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Downtown Portland Clean & Safe recently released its 2018 Development/Redevelopment Report, and it shows that a record construction boom is still under way in the city.

Currently, 48 construction projects are active in the Central City 鈥� an enhanced services district defined as downtown Portland, the West End, the University District, the River District, the South Waterfront District, the Central Eastside Industrial District and the Lloyd District. The 2017 report tallied 45 active projects.

The annual report presents construction and development patterns over the past five years. Highlights this year include the revelation that Central City office vacancy rates increased slightly from 10.5 percent a year ago to 12.8 percent. Citywide, the office vacancy rate is just 9.5 percent. According to Colliers, rental rates in the Central City average $31, with Class A rates at $35 and Class C at $25.

鈥淎t the core, these rates reflect the fundamental stability of downtown’s finance, insurance and real estate sectors,鈥� the report states.

Meanwhile, the citywide residential vacancy rate fell from 5.4 percent to 4.3 percent over the same time period. Correspondingly, since 2011 more than 5,000 residential units have been built in the Central City, with 3,300 additional residential units coming in 19 projects now under construction. Also, 2,000 more units in four projects are in some phase of development.

Hotels are another growth area, with more than 3,000 new rooms expected to come online by the end of 2019, said Jeff Miller, CEO of Travel Portland and a Downtown Portland Clean & Safe board member.

鈥淭hese additional rooms not only help meet business and tourist visitor demand,鈥� he said, 鈥渂ut, for the local market, they directly expand on the more than 35,000 tourism-related jobs the industry already supports in Portland.鈥�

In light of the rapid pace of ongoing construction, Portland developer Jordan Menashe believes there is potential for more growth. But he also cautioned against over-optimism, particularly when considering the ups and downs of the typical real estate cycle.

鈥淔rom somebody that works downtown and lives downtown and knows downtown, I’ll tell you that I think there’s more space on the market from an office standpoint than we think,鈥� he said. 鈥淎nd with interest rates ticking up, I think that we need to be cautiously optimistic, with a little bit more emphasis on the cautious portion. Nobody has a crystal ball, but nobody knows how tough it can (be) until it really gets tough.鈥�

Mike Salsgiver, executive director of the Associated General Contractors Oregon-Columbia chapter, had a similar takeaway.

鈥淭he only concern I have as someone who’s watched the economy a long time is that this is a long-in-the-tooth recovery,鈥� he said. 鈥淚 know that it’s a part of a cycle and at some point the cycle will crest and head down. But right now we’re not seeing an immediate danger.鈥�

For the time being, Salsgiver added, contractors’ biggest problem still is finding enough skilled trades workers.

鈥淓verybody that I talk to in the industry is telling me that their project pipeline is full,鈥� he said. 鈥淭he two biggest challenges remain that they cannot find enough skilled workers to do the work, and they can’t find the subcontractors they need.鈥�

The report also touches on the housing crisis that continues to envelop Portland. Just 10 percent of the new residential units built in recent years are considered 鈥渁ffordable,鈥� according to the report, while the city’s 2017 inclusionary housing rules have almost completely halted development applications.

The medium- and long-term implications are somewhat mixed. Prior to the program beginning in February 2017, developers submitted permits for more than 19,000 housing units across the city, mainly to ensure profitability. During the first year of the program, however, only 17 new residential permits were filed. That is likely to have a substantial ripple effect on the local construction industry in coming years.

鈥淚t’s huge,鈥� Menashe said. 鈥淲e don’t develop multifamily, but I do know the spigot has turned off. The numbers don’t lie. Especially with rising interest rates, it cannot pencil for multifamily developers to have to do this. The city would get more with honey than they have with vinegar, which is inclusionary zoning.鈥�

The Downtown Portland Clean & Safe District covers a 213-square-block area. Businesses in this area pay for services that include cleaning, security, community justice services, market research and retail advocacy.

The complete report, including a full list of current Central City projects, is available at: .