Job Growth Firm, Rent Growth Totters in Portland
The metro’s strong employment growth is pushing up multifamily demand, especially for market-rate apartments. Nearly 8,400 units were underway as of August, of which some 3,200 units are slated to come online by December.
By Adina Marcut
Portland rent evolution, click to enlarge
Rent growth continues to decelerate, but a healthy economy and rapidly growing population are keeping Portland’s multifamily market stable. After reaching a cycle peak of 12.9 percent in January 2016, rent growth has steadily slowed due to heavy supply, mirroring nationwide trends and reaching 1.7 percent as of August 2017. Trailing the national growth rate by 70 basis points, Portland’s rate is underperforming the U.S. average for the first time since 2013.
Construction is leading employment gains (9,300 positions, 14.3 percent expansion), with big-brand projects such as Amazon’s 855,000-square-foot fulfillment center and Under Armour’s new 70,000-square-foot campus reinforcing Portland’s diversifying economy. Education and health services (7,700 jobs) and leisure and hospitality (4,300) have also expanded significantly. The metro’s strong job growth is pushing up multifamily demand, especially for market-rate apartments.
Nearly 8,400 units were underway as of August, of which some 3,200 units are slated to come online by December, but the pipeline could see further delays due to shortages in the construction workforce. Moreover, a slowdown in development may also occur due to the city’s new policy on inclusionary housing, which requires developers to set aside 20 percent of units as affordable. But this could start boosting demand next year, contributing to short- and medium-term rent growth. We expect rents to increase by 2.5 percent in 2017.
