Building vacancies in Portland’s urban core have increased by 80% since 2019.
PORTLAND, Ore. — Portland’s crime and homeless crisis are affecting the city’s real estate market. Office buildings in downtown Portland are going on the market at an alarming rate.
“It felt like a punch in the gut,” said Todd Gooding, president of ScanlanKemperBard Companies (SKB), which invests in commercial real estate.
Two years ago, SKB bought the 100,000-square-foot Mason Erhman Annex building on Northeast 5th and Everett — right in the middle of Old Town — for $25 million. Now, it’s back on the market after tenants felt the area was unsafe.
“They informed us that they’re going to honor their lease, but they’re moving out and they’re not coming back,” said Gooding.
The tenants still have four years left on the lease. Gooding even offered to pay for security escorts to and from work.
“We just feel let down by the city of Portland… We didn’t realize the city would ignore the public safety concerns as long as they did.”
Mayor Ted Wheeler told KGW that community safety continues to be a top priority for his administration. He said he added increased police presence and bike patrols in Old Town along with investments to help the area’s economy.
“My office extends an open door policy, we hope that business owners reach out as they navigate the uncertain economy,” he said in a statement to KGW.
Gooding said his staff has called the city numerous times.
“Nobody will pick up the phone and respond. It’s been pretty disappointing,” said Gooding.
SKB owns seven buildings in Portland. So far, this is the only one they have on the market, but Gooding anticipates that to change since tenants are now looking to move out of downtown, which is home to half of all of Portland’s office buildings.
“We have other tenants in other properties that have also reported other public safety issues,” Gooding said.
“If our downtown is struggling to do well, our city is struggling to do well,” added Tim Harrison, Pacific Northwest regional research director for Jones Lang Lasalle (JLL), a global leader in real estate services.
Harrison said between the pandemic, protests and people working from home, office spaces are struggling to find new tenants.
Right now, JLL knows of 30 office buildings bigger than 10,000 square feet for sale in the urban core. Building vacancies in the urban core have increased by 80% since 2019.
“It’s all part of the recovery,” said Harrison. “It’s taking longer than we would’ve liked. The downtown urban core is still extremely important to the health of our city.”
As for finding new tenants, that’s also proven to be a slow process.
The Mason Erhman building in Old Town has been on the market for 120 days.
And Portland isn’t alone.
Harrison said other major cities such as San Francisco, Denver and Phoenix are seeing an even higher percentage of empty commercial buildings hitting the market.
“Portland is a pretty good average for what’s happening in the country right now,” Harrison said.
Harrison believes the future of the city depends heavily on people returning to the office. He said larger companies and the city itself must take the lead on bringing employees back to the workplace if the urban core is to fully recover from the past few years.
Read More:Crime, homelessness hit Portland’s commercial real estate market
2022-07-07 00:24:00
