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Brandon Frank on office

If Portland’s office market were to name its golden child, the Pearl District would be it without question. With a broad base of tenants ranging from traditional law and accounting firms to creative tech startups, the Pearl District reigns supreme.

2014 saw a migration surge of tech companies escaping the oversaturated safe havens of San Francisco and Seattle, but it wasn’t just tech companies opting for Portland’s deep talent pool and comparatively low cost of living. Many different types of office users sought new space or expansion options this year. After all, the city’s lifeblood is Portland’s rare 24/7 vibrancy and at its epicenter is the Pearl District.

Whereas Portland on the whole balances urban luxury and rural sanctuary, the Pearl District is a concentration of culture. Its unique experiences have birthed the term ‘Pearl Envy’ in which other cities try to model their urban development upon the success found in the Pearl. As such, the Pearl District boasts the highest lease rates in the city as a lifestyle destination.

The proliferation of multifamily development is countered by new restaurants, fun specialty boutiques, and exciting arts and entertainment. Office tenants prefer the Pearl’s accessibility and seamless transition between family friendly parks, work and play. With easy transportation options and numerous bike lanes, the Pearl District is also attractive to a wide age spectrum spanning from young professionals to retirees.

As more people and businesses discover and flock to the Pearl, there is concern whether it can accommodate and sustain such robust growth. Though Portland’s office market is battling limited space options with low vacancy and higher rates, the Pearl District is also the target for the city’s newest development plans between housing projects, residential towers and mixed-use high-rises. This new development will ensure the Pearl’s future as a thriving capital of commerce and culture.

Scott MacLean on industrial

Between staggering amounts of speculative development proposals and new construction projects, Portland is experiencing a tremendous industrial growth spurt. Of course, it’s greatly needed as high demand currently outpaces the city’s supply. Yet, existing close-in industrial properties are also undergoing significant change. As traditional industrial users expand their presence with new development, close-in properties are now attractive and available to a new breed of modernized industrial tenant.

Technology has undoubtedly revolutionized manufacturing trades, refining processes and production to an art. Today’s industrial tenants are a combination of their predecessors with less unwieldy machines and more efficient equipment. As such, this tenant is oftentimes a creative office user too. With obvious competing wants and needs between industrial and office space usage, today’s industrial tenant requires the best of both worlds.

In the past few years, the perfect balance between industrial and office was discovered in flex space, and more specifically, renovated warehouses. Offering large blocks of contiguous, unadulterated space, renovated warehouses are an idyllic solution for tenants wanting build-to-suits. Warehouse space provides operable windows, loading docks, and useful freight elevators; all are ideal amenities for the ‘manufacturer-lite’ or tech startup. Additionally, multistory buildings can be retrofitted to downsize space for smaller businesses.

However, repurposing existing buildings for its large space options hasn’t just been the trend, but has become today’s standard. New industrial construction is now cognizant of this new type of tenant’s needs.

The most recent development of this kind is the six-story New York building – a clear game-changer as the first new high-rise industrial building in Portland in 60 years. With over 100,000 square feet of open floor space, the New York building proved that a spectrum of tenants is willing to pay more for the quintessential open industrial space, and that this is the expectation moving forward.

Jack Gallagher on retail

Portland’s retail market continued to show revitalized strength at the start of the holiday shopping season. This was primarily due to Portland’s affinity for local businesses and preference for lifestyle centers and specialty stores in enclosed malls.

Portland metro consumers are primarily staunch supporters of niche small businesses, which account for over 85 percent of all businesses in the city. The wild success of ‘Little Boxes.’ an iPhone app that encourages users to discover and shop the local retail scene, is evidence of Portland’s serious commitment to small businesses. According to the app’s data results, Little Boxes was credited for 4,200 visits at the 200+ participating stores on Black Friday and more than 1,600 subsequent purchases.

The trend of Little Boxes and similar retail apps is congruent with technology’s increasing influence on brick-and-mortar stores. Many retailers now provide free Wi-Fi and supplement in-store experiences with staggering online inventories and delivery options, catering beyond the consumer’s initial need. These centers, such as Bridgeport Village and Nyberg Rivers’ 100,000-square-foot Cabela’s, have become shopping destinations. In addition, the November opening of Grant Park Village – an apartment complex anchored by the new 34,500-square-foot New Seasons Market – highlights the growing demand for urban lifestyle centers.

Due to their ultimate urban convenience, lifestyle centers are expected to increase significantly. In order to compete with this trend, existing shopping centers must be strategic with their tenant placement. Clackamas Town Center’s recent 36,000-square-foot addition of Dave and Buster’s is a direct result of strategic tenant selection. After all, well-selected, active tenants drive customer traffic and sales, which will ultimately drive rents. As this type of development continues in 2015, the retail market can expect landlords becoming more focused on their tenant selection.

Brandon Frank specializes in the leasing and sales of office properties throughout the Portland metropolitan area at NAI Norris, Beggs & Simpson, a real estate brokerage and asset/property management company. Contact him at 503-273-0358 or [email protected].

Scott MacLean specializes in the leasing and sales of industrial properties throughout the Portland metropolitan area at NAI Norris, Beggs & Simpson, a real estate brokerage and asset/property management company. Contact him at 503-273-0321 or [email protected].

Jack Gallagher specializes in the leasing and sales of retail properties throughout the Portland metropolitan area at NAI Norris, Beggs & Simpson, a real estate brokerage and asset/property management company. Contact him at 503-273-0327 or [email protected].