As the next building cycle for the Portland area is still another year out, vacancy rates are expected to fall to historic lows across the metro. The overall vacancy rate will match the lowest on record at 2.7 percent, while the area’s lower-tier vacancy will fall to as low as 2 percent.
Marcus & Millichap notes that a lack of multifamily construction and the expansion of jobs in the region will be the prime factors behind the extraordinarily high rates of occupancy. Job growth is expected to rise 3.1 percent—from 20,500 positions created in 2011 to 31,000 positions created in 2012. Of particular significance will be the development of a new Intel facility, which is expected to create thousands of construction jobs and spur large demand for Class B and C apartments.
Cap rates for trophy buildings are likely to average in the high 4-percent range, with Class A and B assets in the suburbs falling in the mid 5- to low 6-percent range.
Investment is also expected to take off this year, as owners with maturing debt will likely sell while demand is high. The types of portfolios sought by investors will likely be across the board, with well-located and mid-sized Class B and C assets ranking alongside the more commonly sought Class A deals.
See the complete MultiHousing News piece here: Lack of Construction in Portland to Send Vacancy Rates to Historic Lows