Thanks to its diverse economy and high quality of life, Portland’s multifamily market was able to resist recent economic hardships. The metro also benefited from pandemic-induced migration patterns, attracting residents looking for less dense and more affordable places to live in.
And the city’s rental market will remain strong, Trion Properties Managing Partner Max Sharkansky believes. The firm recently purchased The Russell, a 68-unit community near downtown Portland, for nearly $20 million, bringing its current portfolio in the metro to 10 properties. In the interview below, Sharkansky explains what makes Portland an attractive multifamily market for investors.
READ ALSO: Portland Multifamily Report – Summer 2021
How did Portland’s multifamily market perform during the first half of 2021?
Sharkansky: The city remained resilient during the pandemic and even grew by nearly 30,000 residents last year, allowing for a strong first half of 2021, which we believe will continue well into the future.
As businesses and residents from other West Coast markets such as California continue to migrate to the Greater Portland metro, the city has continued to experience population growth in 2021, resulting in the need for quality multifamily communities.
What does Portland have to offer to multifamily investors?
Sharkansky: The city and surrounding areas are attractive to residents due to the high quality of life and diverse range of activities they provide, and immense business growth is resulting in longer retention.
Additionally, zoning changes have taken place throughout the city in recent years, which has greatly affected the development pipeline and drastically increased demand for quality apartment communities at reasonable price points, presenting reliable opportunities for a strong return on investment.
The Russell represents the first acquisition of Trion’s newest Multifamily Opportunity Fund. How does this deal fit into your investment strategy?
Sharkansky: Our recent acquisition of The Russell was unique because we typically invest in older properties in Portland and surrounding submarkets where we can implement our proven value-add strategy to revitalize neighborhoods.
That said, we are always open to acquisitions outside our usual business plan, where we can also leverage our knowledge and relationships in the market to generate strong returns for our investors.
We identified this particular property as a rare opportunity to add an already upgraded asset that was built in 2017 to our portfolio that had historically low-rate debt and strong going-in cash flow.
Additionally, this property is the only market-rate multifamily development to be completed within the last 20 years, making it a standout in Portland that we could not pass up.
How competitive is Portland when it comes to value-add opportunities?
Sharkansky: As Portland continues to be recognized as a top performer in growth, resiliency and long-term value, competition has been tightening significantly when it comes to value-add opportunities over the past few years.
That said, we acquired our first Oregon property in 2016, allowing us to foster relationships in the area for the past several years, which has positioned us to remain ahead of the curve.
What types of properties would you consider risky investments in upcoming quarters?
Sharkansky: The Portland market has seen significant recent and ongoing deliveries of upscale, luxury multifamily products. There is a risk of supply outpacing demand in this subsector in the coming quarters.
Additionally, it will be important for investors to stay on the pulse of rent control in Portland and Oregon as a whole, ensuring that current regulations and potential changes will not impact business plans.
How does Portland compare to other markets you have a presence in?
Sharkansky: Portland is similar to other Western markets we have a presence in, such as Denver and the East Bay area, in that it offers affordability in comparison to other regional metros, an appealing quality of life, high walkability and a flourishing business environment.
These markets are seeing an incredible amount of top talent move in and the expansion of several prominent companies, such as high-tech manufacturers in Portland, for example. Trion will continue to seek opportunities to invest in multifamily properties in these markets that align with our strategy, as we know that demand for this product type will only increase in the years ahead.
What are your predictions for Portland’s multifamily market?
Sharkansky: We expect the greater Portland market to continue to grow rapidly as a result of its strong economy, in-migration, beautiful scenery and diverse business environment.
This is a market that has garnered increasing interest from people of all demographics and income levels and is facing high demand for modern, market-rate apartment communities that investors are ready to act on.