Retail Market Report | Q4 2018

The retail market in Portland did not experience much change from the third quarter 2018, going from 3.1% to 2.9%. Net absorption was a positive 382,286 square feet and vacant sublease space decreased by (8,016) square feet. Quoted rental rates increased slightly, ending at $18.21 per square foot per year. Seventeen buildings were delivered to the market in the fourth quarter 2018 with 472,479 square feet still under construction.

With positive 382,286 square feet absorbed, net absorption was moderate again in fourth quarter 2018. The third quarter saw positive absorption at 417,013 square feet. Currently there are 181,722 square feet vacant in the market.

The Portland retail vacancy rate decreased in the fourth quarter 2018, ending at 2.9%, continuing a steady decrease over the past four quarters. The first quarter ended at 3.2%.Vacant sublease space has also gone down over the past four quarters. At the end of the first quarter 2018 there were 206,841 square feet of vacant sublease space and the current quarter ended with 181,722 square feet vacant.

PORTLAND MARKET SNAPSHOT

VACANCY

OVERVIEW

ABSORPTION & DELIVERIES

Vacancy Rates by Building Type

Years 2006 - 2018

Absorption & DeliveriesPast 9 Quarters

900 SW 5TH AVENUE, 17TH FLOOR | PORTLAND, OR 97204 | 503.223.3171 | WWW.NORRIS-STEVENS.COM

VACANCY RENTAL RATE

CONSTRUCTION ABSORPTION

2.9%

472,479 SF

$18.21

382,286 SF

Source: CoStar Property

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1

Power Center Specialty Center General Retail Shopping Center Mall Total Market

Mill

ions

of S

F

Net Absorption Deliveries

Absorption & Deliveries Last 9 Quarters

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2018 Q32018 Q12017 Q32017 Q12016 Q3

0.23

0.79

0.37

0.14

0.53

0.18

0.09

1.08

0.15

0.31

0.100.14 0.15

0.45

0.07

(0.11)

(0.25)

0.08

0.38

0.13

DELIVERIES AND CONSTRUCTION RENTAL RATES

For detailed information regarding this report, and to discuss how Norris & Stevens can assist with your real estate needs, please contact us at (503) 223-3171 or visit us at www.norris-stevens.com.

Average quoted rental rates have increased again for the fourth quarter 2018, ending at $18.21 per square foot per year. That compared to $17.51 per square foot in the third quarter 2018, $17.21 in the second quarter and $17.21 at the end of the first quarter. This represents a 5.49% increase from four quarters ago.

17 buildings totaling 130,908 square feet were completed and delivered during the fourth quarter 2018. 476,969 total square feet have been built in Portland over the past four quarters. 472,479 square feet remain under construction at the end of the quarter. Total retail inventory for the Portland market amounted to 188,796,643 square feet as the quarter came to close.

MarketUnder Construction Inventory Average Bldg Size

# Bldgs Total RBA Preleased SF Preleased % All Existing U/C

Clark County 24 188,269 102,092 54.2% 12,407 7,845

I-5 Corridor 4 63,369 21,358 33.7% 14,679 15,842

Lane County 6 37,900 11,994 31.6% 9,229 6,317

Northwest 1 36,000 36,000 100.0% 7,232 36,000

Polk County 3 31,350 9,753 31.1% 7,942 10,450

Southwest 3 23,304 12,209 52.4% 13,528 7,768

Northeast 2 20,040 7,040 35.1% 8,316 10,020

Lloyd District 1 20,000 14,600 73.0% 14,444 20,000

Deschutes County 4 19,439 13,659 70.3% 11,378 4,860

Yamhill County 3 12,440 5,145 41.4% 8,135 4,147

All Other 3 20,368 9,868 48.4% 9,869 6,789

Totals 54 472,479 243,718 51.6% 10,269 8,750

Construction Activity | Markets Ranked UNDER CONSTRUCTION SF

Source: CoStar Property

Source: CoStar Property

900 SW 5TH AVENUE, 17TH FLOOR | PORTLAND, OR 97204 | 503.223.3171 | WWW.NORRIS-STEVENS.COM

Mill

ions

of S

F

Construction Starts Deliveries

-0.1

0.0

0.1

0.2

0.3

0.4

2018 Q12017 Q12016 Q12015 Q1 2018 Q4

0.42

0.34

0.37

0.18 0.17

0.37

0.30

0.24

0.170.19

0.140.15

0.090.08

0.17

0.37

0.31

0.14

0.22

0.18

0.27

0.09

0.15

0.18

0.10

0.21

0.15

0.050.07

(0.01)

0.13

0.00

Historical Construction Starts & Deliveries Square Footage Per Quarter