which typically include free months of rent, tenant improvement allowances and operating expenses, also impact NER. The calculation factors in annual rent increases, which may take the form of absolute dollar amounts or percentage-based increases. Operating expenses in future years were adjusted based on an assumed average annual inflation rate of 4%.