Portland Industrial Market

RESEARCH 1Q 2021

Portland Industrial Market

Continued Growth into a New Year

Portland¡¯s Overall Industrial Market

In the first quarter of 2021, the total industrial inventory grew to

225.5 million square feet, a 3.9-million-square-foot increase from

the past year. Positive 40,819 square feet of absorption was also

reported for the quarter. Despite seeing positive absorption, the

vacancy rose to 5.4%, ticking up from 4.9% last quarter due to

the completed construction added to the inventory, totaling more

than absorption. The overall average asking rent was $0.77/SF,

$0.01/SF less than last quarter.

Market Summary

Warehouse / Distribution

Construction & Deliveries

Throughout the pandemic, the need for home delivery has helped

to accelerate ecommerce growth. At the beginning of 2021,

Portland¡¯s warehouse/distribution inventory totaled 91.6 million

square feet, with 3.4 million square feet of more space reported

than at this time last year, an increase of 3.8%. As well, positive

466,882 square feet of absorption was reported this quarter. The

average asking rent has also remained relatively the same, at

$0.61/SF from $0.62/SF from last year, a $0.01/SF difference.

Current Prior

Quarter Quarter

Total Inventory (SF)

Year Ago

Period

12-Month

Forecast

225.5M

224.1M

221.6M

?

Vacancy Rate

5.4%

4.9%

4.6%

?

Qtr Net Abs (SF)

41K

4K

136K

?

Avg NNN Ask Rent/SF

$0.77

$0.78

$0.78

?

Under Const (SF)

2.7M

3.8M

5.8M

?

SQ U ARE FEET

6,000,000

4,500,000

3,000,000

1,500,000

0

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21

Under Construction

Deliveries

Market Analysis

ASKI N G REN T AN D VACAN CY RATE

N ET ABSO RPTI O N

$0.80

5.5%

$0.60

5.0%

$0.40

4.5%

$0.20

4.0%

$0.00

3.5%

1Q16

1Q17

1Q18

1Q19

Average Asking Rent (NNN Price/SF)

1Q20

1Q21

Vacancy (%)

2,500,000

1,750,000

1,000,000

250,000

-500,000

1Q16

1Q17

1Q18

1Q19

1Q20

1Q21

1

RESEARCH 1Q 2021

General Industrial

Increasing by 452,789 square feet in the past year, the inventory

for general industrial now totals 99.3 million square feet.

Absorption was negative 403,279 square feet this quarter, and

vacancy stood at 4.3%, ticking up from 3.8% last quarter. The

average asking rent has also increased slightly, by $.01/SF, and is

reported at $0.71/SF this quarter, up from $0.70/SF last quarter.

R&D/Flex

In 2020, the inventory for R&D/flex remained relatively the same,

at 34.5 million square feet. Absorption in the fourth quarter was

negative 22,784 square feet. Accordingly, vacancy was at 6.8%,

up from 6.6% last quarter. At $1.18/SF, the average asking rent

has decreased by $.03/SF since last quarter but is the same as

reported a year ago.

Under Construction

2.7 million square feet of industrial space is reported to be under

construction this quarter, between 18 different projects; 12 of

these projects, totaling 2.3 million square feet, are classified as

general industrial. Accordingly, 84.6% of all industrial space

under construction in the Portland area is classified as general

industrial. Five projects, totaling 389,149 square feet, were

classified as warehouse/distribution. Only one project is

classified as R&D/flex, which is Building 2 of Compass Business

Park in Vancouver, measuring 22,600 square feet.

Completed Construction

During the first quarter, Portland saw more than 1 million square

feet of industrial real estate finish construction. These

completions include several large properties classified as

warehouse/distribution. A few are mentioned in the next

paragraph, but more are reported in the statistics.

The largest completion reported in the statistics was Bridge Point

i5 in the NE/Columbia Corridor submarket, totaling 677,033

square feet of space when both Buildings A and B are combined.

Another major completion was Portside Industrial Park in

Vancouver (Clark County submarket), which measures 192,960

square feet. Prologis PDX 23 delivered as well in the

NE/Columbia Corridor, totaling 156,900 square feet.

Leasing Activity

One of the largest known deals for the first quarter was a

134,400-square-foot lease extension at Halsey Business Park for

Trailblazer Fruit Products. Another major deal, brokered by Kidder

Mathews and Colliers International, was at Bybee Lake Logistics

Center, where JCB Packaging signed a 123,120-square-foot

sublease. Also of note was a 46,500-square-foot lease expansion

for Red Bark at Building 4A at 6400 SE 101st Avenue.

Select Lease/User Transactions

Tenant

Building(s)

Submarket

Type

Square Feet

Trailblazer Fruit Products, Inc.

Halsey Business Park

Gresham/Outer SE

Lease Extension

134,400

JCB Packaging, LLC

Bybee Lake Logistics Center ¨C Phase II

Rivergate

Sublease

123,120

XPO Logistics

6220-6228 NE Pinefarm Ct

Sunset Corridor

Sublease

69,630

LVJ Inc

Cipole Industrial Park - Building C

I-5 South Corridor

Lease

47,006

Red Bark Inc.

6400 SE 101st Ave ¨C Building 4A

Gresham/Outer SE

Lease Expansion

46,500

Select Sales Transactions

Building

Submarket

Sale Price

Price/SF

Square Feet

Bybee Lake Logistic Center I & II

Rivergate

$82.5 Million

$113

729,610

205 Airport Way Business Center

NE/Columbia Corridor

$43.0 Million

$147

292,117

Millikan Building 73

217 Corridor/Beaverton

$24.0 Million

$221

108,754

Portside Industrial Park

Clark County

$26.7 Million

$139

192,960

NEWMARK PORTLAND INDUSTRIAL MARKET

2

RESEARCH 1Q 2021

Submarket Statistics ¨C All Classes

Total

Inventory

(SF)

Under

Construction

(SF)

Total

Vacancy

Rate

Qtr Net

Absorption

(SF)

YTD Net

Absorption

(SF)

R&D/Flex

Asking Rent

(Price/SF)

WHS/Dist

Asking Rent

(Price/SF)

Total

Asking Rent

(Price/SF)

217 Corridor/Beaverton

10,557,574

-

6.7 %

-38,683

-38,683

$1.32

$0.55

$0.93

Clark County

25,541,494

415,429

3.6 %

32,147

32,147

$1.16

$0.55

$0.68

Close-In SE

8,200,393

-

4.8 %

9,868

9,868

$1.62

$0.94

$0.93

Gresham/Outer SE

8,530,832

-

3.6 %

-25,245

-25,245

$1.03

-

$0.79

I-5 South Corridor

28,370,790

316,797

5.3 %

-3,424

-3,424

$1.12

$0.64

$0.89

Milwaukie/Clackamas

21,235,689

22,710

5.2 %

430,051

430,051

$1.00

$0.56

$0.65

NE/Columbia Corridor

43,060,440

146,420

8.9 %

-210,743

-210,743

$0.72

$0.53

$0.60

Northwest

15,896,119

-

4.1 %

-29,629

-29,629

-

$1.04

$0.89

Rivergate

18,537,047

40,890

5.8 %

-145,531

-145,531

$1.03

$0.44

$0.49

Sunset Corridor

33,309,584

1,731,550

2.6 %

33,075

33,075

$1.20

$1.10

$1.18

Swan Island/Close-In NE

8,868,583

-

6.9 %

6,519

6,519

-

$0.52

$0.82

225,466,898

2,673,796

5.4 %

40,819

40,819

$1.18

$0.61

$0.77

TOTALS

Statistics by Subtype

Total

Inventory

(SF)

Under

Construction

(SF)

Total

Vacancy

Rate

Qtr Net

Absorption

(SF)

YTD Net

Absorption

(SF)

Total

Asking Rent

(Price/SF)

General Industrial

99,298,693

2,262,047

4.3%

-403,279

-403,279

$0.71

R&D/Flex

34,519,749

22,600

5.9%

-22,784

-22,784

$1.18

Warehouse/Distribution

91,648,456

389,149

6.5%

466,882

466,882

$0.61

TOTALS

225,466,898

2,673,796

5.4%

40,819

40,819

$0.77

NEWMARK PORTLAND INDUSTRIAL MARKET

3

RESEARCH 1Q 2021

EMPLOYMENT

In February of 2021, the unemployment rate was reported at

6.4% for Portland and 6.2% nationwide. The unemployment rate

has continuously decreased since April when the initial shock of

the pandemic was felt, with unemployment spiking to 14.2%

locally and 14.8% nationwide. All industries have either seen

negative growth or no growth when compared to figures

reported first-quarter 2020 before the effects of quarantining

were felt. The leisure and hospitality industry was hit the hardest,

decreasing by 37.4%. Mining and logging, however, saw no

change.

Employment by Industry

PO RTLAN D METRO

Mining and Logging

Construction

12.7% 6.2%

3.4%

Financial Activities

19.5%

15.9%

Professional and Business Services

2.2%

6.2%

Education and Health Services

Leisure and Hospitality

Other Services

Government

Source: U.S. Bureau of Labor Statistics, February 2021

Payroll Employment

N O T SEASO N ALL Y ADJU STED

TO TAL N O N FARM, N O T SEASO N ALL Y ADJ, 12-MO % CHAN G E

15.0%

15.0%

12.0%

9.0%

9.0%

3.0%

6.0%

-3.0%

3.0%

-9.0%

0.0%

-15.0%

United States

Trade, Transportation, and Utilities

Information

16.3%

Unemployment Rate

10.6%

6.8%

OUTLOOK

The industrial real estate market in Portland has grown over the

course of the past year and will continue to do so. Currently, 2.7

million square feet remains under construction. In future quarters,

the inventory will continue to increase as this construction

completes.

Manufacturing

Portland-Vancouver-Hillsboro, OR-WA

Source: U.S. Bureau of Labor Statistics

United States

Portland-Vancouver-Hillsboro, OR-WA

Source: U.S. Bureau of Labor Statistics

Consumer Price Index (CPI)

Employment Growth by Industry

ALL I TEMS, 12-MO % CHAN G E, N O T SEASO N AL LY ADJU STE D

PDR, 12-MO % CHAN G E, N O T SEASO N AL L Y ADJU STE D

Total Nonfarm

Mining and Logging

Construction

Manufacturing

Trade, Transportation, and ¡­

Information

Financial Activities

Professional and Business ¡­

Education and Health Services

Leisure and Hospitality

Other Services

Government

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

-40.0% -30.0% -20.0% -10.0% 0.0%

United States

Source: U.S. Bureau of Labor Statistics

10.0%

West, Class-A

Source: U.S. Bureau of Labor Statistics, February 2021

NEWMARK PORTLAND INDUSTRIAL MARKET

4

RESEARCH 1Q 2021

For more information:

Newmark

760 SW 9th Avenue, Suite 200

Portland, OR 97205

t 503-241-1155

Scott Miller

Research Analyst

scott.miller@



Newmark has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including

availability, asking rents, absorption and effective rents. Newmark Research Reports are available at research.

All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark has not verified any such information, and the same constitutes the statements and

representations only of the source thereof not of Newmark. Any recipient of this publication should independently verify such information and all other information that may be material to any decision the

recipient may make in response to this publication and should consult with professionals of the recipient¡¯s choice with regard to all aspects of that decision, including its legal, financial and tax aspects and

implications. Any recipient of this publication may not, without the prior written approval of Newmark, distribute, disseminate, publish, transmit, copy, broadcast, upload, download or in any other way reproduce

this publication or any of the information it contains. This document is intended for informational purposes only, and none of the content is intended to advise or otherwise recommend a specific strategy. It is

not to be relied upon in any way to predict market movement, investment in securities, transactions, investment strategies or any other matter.

NEWMARK PORTLAND INDUSTRIAL MARKET

5

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