CoStar Market Analytics, a commercial real estate advisory service, issued a memo on September 9 to its Portland clients detailing the city’s apartment building inventory and the pace of new construction.
The conclusions were gloomy: vacant units are declining rapidly, rents continue to rise, and the development of new multi-family units is slowing down.
This slowdown, CoStar reported, is in part due to shortages of skilled labor and more expensive raw materials throughout the pandemic: “This, coupled with a shortage of skilled labor, has had many developers who are probably struggling to complete projects. “
But the company also blamed an inclusive zoning policy passed by Portland City Council in 2017 that requires buildings over 20 units to set aside 20% for affordable housing.
CoStar reported that Portland had the fifth declining vacancy rate among the top 50 metropolitan areas in the country, falling to 4.7% in the third quarter of 2021, from 6.9% in mid-2020.
As Portland battles increasing roaming, CoStar has warned customers that the worst is yet to come – for some time.